Original Research

Patients’ Perceptions of the Costs of Total Hip and Knee Arthroplasty

Am J Orthop. 2015 May;44(5):E135-E141

References

1. Kumar S, Ghildayal NS, Shah RN. Examining quality and efficiency of the U.S. healthcare system. Int J Health Care Qual Assur. 2011;24(5):366-388.

2. Hariri S, Bozic KJ, Lavernia C, Prestipino A, Rubash HE. Medicare physician reimbursement: past, present, and future. J Bone Joint Surg Am. 2007;89(11):2536-2546.

3. Kurtz S, Ong K, Lau E, Mowat F, Halpern M. Projections of primary and revision hip and knee arthroplasty in the United States from 2005 to 2030. J Bone Joint Surg Am. 2007;89(4):780-785.

4. Foran JR, Sheth NP, Ward SR, et al. Patient perception of physician reimbursement in elective total hip and knee arthroplasty. J Arthroplasty. 2012;27(5):703-709.

5. Rosenthal JA, Lu X, Cram P. Availability of consumer prices from US hospitals for a common surgical procedure. JAMA Intern Med. 2013;173(6):427-432.

6. US Senate Committee on Finance. H.R. 4994: the Medicare and Medicaid Extenders Act of 2010. http://www.finance.senate.gov/legislation/details/?id=9f97aa2e-5056-a032-52d4-8db158b12b11. Accessed March 25, 2015.

7. Zinberg JM. When patients call, will physicians respond? JAMA. 2011;305(19):2011-2012.

8. Jost TS. The Independent Payment Advisory Board. N Engl J Med. 2010;363(2):103-105.

9. US Department of Health and Human Services, Centers for Medicare & Medicaid Services. Estimated financial effects of the “Patient Protection and Affordable Care Act,” as amended. 2010. http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies‌/downloads‌/PPACA_2010-04-22.pdf. Accessed March 25, 2015.

10. Hayden SA, Hayden D, White LW. The U.S. public’s perceived value of the surgeon’s fee for total knee replacement. Abstract presented at: 75th Annual Meeting of the American Academy of Orthopaedic Surgeons; March 5-9, 2008; San Francisco, CA. Abstract 214.

11. Centers for Medicare & Medicaid Services. Physician Fee Schedule Search Tool. http://www.cms.gov/apps/physician-fee-schedule/search/search-criteria.aspx. Accessed March 25, 2015.

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13. Lavernia CJ, Hernandez VH, Rossi MD. Payment analysis of total hip replacement. Curr Opin Orthop. 2007;18(1):23-27.

14. Robinson JC, Pozen A, Tseng S, Bozic KJ. Variability in costs associated with total hip and knee replacement implants. J Bone Joint Surg Am. 2012;94(18):1693-1698.

15. Smolders JM, Van Loon CJ, Rijnberg WJ, Van Susante JL. Patients poorly estimate the overall costs of a total knee arthroplasty and strongly overestimate the surgeon’s fee. Acta Orthop Belg. 2007;73(3):339-344.

Discussion

The sustainable growth rate (SGR) formula, part of the Balanced Budget Act of 1997, was constructed to manage health care costs in the context of overall economic growth. By 2001, Medicare health care expenditures had begun to outpace economic growth, and the SGR formula dictated a reduction in reimbursement to physicians. Each year over the past decade, Congress has passed legislation providing a temporary reprieve, staving off a drastic reduction of as much as 25% in 2010.⁶ Despite these adjustments, reimbursement continues to decrease because of overall inflation.

More worrisome is that “more than half of the nearly trillion dollar price tag for expanding coverage under the Affordable Care Act (ACA) will be paid by decreasing spending for the more than 46.3 million individuals covered by Medicare.”⁷ ACA provisions will also create an Independent Payment Advisory Board (IPAB) to oversee health care costs and reduce Medicare spending when it is expected to exceed target levels.⁸ As IPAB cannot recommend increasing revenues or changing benefits, and because it is initially prohibited from recommending decreasing payments to hospitals, the decreases will likely have the greatest impact on physician reimbursement.^7-9

Health care policy has been a major campaign issue during recent US elections. The public and popular media remain engaged in this important discussion. Although patients, policymakers, and physicians are understandably concerned about cost and access to health care, it is unclear if patients understand the distribution of health care cost and reimbursement.

Other authors have studied patients’ perceptions of physician reimbursement for TJA. Hayden and colleagues¹⁰ surveyed 1000 residents of a Texas city. The 121 who responded to the survey thought that fair compensation for performing a TKA was $5080, on average.¹⁰ Although this was significantly higher than the actual Medicare reimbursement at the time, a later study, by Foran and colleagues,⁴ found patients’ estimates of both fair reimbursement and Medicare reimbursement for TJA to be even higher. Foran and colleagues⁴ surveyed 1120 patients who thought surgeons deserved to be paid $14,358 for THA and $13,322 for TKA, on average. These reimbursement values are nearly an order of magnitude higher than actual reimbursements. For Medicare payments, patients lowered their estimates to $8212 for THA and $7196 for TKA.⁴

To our knowledge, the present study is the first to use a “postconsumer” survey to assess patients’ perceptions of THA and TKA costs. Our results confirmed that patients substantially overestimated reimbursement for THA and TKA at $11,872 and $12,263, respectively, relative to the average Medicare reimbursements of $1467 and $1530, respectively.¹¹ We also found that patients overestimated both hospital cost and reimbursement for THA at $22,981 and $27,366, respectively, relative to recently published hospital economic analyses showing THA cost and reimbursement to be $11,688 and $15,789, respectively.¹² Few patients enrolled in our study demonstrated an understanding of the services included in the global surgical package. Only about 12% of patients correctly indicated there was no additional payment to the physician for initial follow-up appointments. However, patients were fairly accurate in their estimates of implant cost. On average, patients who underwent THA priced their implant at $6823, which is only about 9% higher than the reported median cost of $6072 to $6400.^13,14

We also found significant differences in perceptions of cost based on level of education, joint replaced, and overall level of satisfaction. On average, patients with a bachelor’s degree or higher gave estimates of cost and reimbursement that were lower than those given by patients with a lower level of education. Estimates of physician reimbursement and hospital reimbursement and cost were higher from patients who had TKA than from patients who had THA.

Comparing perceptions of reimbursement for appendectomy and coronary artery bypass with perceptions for TJA, Foran and colleagues⁴ found that patients understood the relative complexity of each procedure, as evidenced by their estimates of fair reimbursement for each. However, in comparing patient estimates for the different components of cost and reimbursement for TJA, we found great variability in understanding. Patients in our study overestimated payments to the hospital by 73% but overestimated the cost of the THA implant by only 9%. However, the same patients overestimated physician reimbursement for THA by about 800%. If these patients’ estimates of reimbursement are considered surrogates for relative value, then physicians, based on actual payments, are grossly undervalued relative to implant manufacturers.

Our study had several limitations. First, the enrolled patients were all seen at one medical center, in Ann Arbor, Michigan, and our results may not be generalizable outside the region. Second, the survey respondents were postoperative patients who had an established relationship with the study’s principal investigators—a relationship that may have been a source of bias in the consideration of reimbursement as a function of value. Third, despite our efforts to carefully design a survey with open-ended responses, the order in which the survey questions were presented may have influenced patient responses. Fourth, the open-ended question design may have had an impact on responses where the correct answer would have required entering 0.00.