Panel discusses patients’ perceptions of surgeon reimbursement

After more than 35 years of private orthopedic surgical practice, it has never ceased to amaze me when patients bring their explanation of benefits into the office and tell me that they cannot believe how much was billed for their surgery yet how low the reimbursement was to me by the insurer. In this Orthopedics Today Round Table, panelists share their perspectives and results of their recently conducted studies that surveyed patients about surgeon reimbursement in multiple locations around the United States. The panelists are to be congratulated for taking such initiatives for their efforts to document patient perceptions of actual payer reimbursement.

Jack M. Bert, MD
Moderator

Jack M. Bert, MD: What was the purpose of your study and why did you do it?

Neil Badlani, MD, MBA: As a means to reduce rising health care costs, physician reimbursement has been specifically targeted and has been substantially reduced while physicians’ operating expenses continue to increase. Although the public is aware of the increasing costs of health care, it appears they know little about declining physician reimbursements and the resultant challenges in caring for an increasing elderly population. As disclosure and transparency have now become an industry standard to mitigate financial conflict of interests, it is likely that patients, the ultimate consumer of health care, will become more aware of reimbursement values and may help shape the resultant debate on the appropriateness of these values. It is therefore important to have a better understanding of their beliefs and expectations of physician reimbursement, and this was the primary initiative of our study.

Brandon D. Bushnell, MD, MBA: In 2013, I was in the Physician Executive MBA program at Auburn University and studying the concept of value in health care. I was inspired by the work of our other panel members, who had investigated patient perception as a means of objectively quantifying the value of orthopedic surgery. At that point, no one else in the literature had looked at knee and shoulder arthroscopy, so I decided to tackle those areas.

Jared R.H. Foran, MD: We performed this study in 2010. During that time, there was a tremendous amount of discussion in the media about increasing health care costs, patient access to care, Affordable Care Act, etc. In this context, we were interested in how patients perceived their orthopedic surgeon’s role in this debate. In passing conversations, it was becoming clear that patients often significantly overestimated what their surgeon was being reimbursed for a total hip or knee arthroplasty. We were interested to know how pervasive this perception was and what the possible implications were.

Richard C. “Chad” Mather III, MD: We recognized that many musculoskeletal treatment decisions are highly sensitive to patient preferences, and as such, personalized care that helps match the treatment to the patient promises to improve health care delivery efficiency. Shoulder instability is a preference-sensitive condition with high levels of evidence and more clearly defined treatment choices so it represented an ideal condition for a pilot study.

Sameer Nagda, MD: I suspected patients had the perception that we made several thousand dollars for each surgery. I wondered if this was true and to what extent. Jared’s study got me thinking.

Bert: How did you set up your study? Which procedures did you choose?

Badlani: The study setting was two outpatient office clinics at large high-volume spine centers at the University of California San Diego and Midwest Orthopedics at Rush University in Chicago. In a survey format, patients were asked how much they believe physicians are being and should be reimbursed for typical spine procedures. Patients were then given the actual reimbursement amount and asked about their opinions of that actual amount using a Likert scale. Specifically, we chose anterior cervical discectomy and fusion, lumbar discectomy and single-level lumbar fusion.

Bushnell: I worked with four other colleagues around the United States to perform a multi-center survey study of patients who had undergone either an arthroscopic meniscectomy or an arthroscopic rotator cuff repair. We modeled our investigation after other patient-perception studies, and we used an anonymous computer-based format. Patients were given an open-answer opportunity to assign a dollar value to their procedure based on three questions: 1) what they thought was a reasonable level of surgeon reimbursement; 2) what they thought Medicare actually paid the surgeon; and 3) what they would be willing to pay for the procedure out-of-pocket. The patients were then informed what the actual reimbursement amounts were and given a chance to express how this amount related to their expectations.

Foran: We handed out 1,120 anonymous surveys to patients in the waiting room of a joint replacement practice. Surveys were returned in sealed envelopes to encourage candor and to maintain confidentiality. We asked questions regarding the reimbursement of total hip and total knee arthroplasty procedures. Specifically, we asked patients the following questions:

1. What do you think is a reasonable fee that an orthopedic surgeon should receive to perform a total hip replacement (THR)?
2. How much do you estimate that Medicare actually pays an orthopedic surgeon for performing a THR and 90 days of care following surgery?
3. What do you think is a reasonable fee that an orthopedic surgeon should receive to perform a total knee replacement (TKR)?
4. How much do you estimate that Medicare actually pays an orthopedic surgeon for performing a TKR and 90 days of care following surgery?

