Orthopedics

Feature Article 

Patient Perception of Physician Reimbursement for Common Hand Surgical Procedures

John R. Fowler, MD; Glenn A. Buterbaugh, MD

Abstract

Health care–related costs have been the focus of intense scrutiny in politics and in the media. However, public perception of physician reimbursement is poorly understood. The purpose of this study was to determine patient perception of physician reimbursement for 2 common hand surgery procedures: carpal tunnel release and open reduction and internal fixation of a distal radius fracture.

Anonymous surveys were completed by 132 patients in an outpatient hand and upper-extremity practice. The surveys asked patients to estimate reasonable surgeon fees and actual Medicare reimbursement for 2 common hand surgery procedures (carpal tunnel release and internal fixation of a distal radius fracture) and 2 common surgical procedures (coronary artery bypass and appendectomy). On average, patients estimated that a reasonable surgeon fee for carpal tunnel release and 90 days of postoperative care was $2629 and that actual Medicare reimbursement was $1891. Patients estimated that a reasonable surgeon fee for internal fixation of an extra-articular distal radius fracture and 90 days of postoperative care was $3874 and that actual Medicare reimbursement was $2671. Higher level of education, annual household income, and insurance status had no statistically significant effect on patient estimates of reimbursement.

Patients in an outpatient hand and upper extremity practice believe that surgeons are reimbursed at a rate 3.6 to 4.7 times greater than actual reimbursement. These misperceptions highlight the lack of understanding and transparency in health care costs and may interfere with the ability of patients to make well-informed decisions about health care.

The authors are from the Department of Orthopaedics (JRF), University of Pittsburgh, Pittsburgh; and Hand & UpperEx Center (GAB), Wexford, Pennsylvania.

The authors have no relevant financial relationships to disclose.

Correspondence should be addressed to: John R. Fowler, MD, Department of Orthopaedics, University of Pittsburgh, 3471 Fifth Ave, Ste 1010, Kaufmann Building, Pittsburgh, PA 15213 (johnfowler10@gmail.com).

Abstract

Health care–related costs have been the focus of intense scrutiny in politics and in the media. However, public perception of physician reimbursement is poorly understood. The purpose of this study was to determine patient perception of physician reimbursement for 2 common hand surgery procedures: carpal tunnel release and open reduction and internal fixation of a distal radius fracture.

Anonymous surveys were completed by 132 patients in an outpatient hand and upper-extremity practice. The surveys asked patients to estimate reasonable surgeon fees and actual Medicare reimbursement for 2 common hand surgery procedures (carpal tunnel release and internal fixation of a distal radius fracture) and 2 common surgical procedures (coronary artery bypass and appendectomy). On average, patients estimated that a reasonable surgeon fee for carpal tunnel release and 90 days of postoperative care was $2629 and that actual Medicare reimbursement was $1891. Patients estimated that a reasonable surgeon fee for internal fixation of an extra-articular distal radius fracture and 90 days of postoperative care was $3874 and that actual Medicare reimbursement was $2671. Higher level of education, annual household income, and insurance status had no statistically significant effect on patient estimates of reimbursement.

Patients in an outpatient hand and upper extremity practice believe that surgeons are reimbursed at a rate 3.6 to 4.7 times greater than actual reimbursement. These misperceptions highlight the lack of understanding and transparency in health care costs and may interfere with the ability of patients to make well-informed decisions about health care.

The authors are from the Department of Orthopaedics (JRF), University of Pittsburgh, Pittsburgh; and Hand & UpperEx Center (GAB), Wexford, Pennsylvania.

The authors have no relevant financial relationships to disclose.

Correspondence should be addressed to: John R. Fowler, MD, Department of Orthopaedics, University of Pittsburgh, 3471 Fifth Ave, Ste 1010, Kaufmann Building, Pittsburgh, PA 15213 (johnfowler10@gmail.com).

With the passing of the Affordable Care Act in March 2010, increased focus has been placed on health care costs.1,2 A recent study by Foran et al3 found that patients estimated physician Medicare reimbursement for elective total knee and hip arthroplasty to be 5 to 6 times higher than actual reimbursement. The large discrepancy between perception and reality highlights a lack of transparency with regard to health care–associated costs and may prevent patients from making well-informed decisions with respect to health care and economics. Proposed 26.5% cuts in Medicare physician reimbursement under the sustained growth rate formula were delayed by the American Taxpayer Relief Act on January 1, 2013.4 Had the sustained growth rate cuts taken effect, the disparity between actual and perceived reimbursement would be higher still.

