By John Gever

Declining reimbursements to surgeons under Medicare and private insurance for total joint replacement procedures are creating an untenable situation, researchers warned.

Already, according to a study presented here at the American Academy of Orthopaedic Surgeons' (AAOS) annual meeting, hourly rates for early-career orthopedic surgeons performing hip replacements are about the same as for dentists and travel nurses. And the same group projected that Medicare payments to physicians for hip replacement surgeries would drop below $11 per hour if the current downward-accelerating trend continues.

That bodes poorly for older Americans, as demand for joint replacement procedures has been projected to surpass 1.5 million annually by 2030, compared with about 1 million prior to the COVID-19 pandemic. It's hard to imagine surgeons agreeing to keep working, let alone join the profession, at pay rates below those currently earned by Taco Bell cashiers. Something has to give.

Adam Bruggeman, MD, chair of the AAOS's Advocacy Council and a solo-practice surgeon in San Antonio, said that Congress needs to address this crisis and soon.

Medicare financing has long been problematic, he explained, in that it provides a fixed pot of money to pay for whatever comes along. "As more procedures are performed, or more patients need care, or more cases are moved out of the hospital into the surgery centers" -- which Medicare treats like individual physicians, whereas hospitals are reimbursed differently -- "we're doing more things in this one bucket, but that bucket has a finite amount of things it can pay for. So what ends up happening is that every year, we get a decrease [in reimbursement rates]. We've been unable to get Congress to tie our reimbursement to inflation."

To deal with this strain, he continued, the industry has moved in the direction of consolidation, as hospital systems are bought by investors and insurance companies, and physicians join big groups or become health system employees. That means individual physicians who treat Medicare patients may receive income beyond their Medicare reimbursements, but another result is that these costs are eventually passed through to consumers through their insurance premiums and taxes.

"Consolidation is expensive and it traditionally leads to, typically, less quality care," Bruggeman said.

As research presentations at the AAOS meeting documented, push is already coming to shove for physicians.

David Shau, MD, of Texas Hip and Knee Center in Fort Worth, Texas, provided some data on recent Medicare reimbursements for hip and knee replacements paid to orthopedic surgeons just starting their practices. His group followed three such physicians in their first year post-fellowship, having them record how much time they personally spent around the time of surgery on each case. This included not just their work in the surgical suite but also the pre-operative meetings, planning, and note-writing along with post-operative visits and required paperwork. The researchers then calculated hourly pay rates from the Medicare reimbursements eventually received.

Covering a total of 334 surgeries, the mean total time per case was about 440 minutes both for total hip and total knee arthroplasties -- somewhat longer than the 404-407 minutes established by the Relative Value Scale Update Committee (RUC) as the standards for these procedures. For hip replacements, reimbursements averaged $89 per hour; the mean for knee replacements was $88 per hour. These were essentially identical to published averages for dentists ($89) and travel nurses ($88).

If those numbers aren't disappointing enough for young surgeons who've already spent a dozen years in training, the same group fit a third-order polynomial model to historical data for Medicare reimbursements for arthroplasties, yielding a projection out to 2030. Actual figures from 2007 to 2023 showed mean reimbursements falling over time, and falling faster with each passing year from 2019 onward.

The resulting model resembles a letter S tipped onto its back: a steep decrease initially, flattening out in the middle, but then an accelerating decline in the final years. Rates fall off a cliff as the current decade proceeds, with mean reimbursements dropping to $200 or less in just a few more years.

Incredibly, the projection suggests physicians might get just $50 for a primary hip replacement in 2030. That's total, not per hour.

It's frequently stated that private insurance often follows Medicare's example, and a third study reported at AAOS indicated just that. John Mazzocco, MD, of New England Baptist Hospital in Boston, and colleagues analyzed commercial insurance claims for 33,000 total knee arthroplasties performed from 2016 to 2021. They found that while mean payments to hospitals for these procedures increased steadily over time -- 12.2% over that 6-year period -- physician payments fell by 3.7%. Pay rates varied somewhat according to whether the arthroplasties were cemented versus cementless, and whether they were manual or robotically-assisted. But a general trend of stagnation on physician pay while the hospitals' share rose was the same.

Meanwhile, yet a fourth study at AAOS looked at Medicare reimbursements in 2021. Jack Haglin, MD, of the Mayo Clinic in Phoenix, Arizona, and colleagues found that, while hospitals earn about 50% more from joint replacements performed in sicker versus healthier patients, the surgeons actually receive less. The researchers' conclusion from this was best expressed in the presentation title: "Hospitals Are Incentivized More Than Surgeons to Care for Riskier Arthroplasty Patients."

Bruggeman explained that AAOS and other physician groups have been working to educate members of Congress on the importance of addressing the upcoming crisis for physicians -- and for everyone else on the care team, including nurses, physician assistants, physical therapists, et al., who also take shares of the Medicare pot. He said the response has been attentive and respectful.

The alternative to effective Medicare reform, he pointed out, is that surgeons will have to limit the number of Medicare patients they see -- perhaps by refusing to accept new ones -- and some may quit Medicare altogether. "You're going to have a hard time as a Medicare beneficiary obtaining clinic time with the physician because they're going to say, 'I feel ethically obligated to taking care of this patient, however, I'm going to limit the number of patients I can see with that health insurance plan.'"

While Congress may no longer be as solicitous of Baby Boomers' concerns as it once was, it's noteworthy that their working-age children will quickly find out how much they depend on Medicare, though they may not know it yet. After all, who's going to hear about it first when Mom can't find a doctor who'll perform the hip replacement under Medicare?