At the end of the survey (so as not to bias earlier answers), we revealed the actual average Medicare reimbursement for THA and TKA ($1,375 and $1,470, respectively in 2010), and asked patients to indicate their feelings on these reimbursement values as either 1) much lower, 2) somewhat lower, 3) about right, 4) somewhat higher or 5) much higher than what a surgeon should earn for a THA or TKA.

Mather: We used adaptive conjoint analysis, a long-used technique in market research, to analyze patient preferences for a first-time anterior shoulder dislocation. The patient is shown multiple sets of two side-by-side scenarios of different attributes and levels of the treatment process and outcomes such as out-of-pocket costs, risk of recurrent dislocation and time out of work, for example, and they are asked to choose which scenario they prefer. At the end of the survey, we ask them to choose between two blinded treatment options (surgery and nonoperative treatment) with attributes and levels set for the specific age and gender of the respondent.

Nagda: We looked at rotator cuff repairs and total shoulder replacements. We asked all patients in our office who were there for shoulder pain what they thought the procedures were worth and how much they thought we were reimbursed for the procedures. Then, after revealing to them what we were reimbursed, we asked if they thought that was right, too low or too high.

Bert: What were the responses?

Badlani: Although we hypothesized patients would overestimate reimbursement values and believe surgeons were underpaid for spinal procedures, the magnitude by which they felt surgeons were underpaid was surprising. Patients believe orthopedic surgeons who perform spine surgery should be compensated more than 10- to 20-times more than current Medicare reimbursement rates.

Bushnell: Patients overestimated the “reasonable” level of surgeon reimbursement by 10- to 15-times the actual Medicare amount. We also found they would be willing to pay substantially more out-of-pocket than the Medicare amount. In both knee and shoulder patients, more than 80% of our respondents thought the Medicare amount was much lower or somewhat lower than expected.

Foran: Our results were frankly shocking. We thought patients would overestimate reimbursements, but we were surprised by how much they overestimated them. Patients also thought orthopedic surgeons should be paid much more than they actually are. On average, respondents believed orthopedic surgeons should be paid $14,358 for performing a THA and estimated that Medicare actually paid $8,212 (actual reimbursement is $1,375). On average, respondents believed orthopedic surgeons should be paid $13,332 for a TKA, and estimated that Medicare actually paid $7,196 (actual reimbursement is $1,470).

Furthermore, nearly 70% of respondents believed the actual THA and TKA reimbursements were lower than they should be, and less than 1.5% believed the actual reimbursements were higher than they should be.

Mather: Respondents chose surgery for a first-time anterior shoulder dislocation at higher rates than we expected and were willing to pay substantial amounts out-of-pocket for that intervention. More than 50% of respondents chose surgery with a $1,000 out-of-pocket cost, but we observed similar findings at $4,000 out-of-pocket cost. These rates are higher than those estimated by epidemiology studies that show that only 37% of patients ever get surgery after a dislocation. We also found the rate of recurrent instability and out-of-pocket cost were the most important attributes.

Nagda: Overwhelmingly, patients perceived us to be reimbursed four- to eight- times the amount we were actually reimbursed. Also, more than 80% believed our reimbursement per procedure was too low. Many patients had no idea how little we actually were reimbursed for procedures.

Bert: Based upon these results, please summarize the conclusions of your surveys.

Badlani: Patients believe orthopedic surgeons who perform spine surgery should be compensated more than 10- to 20-times more than current Medicare reimbursement rates. In addition, patients overestimate the actual amount that Medicare reimburses for each of the procedures by a factor of approximately seven to 10. Less than 10% of patients think the current Medicare payment to surgeons is about right, and less than 2% think surgeons are overpaid for the procedures.

Bushnell: This study revealed a major disconnect between perception and reality. Our numbers closely mirrored those of our colleagues who had studied the same concepts in other areas including total joint replacement, spine and even general surgical procedures. Ultimately, patients think that surgeons receive higher levels of reimbursement than they actually do and that surgeons should receive higher levels of reimbursement.

Foran: Patients believe orthopedic surgeons who perform total hip and knee replacements should be compensated approximately an order of magnitude greater than current Medicare reimbursement rates. In addition, patients overestimate the actual amount that Medicare reimburses for each of the procedures by a factor of nearly six. Less than 10% of patients think the current Medicare payment to surgeons is about right, and less than 1.5% think that surgeons are overpaid for the procedures.

Mather: There is a perception that surgeons over-utilize surgical interventions. However, our study demonstrates that we might be under-utilizing surgery for a first-time anterior shoulder dislocation. This has important policy implications because many federal and state policies exist that aim to address perceived overutilization, particularly through restriction of ancillary physician ownership.

