Mapping the Institutional Healthcare Payer Mix for Total Hip and Knee Arthroplasty: Insight Into a Large Practice

As the demand for total hip arthroplasty (THA) and total knee arthroplasty (TKA) continues to grow exponentially, the economic burden on practices and healthcare payers simultaneously increases. Medicare accounts for over 60% of total joint arthroplasty (TJA) cases nationwide, and the reimbursements are worsening despite alternative payment models. Trending the active payers at an institution provides invaluable insight into the financial health of a practice and projects if annual run rates are sustainable.

Insurance and billing claims were analyzed for all THA and TKA cases between January 1, 2019, and December 31, 2022, from various healthcare payers at a single, high-volume institution. The payers included Medicare, Medicare Advantage, and seven commercial payers. The THA and TKA claims are from institutional facilities across two Northeast states - New Jersey (NJ) and Pennsylvania (PA). Volumes, charges, and payments from each payer were trended over three years (2019 to 2022).

In the years following the COVID-19 pandemic, the number of institutional patients who had Medicare and Medicare Advantage undergoing TJA drastically increased by 29.1 and 37.8%, respectively. As a result, charges spiked by over $20 million for Medicare and nearly $15 million for Medicare Advantage. Despite a higher caseload, the payments received per case decreased by 24.5% for Medicare and 18.7% for Medicare Advantage. Commercial payers grew 20.6% in annual cases, yet payments received per case similarly decreased by 15.0% at the end of 2022.

Rising Medicare and Medicare Advantage TJA volume highlights the increase in costs and resource utilization, while diminishing payments underscore the inadequate reimbursement to hospitals and surgeons. Along with stagnant commercial payments, the trend shows concerns about the financial health of THA and TKA institutions that participate in the care of a large number of Medicare patients.