Orthopedics

Feature Article 

Trends in Orthopedic Surgery Reimbursement From 2000 to 2015

Robert Walker, MD; Zachary Morrison, BS; Mark Campbell, MD

Abstract

Understanding trends in reimbursement for orthopedic surgery is important, especially considering the changing landscape of health care delivery and payment models. Although other studies have examined these trends using a sampling of common orthopedic procedures compared with non-orthopedic specialties, robust examination across all orthopedic specialties is not available in the current literature. This study aimed to critically analyze the trends in reimbursement in the field of orthopedic surgery. Inflation-adjusted Medicare reimbursement and work relative value units (RVUs) between 2000 and 2016 for more than 200 individual Current Procedural Terminology codes across all major orthopedic subspecialties were analyzed, and inherent value of work RVUs was assessed by dividing reimbursement dollar values by work RVUs annually and tracking the changes. Between 2000 and 2016, reimbursement decreased across all orthopedic subspecialties by an average of 29%, except oncology, which showed a 6% increase. Work RVUs increased by an average of 10%, but the inherent value of work RVUs decreased across all orthopedic subspecialties by an average of 39%. Increased active involvement of orthopedic attending physicians and residents in coding documentation and fee-schedule representation is needed. [Orthopedics. 2020;43(3):187–190.]

Abstract

Understanding trends in reimbursement for orthopedic surgery is important, especially considering the changing landscape of health care delivery and payment models. Although other studies have examined these trends using a sampling of common orthopedic procedures compared with non-orthopedic specialties, robust examination across all orthopedic specialties is not available in the current literature. This study aimed to critically analyze the trends in reimbursement in the field of orthopedic surgery. Inflation-adjusted Medicare reimbursement and work relative value units (RVUs) between 2000 and 2016 for more than 200 individual Current Procedural Terminology codes across all major orthopedic subspecialties were analyzed, and inherent value of work RVUs was assessed by dividing reimbursement dollar values by work RVUs annually and tracking the changes. Between 2000 and 2016, reimbursement decreased across all orthopedic subspecialties by an average of 29%, except oncology, which showed a 6% increase. Work RVUs increased by an average of 10%, but the inherent value of work RVUs decreased across all orthopedic subspecialties by an average of 39%. Increased active involvement of orthopedic attending physicians and residents in coding documentation and fee-schedule representation is needed. [Orthopedics. 2020;43(3):187–190.]

Medicare-based physician reimbursement relies on appropriate coding through Current Procedural Terminology (CPT) codes and is calculated based on a resource-based relative value scale (RBRVS), measured in relative value units (RVUs).1,2 Each RVU comprises 3 separate components, namely a work RVU (wRVU, related to the time and complexity of the service provided), an expense RVU (eRVU, related to the cost of providing that service), and a malpractice RVU (mRVU, related to the cost of malpractice insurance).3 The wRVU accounts for approximately 52% of the total RVU, the eRVU accounts for approximately 44% of the total RVU, and the mRVU accounts for approximately 4% of the total RVU.3 The eRVU is further broken down into “facility” pricing (FP) and “non-facility” pricing (NFP).4 Reimbursement typically is higher for NFP because the physician assumes the overhead costs of providing the service that the hospital normally assumes for FP. Each component of the total RVU is multiplied by a geographical factor and then summed together, with the resulting sum being multiplied by an annually updated conversion factor, to determine the total dollar amount of reimbursement given to the physician for providing that service.4

Physician reimbursement has been trailing well behind the inflation rate.4 With rising health care costs and increasing uncertainty in the health care delivery system, understanding the future landscape of physician reimbursement remains volatile. Recent data4 from the Centers for Medicare & Medicaid Services (CMS) demonstrated that between 2000 and 2016, reimbursement and compound annual growth rates (CAGRs) for the most common orthopedic procedures also trails the top 10 non-orthopedic procedures performed in the United States. The primary objective of this study was to expand on these data and provide a comprehensive examination of trends in orthopedic surgery reimbursement across all subspecialties. This study compared the trends of NFP reimbursement and wRVUs in all orthopedic procedures between 2000 and 2015, and also examined how the inherent value of wRVUs (measured as the NFP/wRVU) has changed over time.5

