Medicare Reimbursement in Hand and Upper Extremity Procedures: A 20-Year Analysis

Abstract

Purpose:

Concern exists that Medicare physician fees for procedures have decreased over the past 20 years. The Centers for Medicare & Medicaid Services (CMS) is set to re-evaluate these physician fees in the near future for concern that these procedures are overvalued. Our study sought to analyze trends in Medicare reimbursement rates from 2000 to 2019 for the top 20 most billed hand and upper extremity surgical procedures at our institution.

Methods:

The financial database of a single academic tertiary care center was queried to identify the Current Procedural Terminology codes most frequently utilized in orthopedic hand and upper extremity procedures in 2019. The Physician Fee Schedule Look-Up Tool from the CMS was queried for annual physician fee data. Monetary data were adjusted for inflation using the consumer price index of Urban Research Series (CPI-U-RS) and expressed in 2019 constant US dollars (USD). The average annual and total percent change in reimbursement were calculated via linear regression for all procedures (P < .05).

Results:

Accounting for inflation, the total average physician reimbursement decreased by 20.9% from 2000 to 2019, with 12 of 20 codes decreasing by more than 20%. The greatest decrease pertained to arthrodesis of the wrist at 33.9%. Upon linear regression, all procedures were found to decrease annually, with arthrodesis of the wrist decreasing by an average of 2.3% annually over this period.

Conclusions:

Over the past 2 decades, physician reimbursement for hand and upper extremity procedures has significantly decreased.

Introduction

The Centers for Medicare and Medicaid Services (CMS) reimbursement policies can be subject to numerous policy changes and further complicated by technical jargon. Physician and institutional reimbursement can be impacted negatively by these factors. ¹ Originally, physicians were reimbursed for their services based on “usual, customary, and reasonable” (UCR) charges. ² Due to concerns that the UCR standard led to inflated costs of care, Congress funded a 1998 study to investigate and rank the relative amount of work required for 200 procedures. ³ Subsequently, the Resource-Based Relative Value Scale was created, on which the traditional fee-for-service model is based.^4-6 This reimbursement schedule utilizes a Current Procedural Terminology (CPT) code delineating the procedure performed, ¹ which is assigned a set number of Relative Value Units (RVU) based on required physician work, practice expenses, professional liability insurance, and geography to determine appropriate reimbursement. ⁷

The designated RVU for a given procedure, as assessed by the CMS, is multiplied by a conversion factor to determine actual monetary payout to physicians and institutions. Until recently, this conversion factor has been based on CMS spending and gross domestic product from the previous fiscal year. ⁸ However, this traditional “fee-for-service” model has been criticized for putting the quantity of procedures over their quality, thereby incentivizing practitioners to reactively treat disease instead of proactively promote health through preventative measures. ⁹ Thus, the Affordable Care Act of 2010 funded investigations of novel “pay-for-performance” reimbursement programs designed to incentivize physicians with financial rewards and penalties via new quality measures. ¹⁰ As a result, the Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act (MACRA) of 2015 dictated conversion of the traditional “fee-for-service” system to the new “pay-for-performance” reimbursement schedule by 2017 in the hopes of increasing quality of care while further decreasing physician reimbursement. ¹¹ Today, there continues to be concern among government officials that healthcare procedures are overvalued, despite published data demonstrating dramatic decreases in reimbursement across multiple specialties.^12-14 With the CMS set to further decrease reimbursement to over 30 specialties in 2021, ¹⁵ it is important that we consider the economic impact of the continued push to limit physician payout over the previous 2 decades.

Considering orthopedics specifically, recent analyses have shown significant decreases in reimbursement rates across all subspecialties, ¹⁶ with orthopedic trauma procedures decreasing the most dramatically by an average of 30.0% since 2000. ¹⁷ This change is not immediately apparent given that RVUs for orthopedic procedures have increased from 2000 to 2016. However, the monetary value of RVUs has decreased by 39% over this time period, thus leading to an overall decrease in reimbursement. ¹⁸ To the best of our knowledge, only 2 groups have published studies discussing reimbursement trends among common hand procedures.^19,20 Given the relative paucity of peer reviewed literature focusing on upper extremity procedures, our study sought to analyze trends in Medicare reimbursement rates from 2000 to 2019 for 20 commonly billed hand and upper extremity procedures. We hypothesize that a global decrease in reimbursement will be present, with procedures such as amputations being affected the most and arthroplasty being affected the least. Overall, our goal is to increase awareness of the economic impact of recent healthcare policy on commonly performed hand and upper extremity procedures.

