Economic factors affecting head and neck reconstructive microsurgery: the surgeons' and hospital's perspective

The purpose of this study was to determine the relative financial value of providing the service of free-tissue transfer for head and neck reconstruction from the surgeons' and hospital's perspective.

Medical and hospital accounting records of 58 consecutive patients undergoing head and neck resections and simultaneous free-flap reconstruction were reviewed. Software from the Center for Medicare and Medicaid Services was used to calculate anticipated Medicare payments to the surgeon based on current procedural terminology codes and to the hospital based on diagnosis-related group codes.

The mean actual payment to the surgeon for a free flap was $2300.60. This payment was 91.6 percent ($2300 out of $2510) of the calculated payment if all payments had been reimbursed by Medicare. Total charges and total payment to the hospital for the 58 patients were $19,148,852 and $2,765,552, respectively. After covering direct costs, total hospital revenue (i.e., margin) was $1,056,886. The mostly commonly assigned diagnosis-related group code was 482 (n = 35). According to the fee schedule for that code, if Medicare had been the insurance plan for these 35 patients, the mean payment to the hospital would have been $45,840. The actual mean hospital payment was $44,133. This actual hospital payment represents 96 percent of the calculated Medicare hospital payment ($44,133 of $45,840).

Free-flap reconstruction of the head and neck generates substantial revenue for the hospital. For their mutual benefit, hospitals should join with physicians in contract negotiations of physician reimbursement with insurance companies. Bolstered reimbursement figures would better attract and retain skilled surgeons dedicated to microvascular reconstruction.