An Update On Total Ankle Arthroplasty Reimbursement

Many of us battle with hospital administration on a weekly or even daily basis. Trying to get our most valuable products or coveted devices past the desk of a hospital CFO or orthopedic OR manager is a constant struggle. We aim to treat our patients with the most up-to-date available products, but the reality is, patient care takes a back seat to healthcare cost containment.

In a world of bundled payments, Medicare has sought to continue to tighten the belt of lowered costs, even in lower extremity surgery. For clarification, the Centers for Medicare and Medicaid Services (CMS) determine how Medicare will pay for a procedure not based on the operating time or the type of screw places, but on the diagnosis of the patient and even more so on the diagnoses of the national average for that diagnosis. These diagnoses are categorized into Medicare Severity-Diagnosis Related Groups (MS-DRGs), which CMS assigns to each inpatient stay. Hospitals usually receive a set reimbursement fee for treating all patients in the same MS-DRG, regardless of the actual cost for the case.¹

How does this affect our total ankle arthroplasty cases?

Prior to October 1, 2017, primary total ankle arthroplasty procedures with an acute inpatient stay reimbursed hospitals approximately $12,326, which is under MS-DRG 470.² This was becoming a pressing issue among industry allies, hospitals and total ankle arthroplasty surgeons for several reasons. One, it placed ankle arthroplasty (primary and revision) on the same playing field as hip and knee arthroplasty procedures. Two, this therefore placed ankles at risk of being bundled into the Medicare payment system. Three, this designation did not take into consideration the distinct variation in associated costs with revision total ankle arthroplasty procedures. The average cost of a total ankle replacement is double that of a hip or knee. Therefore, the hospitals were losing money and unable to cover their costs for the procedure.

The American College of Foot and Ankle Surgeons and the American Academy of Orthopedic Surgeons acted in Washington, D.C. along with industry partners, to help CMS redesignate total ankle arthroplasty (primary and revision) in MS-DRG 469.³ MS-DRG 469 reads “Major joint replacement or reattachment of lower extremity with MCC (or complications).” This results in a drastic increase (55 percent) in the Medicare hospital reimbursement for a primary total ankle arthroplasty. The reimbursement sits at approximately $19,296 as of Fiscal Year 2018.

This is a major win in the ankle arthroplasty domain and all surgeons providing this service should make their hospital aware of this change if the hospital does not know already.

Please email me with any concerns or questions.

References

1. OptumInsight Staff. An inpatient prospective payment system refresher: MS-DRGs. Available at https://health-information.advanceweb.com/Web-Extras/CCS-Prep/An-Inpatient-Prospective-Payment-System-Refresher-MS-DRGs-2.aspx . Published Feb. 3, 2012.
2. Wright Medical. CMS significantly increases inpatient hospital reimbursement for total ankle replacement (TAR). Available at https://www.wright.com/tardrg .
3. Johnson JE. In Stride. Available at https://www.aofas.org/publications/InStride%20Documents/2017-Spring-InStride.pdf . Published Spring 2017.