Materials and Methods

The CMS Physician Fee Schedule Look-up Tool was accessed.6 The most common orthopedic procedures across each orthopedic subspecialty were identified by CPT, and NFP values and wRVU values were collected for each CPT code annually from 2000 to 2015. All NFP values were inflation adjusted to 2015 dollars based on Consumer Price Index data from the US Department of Labor, Bureau of Labor Statistics.7 Trends in annual inflation-adjusted NFP (referred to as NFP from this point on) values and wRVU values were analyzed. To assess trends in the inherent value of wRVUs, each annual NFP was divided by its corresponding wRVU, yielding a “price per wRVU” value. Total percent changes in NFP, wRVU and “price per wRVU” from 2000 to 2015 also were calculated. Mean NFP, wRVU, “price per RVU,” and percent change values also were analyzed for each orthopedic subspecialty together (Table 1).

Reimbursement Changes by Subspecialty

Table 1:

Reimbursement Changes by Subspecialty

Results

Between 2000 and 2007, reimbursement decreased by 25% across all orthopedic subspecialties, and between 2008 and 2015, reimbursement increased by 4% across all orthopedic subspecialties. Overall, between 2000 and 2015, Medicare reimbursement decreased across all orthopedic subspecialties by an average of 29%. The only exception was oncology, which showed an increase of 6%. The largest decrease in reimbursement occurred in foot and ankle surgery, with an overall decrease of 43%, and the smallest decrease in reimbursement occurred in hand surgery, at 17%.

There was a 7% increase in wRVU allotment between 2000 and 2007, and a 2% increase between 2008 and 2015. Overall, allotment of wRVUs between 2000 and 2015 increased across all orthopedic subspecialties by an average of 10%. The largest increase in wRVU occurred in shoulder and oncology at 13%, and the smallest increase in wRVU was seen in joints at 7%.

The inherent value of wRVUs decreased by 32% between 2000 and 2007, and increased by 3% between 2008 and 2015. Overall, the inherent value of wRVUs between 2000 and 2015 decreased across all orthopedic subspecialties by an average of 39%. The largest decrease occurred in foot and ankle at 61%, and the smallest decrease occurred in oncology at 2% (Figure 1).

Price per work relative value unit (w-RVU) from 2000 to 2015 for all orthopedic subspecialties.

Figure 1:

Price per work relative value unit (w-RVU) from 2000 to 2015 for all orthopedic subspecialties.

Discussion

Inflation-adjusted Medicare reimbursement in orthopedic surgery has decreased significantly since 2000, and evidence exists that these decreases are more than what is observed in non-orthopedic fields.3 Although wRVUs have increased in this same time frame, these increases have not matched the inflation rate, as evidenced by a significant decrease in the “inherent value” of wRVUs when compared with inflation-adjusted price on an annual basis.8

Since the inception of Medicare, there has been continued rapid growth in the costs required to provide care, along with multiple subsequent efforts to curtail spending.9 Between 2000 and 2015, the dominating underlying legislation affecting Medicare Physician Fee Schedule (MPFS) reimbursement was a formula known as the sustainable growth rate (SGR). In 1997, Congress enacted the SGR as part of the Balanced Budget Act; the SGR was a formula that annually calculated spending targets for MPFS reimbursement based largely on the annual changes in economic growth as measured by gross domestic product (GDP).10 Exceeding these spending targets in 1 year led to a proportional cut of MPFS reimbursement for the following year. However, since 2003, SGR-calculated spending targets for MPFS reimbursement have been regularly exceeded by increasing percentages, culminating in a projected cut of almost 25% in 2014.11 Because such cuts would have threatened access to medical care for senior citizens, Congress consistently acted to block annual proposed cuts from going into effect.10

While attempting to control Medicare spending, the SGR failed to recognize the primary reason that health care spending was outgrowing GDP in the first place—the increasing number and complexity of medical interventions,12 not physician salary. Practicing medicine was becoming intrinsically more expensive, and after providing this increasingly complex care, physicians have been penalized with a gradually eroding compensation. In addition, linking MPFS reimbursement to the overall performance of the economy based essentially on a price differential, without factoring in other models that capture the effects of inflation (eg, Consumer Price Index and Medical Economic Index),11,12 contributed to the trends ultimately seen in Table 2.