Patient perception of physician reimbursement has been documented for total joint arthroplasty but has not been studied in hand surgery. The purpose of this study was to determine patient perception of physician reimbursement for 2 common hand surgery procedures: carpal tunnel release and open reduction and internal fixation (ORIF) of a distal radius fracture. The hypothesis was that patient estimates of Medicare reimbursement for common hand surgical procedures and 90 days of postoperative care would be higher than actual Medicare reimbursement.

Materials and Methods

After institutional review board approval, anonymous surveys were given to 300 consecutive patients in an outpatient hand and upper-extremity practice between September 1 and December 1, 2012. The anonymous surveys were given to patients in the office waiting room by the front office staff. The surveys were returned in an opaque, sealed box prior to the patients being seen by the physician.

The surveys obtained demographic information, including age, sex, employment in the health care field, history of previous carpal tunnel release or open reduction and internal fixation (ORIF) of a distal radius fracture, insurance status, annual household income, and education level. The surveys then asked patients to estimate a reasonable fee that a hand surgeon should receive to perform carpal tunnel release and for 90 days of postoperative care. Of note, the surveys specifically asked patients to estimate the surgeon’s fee for the surgery itself and for 90 days of postoperative care, which did not include any associated hospital fees or anesthesia fees. Next, the patients were asked to estimate the actual Medicare reimbursement for a surgeon to perform carpal tunnel release and for 90 days of postoperative care. These 2 questions were repeated for ORIF of distal radius fracture, appendectomy, and coronary artery bypass. The surveys asked patients to estimate reimbursement for appendectomy and coronary artery bypass surgery to allow comparison between the current study and the study by Foran et al.3

Actual Medicare reimbursement fees for each procedure were obtained from the Centers for Medicare and Medicaid Services Web site. Medicare reimbursement rates were chosen because they are standardized and consistent in a given geographic area. Every physician in a geographic area will receive the same reimbursement from Medicare, as opposed to private payors, which may negotiate different rates with different groups or hospitals. In many states, private payors base their reimbursements on a percentage of Medicare reimbursement, and this percentage can vary widely between states.

Because this was a voluntary survey, some patients chose to not participate and turned in a blank survey. Other patients did not complete the survey or gave answers such as “I don’t know” instead of estimating the reimbursement values. These surveys were excluded, but demographic data were available in most cases and recorded to compare those who successfully completed surveys and those who did not. For continuous data, an independent t test was used to compare differences between groups. One-way analysis of variance was used to test for differences in education and income. Due to the unequal variances and sample sizes, the nonparametric independent-samples Kruskal-Wallis test was used to test for the differences between types of insurance. A pretest power analysis using the data from the Foran et al3 study showed that a sample size of more than 15,000 patients would be needed to detect a difference of $1000 between estimated and actual reimbursements (assuming α=0.05 and β=0.8); this was not obtainable. After distribution of 300 surveys, post-hoc power analysis using the results from the distal radius estimates revealed a power of 52%.

Results

Of 300 surveys, 132 (44%) were successfully completed. Mean age of patients returning a survey was 52.3 years (range, 18–87 years), and 45% were men. Mean age of patients successfully completing surveys was 49.7±12.8 years, compared with 54.4±15.3 years for patients who did not successfully complete the survey (P=.005) (Table 1).

Comparison of Patients Who Did and Did Not Successfully Complete Questionnaires

Table 1: Comparison of Patients Who Did and Did Not Successfully Complete Questionnaires

On average, patients estimated reasonable surgeon fees to be less than the estimated Medicare reimbursement for both carpal tunnel release and ORIF of distal radius fracture (Table 2). Patient estimates for Medicare reimbursement were higher than the actual Medicare reimbursement for carpal tunnel release and ORIF of distal radius fracture: $420 and $720 in western Pennsylvania, respectively. Patients with a high school education estimated higher Medicare reimbursement rates for both carpal tunnel release and ORIF of distal radius fracture (Table 3) than patients with an undergraduate degree, master’s degree, or doctorate, but these differences were not statistically significant (P=.9). With respect to income level, patients with a household income less than $20,000 per year estimated the highest Medicare reimbursement for carpal tunnel release and ORIF of distal radius fracture; however, the differences were not statistically significant (P=.7 and .6, respectively) (Table 4). No statistical differences were found between patients with different insurance types (Table 5).

Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement for All Patientsa

Table 2: Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement for All Patients

Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement by Education Levela

Table 3: Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement by Education Level

Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement by Yearly Household Incomea

Table 4: Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement by Yearly Household Income

Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement by Insurance Statusa

Table 5: Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement by Insurance Status

The 24 patients who had previously undergone carpal tunnel release estimated a reasonable surgeon fee (P=.6) and actual Medicare reimbursement (P=.5) to be less than did the 108 patients who had not previously undergone carpal tunnel release, although no statistical difference existed between 2 groups (Table 6). The 6 patients who had previously undergone ORIF of a distal radius fracture estimated a reasonable surgeon fee (P=.6) and actual Medicare reimbursement (P=.5) to be more than did the 126 patients who had not previously undergone ORIF of a distal radius fracture; however, the difference was not statistically significant. The small patient numbers in these groups prevent meaningful analysis.

Comparison Between Patients Who Did and Did Not Undergo CTR or ORIF of Distal Radius Fracturea

Table 6: Comparison Between Patients Who Did and Did Not Undergo CTR or ORIF of Distal Radius Fracture

Discussion

On average, patients estimated that the actual Medicare reimbursement for a carpal tunnel release was $1891. The actual Medicare reimbursement for a carpal tunnel release (in Pennsylvania) is $420.5 On average, patients estimated that the actual Medicare reimbursement for ORIF of a distal radius fracture was $2671. The actual Medicare reimbursement for ORIF of an extra-articular distal radius fracture (in Pennsylvania) is $720 (2-part intra-articular fracture reimbursement is $806 and 3-part intra-articular fracture reimbursement is $1026).5 Therefore, patients in an outpatient hand and upper-extremity practice believe that surgeons are reimbursed at a rate 3.6 to 4.7 times greater than actual reimbursement. Highest level of education, annual household income, and insurance status had no statistically significant effect on patient estimates of reimbursement. These misperceptions highlight the lack of understanding and transparency in health care costs and may interfere with the ability of patients to make well-informed decisions about health care.

Although a large discrepancy exists in patients’ perceptions of physician reimbursement, a discrepancy also exists between physician charges and actual payment by insurers. It is unclear whether patient perception of reimbursement is based on physician charges rather than insurer payments. Charges for specific aspects of a surgical procedure (eg, surgeon fee, anesthesia, facility fee, or implants) may not accurately reflect the true cost of care. Also, when patients receive a bill or explanation of benefits summary from their insurer, the breakdown of charges and reimbursements may not be transparent or easily understood. An attempt to bring charges in line with insurer payments may prove valuable. Complicating matters further, different insurers, whether private or public and dependent on regional location, may also provide reimbursement at widely varying rates. A future study examining patient understanding of charges, costs, and reimbursement variation among payors and regions may provide additional information.

Patients who had previously undergone 1 of the procedures for which estimates were queried could add bias to this study. It could be argued that patients who have not undergone a specific procedure may not be able to accurately estimate the fees and reimbursements because they do not understand the procedure or what the postoperative rehabilitation entails. However, patients who had previously undergone 1 of the procedures may also unfairly bias the results because they may have received an explanation of benefits from their procedure and thus would know (rather than have to estimate) the fees and reimbursements. Patients who had undergone carpal tunnel release estimated lower fees and reimbursements than did patients who had not; however, patients who underwent ORIF of a distal radius fracture estimated higher fees and reimbursements than did those who did not undergo the procedure. The reason for this is unclear and may be a topic for further study comparing large groups of patients who underwent a specific procedure vs a group of patients who did not.

