Newswise — December 14, 2022 — The prices that insurers negotiate for total joint replacement (TJR) procedures vary widely according to type of insurer and aren’t associated with conventional measures of healthcare quality, according to a study in Clinical Orthopaedics and Related Research® (CORR®), a publication of The Association of Bone and Joint Surgeons®. The journal is published in the Lippincott portfolio by Wolters Kluwer.

TJR is the most common in-hospital surgery performed for U.S. patients older than 65 years. It’s predicted that the number of these procedures—most commonly knee or hip replacement—will continue to increase year after year, making them a key driver of rising healthcare costs. In general, prices for the procedures are negotiated by insurance companies and the federal government rather than being set by individual surgeons or hospitals.

Robin N. Kamal, MD, MBA, of the VOICES Health Policy Research Center in the Department of Orthopaedic Surgery at Stanford University, and colleagues investigated the prices that insurers negotiated for TJR and whether the prices were associated with quality of care. They analyzed publicly available data from 18 hospitals in a single large California health system.

For each hospital, they classified the negotiated prices for TJR by payer type: commercial in-network, commercial out-of-network, Medicare Advantage (plans in which commercial insurers contract to provide Medicare benefits), Medicaid, or discounted cash pay.

"We found that the differences in negotiated prices across the five surveyed payer types for the same [TJR] procedures varied by nearly $60,000," the researchers report.

Private insurers paid most, Medicaid paid least, regardless of quality measures

The lowest negotiated prices were associated with Medicare Advantage and Medicaid insurance plans, and the highest prices were associated with out-of-network care covered by commercial insurance plans. When all types of joint replacement procedures were considered, the average price was:

  • Commercial out-of-network—$78,800
  • Commercial in-network—$63,900
  • Discounted cash—$52,200
  • Medicare Advantage—$20,400
  • Medicaid managed care—$20,300

There was no correlation between the average negotiated price and any of four measures of the quality of care: the TJR complication rate, the need for hospital readmission after surgery, patients’ ratings of their care, and overall hospital performance score. Neither was there any association between price and these quality measures when all payer types were aggregated into a single average negotiated price by hospital.

Efforts to improve the value of TJR care depend on informing patients

Dr. Kamal and his colleagues note that patients need access to price and quality information that’s linked together. They propose that surgeons determine appropriate measures of TJR quality, combine them with price information, and present the results in decision aids—tools such as brochures and charts that help patients make more informed choices about surgery.

"Other strategies for reporting care quality and price include surgeon scorecards and institutional value dashboards [online reports at hospital websites], which have been piloted in orthopaedic surgery with promising results," the authors say. "Hospitals should combine them with price information and present the results transparently to help patients make more informed choices about surgery."

Read [The Price-Quality Mismatch: Are Negotiated Prices for Total Joint Arthroplasty Associated With Hospital Quality in a Large California Health System?]


About CORR®

Devoted to disseminating new and important orthopaedic knowledge, Clinical Orthopaedics and Related Research® is a leading peer-reviewed orthopaedic journal and a publication of The Association of Bone and Joint Surgeons®. CORR® brings readers the latest clinical and basic research and informed opinions that shape today's orthopaedic practice, thereby providing an opportunity to practice evidence-based medicine. With contributions from leading clinicians and researchers around the world, we aim to be the premier journal providing an international perspective advancing knowledge of the musculoskeletal system.

About the Association of Bone & Joint Surgeons®

The mission of The Association of Bone and Joint Surgeons® is to advance the science and practice of orthopaedic surgery by creating, evaluating, and disseminating new knowledge and by facilitating interaction among all orthopedic specialties. Founded in 1947 as the "American Bone and Joint Association," ABJS membership is offered by invitation only to orthopaedic surgeons who have been certified by the American Board of Orthopaedic Surgery.

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Journal Link: Clinical Orthopaedics and Related Research