Changes in Reimbursement by Year

Table 2:

Changes in Reimbursement by Year

The SGR eventually was repealed and replaced with the Medicare Access and CHIP Reauthorization Act in 2015, which is currently being implemented as the Quality Payment Program.9 Although its effects have not yet been fully realized, it is proposed as a sweeping change to the way physician reimbursement is delivered, moving away from a “fee-for-service” system into a “pay-for-performance” system based primarily on the quality of the service provided and its value to the patient.9 In place of a single, calculated target of spending, adjustments now will be based on a threshold set by other physicians. Thus, it seems that more control will be given to physicians in how reimbursement is distributed.

Active management in the increasingly complex coding documentation, while time consuming, has been shown to increase physician reimbursement and wRVU assignment.13 Evidence also exists that increased incorporation of teaching these skills in residency programs can aid in increasing reimbursement; however, these skills often are not universally well taught, and as a result, discrepancies in coding accuracy exist between residents and attending physicians.14

References

  1. Stecker EC, Schroeder SA. Adding value to relative-value units. N Engl J Med. 2013;369(23):2176–2179. doi:10.1056/NEJMp1310583 [CrossRef] PMID:24256346
  2. Coberly S. The basics: relative value units. Retrieved from https://www.nhpf.org/library/the-basics/Basics_RVUs_01-12-15.pdf. Accessed July 20, 2019.
  3. Eltorai AEM, Durand WM, Haglin JM, Rubin LE, Weiss AC, Daniels AH. Trends in Medicare reimbursement for orthopedic procedures: 2000–2016. Orthopedics. 2018;41(2):95–102. doi:10.3928/01477447-20180226-04 [CrossRef] PMID:29494748
  4. Centers for Medicare & Medicaid Services. Medicare Part B reference manual. Retrieved from https://www.cms.gov/Regulations-and-Guidance/Regulations-and-Guidance. Accessed July 20, 2019.
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  8. Shah DR, Bold RJ, Yang AD, Khatri VP, Martinez SR, Canter RJ. Relative value units poorly correlate with measures of surgical effort and complexity. J Surg Res. 2014;190(2):465–470. doi:10.1016/j.jss.2014.05.052 [CrossRef] PMID:24953983
  9. Chen SL, Coffron MR. MACRA and the changing Medicare payment landscape. Ann Surg Oncol. 2017;24(10):2836–2841. doi:10.1245/s10434-017-5954-8 [CrossRef] PMID:28766194
  10. Jacobs C. Medicare's sustainable growth rate: principles for reform. Retrieved from https://www.heritage.org/health-care-reform/report/medicares-sustainable-growth-rate-principles-reform. Accessed July 20, 2019.
  11. Hahn J. The sustainable growth rate and Medicare physician payments: frequently asked questions. Retrieved from http://www.ncsl.org/documents/statefed/health/SGRfaqs3212014.pdf. Accessed July 20, 2019.
  12. Aaron HJ. The sustainable growth rate for physician payment. Retrieved from https://www.brookings.edu/research/the-sustainable-growth-rate-for-physician-payment. Accessed July 20, 2019.
  13. Aiello FA, Judelson DR, Messina LM, et al. A multidisciplinary approach to vascular surgery procedure coding improves coding accuracy, work relative value unit assignment, and reimbursement. J Vasc Surg. 2016;64(2):465–470. doi:10.1016/j.jvs.2016.02.052 [CrossRef] PMID:27146792
  14. Springfield D. Commentary on “Discordance in current procedural terminology coding for foot and ankle procedures between residents and attending surgeons.”J Surg Educ. 2014;71(2):186. doi:10.1016/j.jsurg.2013.08.001 [CrossRef] PMID:24602707