Materials and Methods

The financial database of a single academic, tertiary care, level I trauma medical center was queried to identify the 20 most frequently utilized CPT codes in orthopedic hand and upper extremity surgical procedures in the year 2019 (Table 1). The CMS Physician Fee Schedule Look-Up Tool was then queried for each CPT code and physician reimbursement data was extracted individually for each year from 2000 to 2019. ²¹ Specifically, pricing information inclusive of all modifiers and all Medicare Administrative Contractors were queried and geographic variability of facility price listings were averaged to determine comprehensive annual reimbursement rates for each CPT code. All monetary data were adjusted for inflation using the validated Bureau of Labor Statistics (BLS) Consumer Price Index of Urban Research Series (CPI-U-RS) and expressed in 2019 constant US dollars (USD). ¹⁵ The average annual and total percent changes in reimbursement for each individual CPT code were calculated. Statistical analysis was performed via linear regression to determine statistical significance of the rate of change of reimbursement across this time (P < .05).

Table 1.

20 Most Commonly Billed Hand and Upper Extremity Surgery CPT Codes.

CPT Code	Procedure
64721	Neuroplasty and/or transposition; median nerve at carpal tunnel
26055	Tendon sheath incision (e.g., for trigger finger)
64718	Neuroplasty and/or transposition; ulnar nerve at elbow
25111	Excision of ganglion, wrist (dorsal or volar); primary
24515	Open treatment of humeral shaft fracture, with plate/screws, with or without cerclage
25000	Incision, extensor tendon sheath incision, wrist (e.g., de Quervains disease)
26727	Percutaneous skeletal fixation of unstable phalangeal shaft fracture
26735	Open treatment of phalangeal shaft fracture
24586	Open treatment of periarticular fracture and/or dislocation of the elbow
26951	Amputation, finger or thumb, primary or secondary, any joint or phalanx, single
25447	Arthroplasty, interposition, intercarpal or carpometacarpal joints
26123	Fasciectomy, partial palmar with release of single digit including proximal interphalangeal joint
64719	Neuroplasty and/or transposition; ulnar nerve at wrist
25805	Arthrodesis, wrist; with sliding graft
24685	Open treatment of ulnar fracture proximal end (e.g., olecranon or coronoid process[es]
64831	Suture of digital nerve, hand or foot; 1 nerve
26116	Excision, tumor, soft tissue, or vascular malformation, of hand or finger, subfascial less than 1.5 cm
25332	Arthroplasty, wrist, with or without interposition, with or without external or internal fixation
26160	Excision of lesion of tendon sheath or joint capsule (e.g., cyst, mucous cyst, or ganglion), hand or finger
26615	Open treatment of metacarpal fracture, single, with or without internal or external fixation, each bone

Results

The unadjusted reimbursement rate for the included hand and upper extremity procedures increased on average by 17% from 2000 to 2019. However, when accounting for inflation via conversion of all monetary data to 2019 constant dollars, the overall reimbursement rate for all included surgical procedures decreased by an average of 20.9% during this period, with 12 of 20 procedures decreasing by more than 20% from 2000 to 2019 (Table 2). The adjusted reimbursement rate decreased by an average of 1.5% each year, thereby demonstrating a consistent annual decrease in reimbursement among hand and upper extremity procedures, with all but 3 procedures demonstrating statistical significance (Table 2). Arthrodesis of the wrist via a sliding graft decreased the most dramatically by 33.9% from 2000 to 2019, with an average annual decrease of 2.3%. Similarly, open treatment of a proximal ulnar fracture involving the olecranon or coracoid processes was a close second in terms of the most dramatic decrease in reimbursement, with an overall decrease of 33.0% from 2000 to 2019 and an average annual decline of 2.2%. The only procedure to demonstrate an overall increase in reimbursement was amputation of a finger or thumb, which increased by 4.5% from 2000 to 2019, but upon linear regression was still found to have an overall average annual decrease.

Table 2.

Unadjusted and Adjusted Percent Change per CPT Code from 2000 to 2019.

CPT Code	Unadjusted Change (%)	Adjusted Change (%)	P value
64721	23.9	-17.2	<.0001
26055	6.8	-23.2	.0057
64718	33.7	-10.8	.2153
25111	12.9	-24.5	<.0001
24515	8.4	-27.6	<.0001
25000	11.2	-25.7	<.0001
26727	26.0	-15.7	<.0001
26735	39.8	-6.2	.0607
24586	4.1	-30.6	<.0001
26951	62.0	4.5	.0095
25447	9.2	-26.9	<.0001
26123	9.0	-27.0	.0006
64719	13.1	-24.3	<.0001
25805	-1.3	-33.9	<.0001
24685	0.0	-33.0	<.0001
64831	26.6	-15.4	<.0001
26116	11.3	-25.3	.0049
25332	3.5	-30.8	<.0001
26160	15.2	-18.0	.0046
26615	-40.2	-5.8	.3058

CPT = Current Procedural Terminology.

