Economics of Anterior Cruciate Ligament Tear and Reconstruction




Keywords

ACL surgery, allograft, economics, introperative costs, postoperative costs, preoperative costs

 




Introduction


Purpose


In this chapter the major component costs of anterior cruciate ligament reconstruction (ACLR) will be analyzed, along with institutional reimbursement levels. The effect of current trends and emerging technology as they affect ACLR cost will be discussed. Recommendations for providing cost savings while preserving quality will be discussed.


One of the primary purposes of this chapter is to help surgeons understand the societal cost of anterior cruciate ligament (ACL) tear and reconstruction and to understand the economic implications of their choices for resource utilization in ACLR. All of the relevant cost variables discussed in this chapter are under surgeon control. These choices are always made to maximize patient outcomes. However, it is also important to understand the economic impact of these choices. Limited resources coupled with increased demand and increasingly expensive technology may force the surgeon to make difficult decisions in the future in this regard.


Background


With more than 125,000 ACLRs now performed yearly in the United States, direct ACLR costs exceed $1 billion annually. Indirect costs related to lost productivity and secondary knee problems push the total far higher.


ACLR costs can be considered from both macro- and microeconomic perspectives. The macroeconomic perspective deals with how many societal dollars are being spent by patients and third-party payers on ACLR. From this perspective, the goal is to spend the minimal amount consistent with high-quality care. The microeconomic perspective deals with the institution (the hospital or surgicenter) where the surgery is performed. The goal from this perspective is to balance costs with payments so that losses are avoided. Excessive macroeconomic costs can lead to lower institutional reimbursements and disallowal of charges (e.g., as has recently happened with refusals to pay for mechanized cold units after ACLR). It can also lead to reduced surgeon reimbursements to both save money and attempt to provide a disincentive to surgeons to perform procedures. Excessive microeconomic institutional costs relative to payments can also lead to controls on choices by surgical facilities to reduce those costs.


The answer to both macro- and microeconomic cost containment is for utilization choices to be soundly grounded in patient outcomes. Thus by constraining excessive costs, the procedure is less likely to become a target for cost cuts. Furthermore, if cuts in necessary services are proposed, the surgeon, as the patient advocate, is better able to justify the necessity of the provided service.


Macroeconomic Cost-Effectiveness of Anterior Cruciate Ligament Reconstruction


Because uncorrected ACL deficiency is associated with loss of work time, future injury, subsequent surgery, and increased long-term disability, several economic analyses have found that ACLR, while expensive, is indeed cost-effective. Patients understand the problems associated with ACL deficiency and put a high value on ACLR. One study found that the amount patients were willing to pay for ACLR was substantially higher than the Medicare reimbursement fees actually paid to orthopaedic surgeons. Ball and Haddad found that some of the costs of treatment can be decreased by utilizing a dedicated knee clinic that can minimize the number of intermediary practitioners seeing patients with knee injuries. In this model, patients are diagnosed and treated efficiently, with lower total costs of care.


Sources of Cost Information


The information presented here was obtained by personal communication between the authors and various institutions and companies, as well as available Medicare cost schedules. The numbers are only approximations and are skewed toward the Chicago area and the US healthcare system. Some of the information was provided only on condition of confidentiality. Unfortunately, hospitals and surgicenters do not reveal their reimbursement arrangements with third-party payers, since they view them as confidential results of bargaining. This well-known lack of transparency in the US healthcare system has unfortunately greatly complicated efforts to deal with cost containment in a rational way. Charges are readily discussed, but actual payment numbers, which bear little relation to charges, are jealously guarded. Specific companies or devices have not been listed partially for this reason, and partially because the numbers are subject to great variation by region. Readers should make inquiries specific to their practice environment and area to acquire comparative data for their personal use.


Third-Party Payer Payments


A few payers still pay a percent of billed charges to ambulatory surgicenters (ASCs) or hospitals. However, most third-party payers pay a flat fee for given Current Procedural Terminology (CPT) codes, from which all the institutional expenses must be subtracted. ASCs are reimbursed at lower rates than hospitals. The 2016 Medicare national ASC reimbursement is about $3464 per ACLR (CPT code 29888). Hospitals are reimbursed at a rate of $9722. Hospital admission for one night will typically actually decrease the reimbursement rate by causing the hospital to be paid its per-diem rate for one night instead of the outpatient surgery cost. For institutions performing high volumes of ACLR, “carve-outs” become extremely important. These remove the ACLR from the fixed surgery reimbursement prepayment mode and substitute a percentage of charges or a higher reimbursement payment level. This is a matter of individual negotiation between the institution and the payer. Most payers also reimburse implant invoices, although some do not. These invoice reimbursements often will occur only above a certain threshold (e.g., at the $1000 level).


Hospital and Surgicenter Costs


These costs are a combination of time charges, which reflect fixed costs of operation such as rent, utilities, and staffing, and additional costs associated with the given procedure. While Novak et al. in 1996 published rates of $12,040 for hospital ACLR with admission, $8815 for hospital ACLR with same-day discharge, and $3853 for surgicenter ACLR, a representative survey of Chicago-area hospitals and surgicenters currently indicates that current total charges typically vary from $5000 to $12,000 for ACLR. In the following discussion, we will break down the component costs that are additive to the basic institutional time costs.