Reimbursement Changes by Subspecialty

SubspecialtyPriceaWork Relative Value UnitbPrice per Work Relative Value Unit
Sports
  2000–2007−19% ($945.71 to $794.03)12% (8.88 to 10.03)−33% ($106.94 to $80.12)
  2008–2015−3% ($739.47 to $719.24)−4% (10.14 to 9.76)1% ($73.87 to $74.49)
  Overall−31% ($945.71 to $719.24)9% (8.88 to 9.76)−44% ($106.94 to $74.49)
Joints
  2000–2007−30% ($1500.03 to $1155.60)7% (14.59 to 15.67)−36% ($101.83 to $74.91)
  2008–20151% ($1070.93 to $1075.56)0% (15.67 to 15.64)1% ($69.46 to $70.03)
  Overall−39% ($1500.03 to $1075.56)7% (14.59 to 15.64)−45% ($101.83 to $70.03)
Trauma
  2000–2007−30% ($1212.41 to $935.31)7% (11.13 to 11.96)−40% ($111.44 to $79.68)
  2008–20153% ($884.84 to $913.41)0% (12.26 to 12.24)4% ($73.28 to $76.02)
  Overall−33% ($1212.41 to $913.41)9% (11.13 to 12.24)−47% ($111.44 to $76.02)
Spine
  2000–2007−31% ($1073.52 to $816.97)2% (10.85 to 11.12)−36% ($97.89 to $72.02)
  2008–20157% ($754.61 to $815.35)6% (11.12 to 11.83)1% ($66.27 to $66.65)
  Overall−32% ($1073.52 to $815.35)8% (10.85 to 11.83)−47% ($97.89 to $66.65)
Foot and ankle
  2000–2007−34% ($1012.21 to $757.75)10% (8.85 to 9.82)−48% ($110.99 to $75.11)
  2008–20150% ($709.84 to $708.22)1% (9.84 to 9.91)−1% ($69.72 to $68.89)
  Overall−43% ($1012.21 to $708.22)11% (8.85 to 9.91)−61% ($110.99 to $68.89)
Shoulder
  2000–2007−13% ($947.51 to $839.52)15% (9.02 to 10.61)−25% ($100.98 to $80.61)
  2008–2015−2% ($780.08 to $767.28)−2% (10.67 to 10.42)1% ($74.49 to $74.89)
  Overall−23% ($945.51 to $767.28)13% (9.02 to 10.42)−35% ($100.98 to $74.89)
Tumor
  2000–2007−24% ($672.24 to $542.70)−7% (7.85 to 7.35)−19% ($83.74 to $70.65)
  2008–201525% ($537.04 to $711.45)19% (7.35 to 9.05)15% ($70.22 to $82.46)
  Overall6% ($672.24 to $711.45)13% (7.85 to 9.05)−2% ($83.74 to $82.46)
Pediatrics
  2000–2007−28% ($1110.21 to $870.67)8% (10.24 to 11.08)−39% ($106.38 to $76.74)
  2008–20152% ($818.01 to $835.47)0% (11.32 to 11.32)2% ($70.24 to $71.89)
  Overall−33% ($1110.21 to $835.47)10% (10.24 to 11.32)−48% ($106.38 to $71.89)
Hand
  2000–2007−13% ($580.41 to $513.50)5% (5.43 to 5.75)−17% ($104.37 to $89.41)
  2008–20151% ($491.40 to $496.39)0% (6.00 to 6.03)−1% ($82.02 to $81.38)
  Overall−17% ($580.41 to $496.39)10% (5.43 to 6.03)−28% ($104.37 to $81.38)
All orthopedic subspecialties
  2000–2007−25% ($1006.03 to $802.86)7% (9.65 to 10.38)−32% ($102.73 to $77.70)
  2008–20154% ($754.02 to $782.49)2% (10.49 to 10.69)3% ($72.18 to $74.08)
  Overall−29% ($1006.03 to $782.49)10% (9.65 to 10.69)−39% ($102.73 to $74.08)

Changes in Reimbursement by Year

YearPrice per Work Relative Value UnitPriceWork Relative Value Unit
2000$102.52$1059.2310.18
2001$103.09$1061.7410.18
2002$98.03$1019.8210.45
2003$95.39$993.7910.50
2004$89.11$937.9110.49
2005$87.85$926.2510.49
2006$85.53$896.1910.38
2007$76.23$839.0310.95
2008$70.94$786.8511.05
2009$71.25$783.0110.96
2010$72.85$821.1611.31
2011$73.57$830.6011.39
2012$73.78$825.8911.32
2013$73.75$821.2811.28
2014$73.28$816.0711.27
2015$73.17$818.2511.27
Authors

The authors are from the University of Arizona College of Medicine-Phoenix (RW, ZM, MC) and The Center for Orthopaedic Research and Education (CORE) Institute (RW, MC), Phoenix, Arizona.

The authors have no relevant financial relationships to disclose.

Correspondence should be addressed to: Robert Walker, MD, The Center for Orthopaedic Research and Education (CORE) Institute, 755 E McDowell Rd, Phoenix, AZ 85006 ( xwalkerobx@gmail.com).

Received: September 13, 2018
Accepted: February 21, 2019
Posted Online: February 20, 2020

10.3928/01477447-20200213-05

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