Nagda: There is an overwhelming perception that surgeons are reimbursed at a rate much higher than we actually are for rotator cuff repairs and shoulder replacements. Patients also think our work is worth much more than what we are reimbursed per procedure.

Bert: What should be done with this information? How should we educate patients, policymakers and payers as to the reality of these perceptions and the value of our services?

Badlani: Educating patients on the realities of physician reimbursement will help patients have rational expectations of their health care and allow them to participate in difficult policy decisions about how to allocate our limited resources. Having the support of our patients in justifying the high value they place on spine surgery can help shape the future allocation of health care dollars and may lead to more support for reduction of other significant drivers of health care costs.

Bushnell: In our time of major health care reform, our duty is to educate patients, policymakers and the public at large about the value of the services we provide. Health care is not a free market wherein normal price-determination forces are at play. As costs increase but prices are artificially forced downward, the system becomes unsustainable at some point. We need to let people know that point may be arriving sooner than we realize.

Foran: Unrealistic perceptions of orthopedic surgeons’ reimbursements can have negative consequences. First, some patients unfairly think physician over-reimbursement is the major driver of increasing health care costs. Second, unrealistic views of surgeons’ reimbursements may lead to feelings of entitlement, resentment and, in some cases, unrealistic expectations by the patient (“If my surgeon is making $10,000 off my knee replacement, he or she had better do ...”). Realistic perceptions may help patients understand surgeons’ time constraints and limitations. Realistic perceptions also may help the public understand why it may take them so long to get an appointment to see their surgeon.

Mather: We should be educating the public on the complete cost of health care and the components of those costs. They will see what we know, that physician professional reimbursement is a small and shrinking portion of that pie. In our study, we found out-of-pocket cost was important to patients and we need to develop better ways to communicate cost to patients.

Nagda: We need to educate patients as to where the bulk of the cost of procedures comes from. Patients get explanation of benefits that list numbers in the thousands and automatically think we got all that. They need to know it is usually the facility and the implant companies that get the lion’s share of the fees.

Bert: What are the unintended consequences of lower reimbursements to orthopedic surgeons?

Badlani: Many patients fear that, given current reimbursement, surgeons might opt-out of the Medicare system, and in many cases, patients would not necessarily fault them. The effect this will have on the quality of spine surgery in the United States and the long-term financial impact on the health care system remains to be seen.

Bushnell: We hear about value-based care a lot nowadays. Absent from the calculus of many value formulas are the thoughts and opinions of the most important part of the entire health care equation — the patients. These studies highlight the importance of allowing patients to have a role in actual price determination rather than simply trying to extrapolate meaningless satisfaction scores into value.

Foran: As reimbursements for THA and TKA continue to decline, while at the same time operating expense and cost of living continue to increase, something has to give. The obvious concern here is that more surgeons will opt-out of Medicare, or even simply limit the number of Medicare patients they see. This could lead to a serious patient access issue in the setting of an aging baby-boomer population. In our study, patients were provided an opportunity to write down comments they wished to share. Nearly 25% of the respondents wrote comments, and many questioned why orthopedic surgeons even continue to accept Medicare given the low rates of reimbursement. If a large number of surgeons opt-out of Medicare and patient access to THA and TKA decreases, perhaps our findings will be viewed in a different light. Of note, since this paper was published, the average Medicare reimbursement for THA and TKA has decreased by 4.9% and 10.9%, respectively. While less than 1.5% of the patients surveyed felt the current reimbursement was too high, it appears that CMS disagreed.

Mather: We discovered an interesting trend while testing this tool with patients. The significant cognitive load required to make an informed health care decision may lead to a threshold phenomenon where patients shut off and become less active contributors to treatment discussions and decision-making.

Nagda: I hope this gets other surgeons thinking about this. We all want and need to prove our value. We must not forget the value that the patient, the consumer, places on the procedures we perform on them. Eventually, I hope the lawmakers will see that.

Bert: Do you think this survey information should be shared with the media to inform patients of actual reimbursements to surgeons?

Badlani: Working with the media carefully and thoughtfully to send the right message to the public and our patients about physician reimbursements can be beneficial. The ultimate goal should be educating the public about all drivers of health care costs, including physician reimbursement. This will help the public have a more accurate understanding of the relatively small fraction of health care dollars that go toward physician reimbursement. Hopefully, this will lead to the public being more informed and active in decisions about how to allocate limited resources. Having the support of patients will be key in achieving a more sustainable level of physician reimbursement as it relates to overall health care spending.