Introduction


Purpose


In this chapter the major component costs of anterior cruciate ligament reconstruction (ACLR) will be analyzed, along with institutional reimbursement levels. The effect of current trends and emerging technology as they affect ACLR cost will be discussed. Recommendations for providing cost savings while preserving quality will be discussed.


One of the primary purposes of this chapter is to help surgeons understand the societal cost of anterior cruciate ligament (ACL) tear and reconstruction and to understand the economic implications of their choices for resource utilization in ACLR. All of the relevant cost variables discussed in this chapter are under surgeon control. These choices are always made to maximize patient outcomes. However, it is also important to understand the economic impact of these choices. Limited resources coupled with increased demand and increasingly expensive technology may force the surgeon to make difficult decisions in the future in this regard.


Background


With more than 125,000 ACLRs now performed yearly in the United States, direct ACLR costs exceed $1 billion annually. Indirect costs related to lost productivity and secondary knee problems push the total far higher.


ACLR costs can be considered from both macro- and microeconomic perspectives. The macroeconomic perspective deals with how many societal dollars are being spent by patients and third-party payers on ACLR. From this perspective, the goal is to spend the minimal amount consistent with high-quality care. The microeconomic perspective deals with the institution (the hospital or surgicenter) where the surgery is performed. The goal from this perspective is to balance costs with payments so that losses are avoided. Excessive macroeconomic costs can lead to lower institutional reimbursements and disallowal of charges (e.g., as has recently happened with refusals to pay for mechanized cold units after ACLR). It can also lead to reduced surgeon reimbursements to both save money and attempt to provide a disincentive to surgeons to perform procedures. Excessive microeconomic institutional costs relative to payments can also lead to controls on choices by surgical facilities to reduce those costs.


The answer to both macro- and microeconomic cost containment is for utilization choices to be soundly grounded in patient outcomes. Thus by constraining excessive costs, the procedure is less likely to become a target for cost cuts. Furthermore, if cuts in necessary services are proposed, the surgeon, as the patient advocate, is better able to justify the necessity of the provided service.


Macroeconomic Cost-Effectiveness of Anterior Cruciate Ligament Reconstruction


Because uncorrected ACL deficiency is associated with loss of work time, future injury, subsequent surgery, and increased long-term disability, several economic analyses have found that ACLR, while expensive, is indeed cost-effective. Patients understand the problems associated with ACL deficiency and put a high value on ACLR. One study found that the amount patients were willing to pay for ACLR was substantially higher than the Medicare reimbursement fees actually paid to orthopaedic surgeons. Ball and Haddad found that some of the costs of treatment can be decreased by utilizing a dedicated knee clinic that can minimize the number of intermediary practitioners seeing patients with knee injuries. In this model, patients are diagnosed and treated efficiently, with lower total costs of care.


Sources of Cost Information


The information presented here was obtained by personal communication between the authors and various institutions and companies, as well as available Medicare cost schedules. The numbers are only approximations and are skewed toward the Chicago area and the US healthcare system. Some of the information was provided only on condition of confidentiality. Unfortunately, hospitals and surgicenters do not reveal their reimbursement arrangements with third-party payers, since they view them as confidential results of bargaining. This well-known lack of transparency in the US healthcare system has unfortunately greatly complicated efforts to deal with cost containment in a rational way. Charges are readily discussed, but actual payment numbers, which bear little relation to charges, are jealously guarded. Specific companies or devices have not been listed partially for this reason, and partially because the numbers are subject to great variation by region. Readers should make inquiries specific to their practice environment and area to acquire comparative data for their personal use.


Third-Party Payer Payments


A few payers still pay a percent of billed charges to ambulatory surgicenters (ASCs) or hospitals. However, most third-party payers pay a flat fee for given Current Procedural Terminology (CPT) codes, from which all the institutional expenses must be subtracted. ASCs are reimbursed at lower rates than hospitals. The 2016 Medicare national ASC reimbursement is about $3464 per ACLR (CPT code 29888). Hospitals are reimbursed at a rate of $9722. Hospital admission for one night will typically actually decrease the reimbursement rate by causing the hospital to be paid its per-diem rate for one night instead of the outpatient surgery cost. For institutions performing high volumes of ACLR, “carve-outs” become extremely important. These remove the ACLR from the fixed surgery reimbursement prepayment mode and substitute a percentage of charges or a higher reimbursement payment level. This is a matter of individual negotiation between the institution and the payer. Most payers also reimburse implant invoices, although some do not. These invoice reimbursements often will occur only above a certain threshold (e.g., at the $1000 level).


Hospital and Surgicenter Costs


These costs are a combination of time charges, which reflect fixed costs of operation such as rent, utilities, and staffing, and additional costs associated with the given procedure. While Novak et al. in 1996 published rates of $12,040 for hospital ACLR with admission, $8815 for hospital ACLR with same-day discharge, and $3853 for surgicenter ACLR, a representative survey of Chicago-area hospitals and surgicenters currently indicates that current total charges typically vary from $5000 to $12,000 for ACLR. In the following discussion, we will break down the component costs that are additive to the basic institutional time costs.