Discussion

Over the past 2 decades, based upon CMS data for the procedures reviewed, physician reimbursement for hand and upper extremity procedures has significantly decreased from 2000 to 2019. This has been confirmed by 2 other groups, where a different subset of CPT codes and analytic methods were employed, yet demonstrated similar trends in reimbursement.^19,20 We believe our results to validate the findings of these recent studies and further serve to expand the body of knowledge regarding the economic impact of recent CMS reimbursement trends among this subspecialty. Furthermore, it is important to understand that the reported reimbursement rates are total reimbursement, which is then divided amongst the facility, the surgeon, and the anesthesiologist. To explain this in better detail, carpal tunnel release surgeries have been analyzed to demonstrate the breakdown of reimbursement percentages among the aforementioned groups, where 70% ($1,267) is allocated to the hospital, 23% ($412) is remunerated to the surgeon, and 7% ($120) is paid to the anesthesiologist covering the procedure. ²² Thus, reported reduction in reimbursement demonstrated within our data set and those of other pertinent studies can be extrapolated to be even more impactful to providers than initially thought.

Within our analysis, reimbursement of arthrodesis of the wrist decreased the most dramatically among included hand and upper extremity procedures. Arthrodesis of the wrist is known to provide predictable pain relief and substantial patient satisfaction. ²³ The primary indication for arthrodesis of the wrist is either post-traumatic or degenerative arthrosis of the radiocarpal and midcarpal joints, once conservation management has failed to provide relief of symptoms. ²⁴ When compared to alternative methods of surgical repair, including total wrist arthroplasty and proximal row carpectomy, all 3 methods have been shown to be extremely cost-effective relative to reported functional outcomes and subjective patient-reported pain reduction scales.^25,26 However, despite the clearly elucidated effectiveness of the procedure, comparable cost-effectiveness to alternative procedures, and superior patient outcomes and satisfaction post-operatively, hand surgeons continue to experience drastic, steady declines in reimbursement for arthrodeses of the wrist.

Following arthrodesis of the wrist, open fixation of a proximal ulnar fracture involving the olecranon and coracoid processes demonstrated the next most dramatic decrease in reimbursement among included hand and upper extremity procedures. Proximal ulnar fractures are exceedingly common particularly in young, active individuals including laborers and almost invariably require surgical fixation. ²⁷ Untreated, such elbow fractures result in a stiff, painful, and arthritic elbow joint. Given the routine use of the elbow for work, recreation, and most activities of daily living, operative repair is a clear and obvious solution to these debilitating consequences. ²⁸ Despite the evidence-based need for open reduction and internal fixation when treating proximal ulnar fractures involving the olecranon, ²⁹ these procedures apparently are still thought to be overvalued by the CMS.

Amputation of a finger or thumb was the only included hand and upper extremity procedure found to have an overall increase in reimbursement from 2000 to 2019 when accounting for inflation. Importantly, upon linear regression, an average annual decrease of $0.10 was discovered. This discrepancy is due to an increase in reimbursement at the conclusion of the 2000 to 2019 time interval, while the predominant trend outside of this recent increase was an overall decrease in reimbursement. Common etiologies requiring digit amputation include ischemia related to atherosclerosis, diabetes, or renal failure, as well as traumatic injury. ³⁰ The relative cost-effectiveness of performing such a procedure in the emergency department as opposed to an operating room has been studied and may offer a viable approach to reducing costs related to this procedure. ³¹

Lastly, Medicare and Medicaid reimbursement is known to be substantially lower than private insurance or worker’s compensation, which in and of itself has been posited to be a potential healthcare disparity. ³² Ihejirika and colleagues demonstrated that reimbursement policy can adversely impact patient care through an analysis of survey responses whereby orthopedic surgeons were queried on how they would approach patient care given a variety of reimbursement mechanisms. In instances where a 90 day readmit penalty or a capitation reimbursement per patient existed, a dramatic increase in surgeons opting to transfer the patient in question to a tertiary care facility as opposed to operating on them directly was observed. ³³ Given these concerns, it is important to ensure physician representation amid national healthcare policy conferences ³⁴ and discussions such as this 1 to be had across all specialties.

While this economic investigation focuses solely on hand and upper extremity procedures, additional research is necessary within other fields of orthopedic surgery to assess whether this is a global trend across the specialty. Additionally, further investigation into the included hand and upper extremity procedures to identify whether the amount of operative time and relative complexity of the procedure has any bearing on the degree of decrease observed. Future studies may also wish to include a more detailed breakdown of institution, surgeon, and anesthesiologist reimbursement trends and may consider comparing these trends to that of private insurance payouts.

Conclusions

In conclusion, our study has shown and collaborated the observation that physician reimbursement for hand and upper extremity procedures has significantly decreased from 2000 to 2019 in the population reviewed. This decreasing pattern of reimbursement, which may be increasingly subject to quality review and withholdings, may impact the health of our population and workforce in the future as physicians and healthcare systems analyze which subset of procedures may be financially viable.