Foran et al,3 in an elective joint arthroplasty practice, reported that the average estimated Medicare payments for total hip and total knee arthroplasty, with 90 days of postoperative care, were $8212 and $7196, respectively. The actual Medicare reimbursement values were $1375 and $1450, respectively.3 This represents an overestimation of reimbursement by 5 to 6 times the actual figures. In comparison, patients in their study felt that surgeons were reimbursed $11,924 and $4643 for coronary artery bypass and appendectomy, respectively.3 Patients in the current study estimated actual reimbursement of $9810 and $2860 for coronary artery bypass and appendectomy, respectively. The actual Medicare reimbursement (in Pennsylvania) is $2681 for coronary artery bypass6 and $638 for appendectomy.7 This represents overestimation by a factor of 3.6 for coronary artery bypass and 4.5 for appendectomy, consistent with the current study’s findings for carpal tunnel release and ORIF of distal radius fracture.

This study has several limitations. First, the survey had a relatively low completion rate of 44%. Patients who failed to successfully complete surveys were statistically older, had high school as their highest level of education, were Medicare patients, and had an annual household income less than $150,000 per year. It is possible that inclusion of these patients may have affected the data. However, these factors were not found to significantly affect reimbursement estimates in patients successfully completing surveys.

The patient population included a high percentage of patients with private insurance (76%) and relatively few with Medicaid (3%) and Medicare (14%). This may not reflect the insurance mix of other hand and upper-extremity practices. Asking patients to estimate reimbursements for a type of insurance that they do not have may also bias the results. Also, these data come from a single institution in western Pennsylvania. Other regions may estimate physician reimbursement differently; however, these data are similar to estimates by patients in Colorado.3 Finally, the study was underpowered to detect a statistical difference between estimated reimbursement and actual reimbursement.

Conclusion

This study found that patients in an outpatient hand and upper extremity practice overestimated actual physician reimbursement for carpal tunnel release and ORIF of distal radius fractures by a factor of 3.5 to 4.6. Improved understanding of the differences among charges, costs, and reimbursement by both patients and physicians would likely improve the ability of patients to make well-informed decisions regarding health care.

References

  1. Bozic KJ, Cramer B, Albert TJ. Medicare and the orthopaedic surgeon: challenges in providing, financing, and accessing musculoskeletal care for the elderly. J Bone Joint Surg Am. 2010; 92:1568–1574. doi:10.2106/JBJS.I.01189 [CrossRef]
  2. Oberlander J. The future of Obamacare. N Engl J Med. 2012; 367:2165–2167. doi:10.1056/NEJMp1213674 [CrossRef]
  3. Foran JR, Sheth NP, Ward SR, et al. Patient perception of physician reimbursement in elective total hip and knee arthroplasty. J Arthroplasty. 2012; 27:703–709. doi:10.1016/j.arth.2011.10.007 [CrossRef]
  4. Lovette M. Last-minute deal averts fiscal cliff. AAOS Now. 2013; 7(2):21.
  5. Distal radius. Centers for Medicare and Medicaid Services Web site. http://www.cms.gov/apps/physician-fee-schedule/search/search-results.aspx?Y=0&T=0&HT=0&CT=2&H1=25608&C=76&M=1. Accessed March 4, 2013.
  6. Coronary artery bypass grafting. Centers for Medicare and Medicaid Services Web site. http://www.cms.gov/apps/physician-fee-schedule/search/search-results.aspx?Y=0&T=0&HT=0&CT=2&H1=33514&C=76&M=1. Accessed March 4, 2013.
  7. Appendectomy. Centers for Medicare and Medicaid Services Web site. http://www.cms.gov/apps/physician-fee-schedule/search/search-results.aspx?Y=0&T=0&HT=0&CT=2&H1=44950&C=76&M=1. Accessed March 4, 2013.

Comparison of Patients Who Did and Did Not Successfully Complete Questionnaires

VariableNo. (%)
P
IncludedExcluded
No.132 (44)168 (56)
Mean age, y49.7±12.854.4±15.3.005
Male57 (43)70 (47).6
Education level
  High school28 (21)60 (40).001
  Undergraduate74 (56)57 (39).004
  Master’s22 (17)28 (19).6
  Doctorate8 (6)3 (2).08
Yearly household income, $
  <20,0007 (5)15 (10).1
  20,000–75,00049 (37)68 (46).1
  75,000–150,00044 (33)50 (34).9
  >150,00032 (24)15 (10).002
Insurance status
  None2 (2)7 (4).14
  Medicaid5 (4)4 (3).6
  Medicare10 (8)32 (21).002
  HMO/PPO115 (87)113 (72).002

Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement for All Patientsa

ProcedureCost, $
Mean±SDActual Western PAbActual Nationalc
Carpal tunnel release
  Estimated reasonable surgeon fee2630±3058
  Estimated actual Medicare reimbursement1892±4180420436
Open reduction and internal fixationd
  Estimated reasonable surgeon fee3874±4275
  Estimated actual Medicare reimbursement2672±5386720743
Coronary artery bypass graft
  Estimated reasonable surgeon fee14,905±18,8432681688
  Estimated actual Medicare reimbursement9810±20,454
Appendectomy
  Estimated reasonable surgeon fee4657±4679
  Estimated actual Medicare reimbursement2861±3682638645

Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement by Education Levela

ProcedureMean±SD Cost, $
P
High SchoolUndergraduateMaster’sDoctorate
Carpal tunnel release
  Estimated reasonable surgeon fee2280±24082667±32822764±21623144±5043.9
  Estimated actual Medicare reimbursement2284±46791868±46891730±17721188±1575.9
Open reduction and internal fixationb
  Estimated reasonable surgeon fee3529±33173972±49524045±23553706±5149.9
  Estimated actual Medicare reimbursement2996±48722706±64222531±21311606±2426.9
Coronary artery bypass graft
  Estimated reasonable surgeon fee23,668±31,01013,233±14,86610,932±577010,625±11,109.04
  Estimated actual Medicare reimbursement12,918±12,7749947±25,9086636±40896400±8126.7
Appendectomy
  Estimated reasonable surgeon fee6427±69014314±39984236±31672788±3304.1
  Estimated actual Medicare reimbursement3649±39362739±39622714±26391638±2236.5

Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement by Yearly Household Incomea

ProcedureMean±SD Cost, $
P
<20,00020,000–75,00075,000–150,000>150,000
Carpal tunnel release
  Estimated reasonable surgeon fee4636±45002256±30372689±28362683±3003.3
  Estimated actual Medicare reimbursement3377±28122059±56911415±13541966±4328.7
Open reduction and internal fixationd
  Estimated reasonable surgeon fee5521±43563782±47533963±43293534±3429.7
  Estimated actual Medicare reimbursement4336±36483186±77952043±18712384±4402.6
Coronary artery bypass graft
  Estimated reasonable surgeon fee17,600±15,92016,005±24,00013,102±15,12915,109±15,286.9
  Estimated actual Medicare reimbursement11,456±10,19314,543±31,8866017±58517419±7978.2
Appendectomy
  Estimated reasonable surgeon fee7407±64634482±48514215±41664931±4669.4
  Estimated actual Medicare reimbursement5063±46303140±46222459±27232503±2867.3

Average Estimated Reasonable Surgeon Fee and Estimated Actual Medicare Reimbursement by Insurance Statusa

ProcedureMean±SD Cost, $
P
NoneMedicareMedicaidPrivate
Carpal tunnel release
  Estimated reasonable surgeon fee6000±56571810±13884080±45532580±3039.6
  Estimated actual Medicare reimbursement2900±29701390±8093976±34061827±4394.3
Open reduction and internal fixationd
  Estimated reasonable surgeon fee5500±63642460±27695040±45533918±4362.4
  Estimated actual Medicare reimbursement2700±32531725±13465110±42022647±5669.5
Coronary artery bypass graft
  Estimated reasonable surgeon fee12,500±10,60712,500±13,97810,400±723215,352±19,6991.0
  Estimated actual Medicare reimbursement8500±91928495±68049340±50489969±21,800.4
Appendectomy
  Estimated reasonable surgeon fee8000±98994310±48215800±60994579±4570.9
  Estimated actual Medicare reimbursement3950±50203770±59065480±50212649±3359.7

Comparison Between Patients Who Did and Did Not Undergo CTR or ORIF of Distal Radius Fracturea

VariableMean±SD CTR, Cost, $PMean±SD ORIF, Cost, $P


YesNoYesNo
Estimated surgeon fee2325±16732698±3290.64392±44443850±4284.8
Estimated actual Medicare reimbursement1341±10652014±4589.55542±97002534±5121.2

10.3928/01477447-20130821-16

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