Anterior Cruciate Ligament Reconstruction Costs


Preoperative Costs


Cost-Effectiveness of Anterior Cruciate Ligament Prevention Programs


ACL prevention programs have proliferated in recent years. A recent study has found that such programs can indeed be cost-effective if properly executed. These programs have been found effective for females for soccer, but not clearly for other sports. Obviously, reducing ACL tears will reduce ACLR macroeconomic costs.


Prehabilitation


Physical therapy has been advocated by some before ACLR. This has been shown to be cost-effective for stiff knees to make sure that full range of motion (ROM) is achieved before surgery. Operating on a knee before full ROM is achieved is associated with increased postoperative morbidity and a higher reoperation rate to deal with recalcitrant stiffness. Prehabilitation is also recommended by some to facilitate the achievement of full postoperative strength earlier in the postoperative course. However, it has not been demonstrated that the increased cost of preoperative physical therapy is offset by a decreased duration and cost of postoperative physical therapy.


Intraoperative Costs


Allograft Versus Autograft


Numerous studies have shown that allografts are more costly and less cost-effective than autografts for ACLR. Nonetheless, allografts are continuing to increase in popularity in the United States. A survey of the largest US tissue banks discloses a price range for various ACL allografts of $1400 to more than $3000, with a mean of about $2500 per case. While an older study by Cole et al. using patient data from 1996 to 1998 showed allografts at that time to substantially reduce costs by decreasing the likelihood of admission and decreasing surgical time, today autograft ACLR procedures are routinely performed on an outpatient basis. Therefore there is no potential cost savings from the use of allografts.


Indeed, several recent studies have clearly shown that the huge cost of purchasing the allograft is not significantly offset by the slightly reduced surgical time from not having to harvest an autograft. Experienced surgeons will generally accomplish the harvest in about 10 minutes, rendering the potential cost savings negligible. The harvest time may be substantially higher for surgeons who perform the procedure only occasionally. Even so, the reduced time will not significantly offset the typical $2500 cost of the allograft. Additionally, there is cost associated with the diversion of assistant or surgeon time involved in opening, thawing, and washing the allograft, which at least partially offsets the reduced operating time resulting from not having to perform a graft harvest.


The other potential benefit of allograft use is avoidance of harvest morbidity. This may be significant regarding kneeling pain after bone–patellar tendon–bone harvest. However the morbidity for hamstring harvest has been shown to be virtually nonexistent. Disadvantages with allograft versus autograft use include lower stability rates (see Chapter 117 ) as well as the small but definite risk of disease transmission. The cost implications of widespread allograft use are staggering. Macroeconomically, $2500 per allograft multiplied by an estimated 125,000 predicted ACLRs would produce a potential incremental cost of almost a third of a billion dollars annually if allografts were universally used instead of autografts. Microeconomically, if allografts are not separately reimbursed above the basic cost of the procedure, their use will virtually always cause the procedure to be performed at a net loss to an ASC. Because most contracts do reimburse for allografts, this is often not an issue, but it is important to be aware of contract provisions at the given institution for the specific payer involved.


Allografts have clearly and repeatedly been associated with higher failure rates and increased revision rates. Thus they carry a hidden indirect cost associated with the extra revision surgeries they generate and the increased arthrosis also associated with the increased revision rate.


Given their increased cost and worse outcomes, the obvious question is why allografts are used at all. The answer is that some surgeons are not comfortable with graft harvest and the allograft is a technically easier procedure. The obvious solution is improved surgeon training in autograft use.


BTB Versus Hamstring


A recent study comparing autograft hamstring and autograft Bone-patellar tendon-bone (BTB) found that hamstring autograft was the more cost-effective. However, the variance in cost among different autografts is quite small. They have similar implant costs, similar complication and reoperation rates, and similar operating times. Thus cost should not really be a factor in choosing an autograft in general. Quadriceps tendon has also been shown to be a clinically effective autograft, and its cost is comparable to BTB and hamstring. It is much less clinically used.


Fixation Implant Costs


We have surveyed the costs of the fixation implants produced by the major manufacturers of such devices. The cost range of these devices is summarized in Table 12.1 . However, discounting of up to 25% below the listed range is common. Interference screws, which are still the most widely used devices, generally cost about $300 each. The cost differential between metal and bioabsorbable screws has largely disappeared, and most sales today are of the bioabsorbable devices. The former practice of using metal devices as a cost-saving measure is thus generally no longer productive. The tibial post screw stands alone as the least expensive tibial or femoral device, with a cost of less than $200. Some devices are priced as high as $500. In general, there is little relationship between the sophistication of the device and its cost, and pricing by the companies would appear to be driven primarily by what the market will bear. Overall, combined tibial and femoral fixation device cost per case will generally be about $600 for single-bundle repairs.


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Aug 21, 2017 | Posted by in ORTHOPEDIC | Comments Off on Economics of Anterior Cruciate Ligament Tear and Reconstruction

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