Bushnell: Nowadays, we hear a lot in the media about the increase of patient satisfaction analysis, but I would like to see more media discussion of value, as well. I think the media needs to share this data with the public, but I agree with Chad in that it may not be ready in its current form. We need to do a little more work in how we package the message. In its current form, this data could easily be “spun” and framed as “rich doctor complaints.” I think the American Academy of Orthopaedic Surgeons and our specialty societies should be able to prepare an effective message from this data that highlights the true value of what we do, sacrifices we make and risks we take to provide valuable care.

Foran: Yes. Informing patients can only be a good thing. Transparency is often lacking in health care, and hospital bills and explanation of benefits are often misleading. Even for physicians, these lists of charges are difficult to decipher. My sense is a lot of patients think we are making tremendous amount of money off them and are literally getting rich from these surgeries. One can imagine how this overinflated view of our reimbursement might sour their views toward their physicians and lead to unrealistic expectations. This is not to say we are looking for pity. Orthopedic surgeons ultimately make a reasonable living. However, because of increasingly lowered reimbursements and increasing practice costs, orthopedic surgeons have to work harder, see more patients and do more operations just to make ends meet. Current Medicare reimbursements now average just around $1,300 for THA and TKA after the relative value unit adjustment in 2014. Practice expenses, such as overhead and malpractice, can commonly be 60% or higher. Thus, after expenses, many physicians are literally making a few hundred dollars per total hip or knee replacement. The real questions are how sustainable is this, and when will orthopedic surgeons say enough is enough and limit access to deserving Medicare patients?

Mather: At this time, I would not support widely sharing this information with the media. Although I believe patients value musculoskeletal services above actual reimbursement, this finding is early and the analysis is brief and superficial. We need additional investigation examining how patients might respond to disclosure of this information to best develop a strategy for releasing it.

Nagda: If it is out there, then the media will find it at some point. I would not go out of my way to spread to the media. It is more important to focus on directing this information towards law and policymakers.

References:

Badlani N, et al. Spine. 2013;doi:10.1097/BRS.0b013e318291b752.

Bushnell BD, et al. Patient perceptions of surgeon reimbursement in arthroscopic meniscectomy: A multicenter survey study. Poster presentation. Presented at: Arthroscopy Association of North America Annual Meeting. April 23-25, 2015; Los Angeles.

Bushnell BD, et al. Patient perceptions of surgeon reimbursement in arthroscopic rotator cuff repair: A multicenter survey study. Poster presentation. Presented at: Arthroscopy Association of North America Annual Meeting. April 23-25, 2015; Los Angeles.

Federer AE, et al. Sports Med Arthrosc. 2013;doi:0.1097/JSA.0b013e31829f608c.

Foran JRH, et al. J Arthroplasty. 2012;doi:10.1016/j.arth.2011.10.007.

Nagda S, et al. J Shoulder Elbow Surg. 2015;doi:10.1016/j.jse.2014.06.034.

For more information:

Neil Badlani MD, MBA, can be reached at The Orthopedic Sports Clinic, 950 Campbell Rd., Houston, TX 77024; email: nbadlani@gmail.com.

Jack M. Bert, MD, can be reached at Minnesota Bone & Joint Specialists, Ltd., 17 W. Exchange St., Ste. 110, St. Paul, MN 55102; email: bertx001@umn.edu.

Brandon D. Bushnell, MD, MBA, can be reached at Harbin Clinic, LLC, 330 Turner McCall Blvd., Rome, GA 30165; email: bbushnell@harborclinic.com.

Jared R.H. Foran, MD, can be reached at Panorama Orthopedics and Spine Center, 660 Golden Ridge Rd., Suite 250, Golden, CO 80401; email: thepractice@panoramaortho.com.

Richard C. “Chad” Mather, III, MD, can be reached at Duke University School of Medicine, 4709 Creekstone Dr., Durham, NC 27703; email: richard.mather@duke.edu.

Sameer Nagda, MD, can be reached at Anderson Orthopedic Clinic, 2445 Army Navy Dr., Arlington, VA 22206; email: snagda@andersonclinic.com.

Disclosures: Badlani reports he is a consultant for Amendia, Nutech and Mazor Robotics and receives a salary and stock options as VP of Nobilis Health. Bert reports no relevant financial disclosures. Bushnell reports he is a consultant for Mitek and Rotation Medical. Foran reports he is a consultant for Zimmer and Cardinal Health. Mather reports he has stock or stock options for MD, and is a paid consultant for Pivot Medical, Smith & Nephew, Stryker and KNG Health Consulting. Nagda reports he is a paid speaker for Mitek.