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Cataract surgery: Medicare reimbursements differ between simple and complex operations

  • Researchers conducted an economic analysis of simple and complex cataract surgeries using a method called activity-based time-based pricing.
  • They reported that although complex surgeries require more physician time, resources, and effort than simple surgeries, Medicare reimbursements do not account for these differences.
  • This discrepancy can affect physicians financially and could potentially reduce access to care for people requiring complex surgeries, highlighting the need for more accurate reimbursement rates.

When a person’s vision is impaired due to cloudy or cloudy areas on the lens of the eye, they may need surgery to remove the lens and replace it with a synthetic lens.

This is called simple cataract surgery.

In some cases, a person may have other eye conditions in addition to cataracts, which require additional procedures to be performed during the surgery.

It’s called complex cataract surgery.

Complex cataract surgery requires more time, resources, and effort from the doctor compared to simple cataract surgery.

However, it is unclear whether Medicare reimbursement for complex cataract surgery offsets these increased costs.

Dr David Portneya resident of Michigan Medicine’s Kellogg Eye Center, explained to Medical News Today that “there is an incredible lack of understanding of health care and medical costs”.

“In my experience…it’s never been easy to accurately state a cost for a medical procedure, hospital stay, or office visit,” he explained. “We often allocate the payer (insurance cost), but that doesn’t accurately represent the cost to the supplier, which is the true delivery cost.”

In a new study, Portney and colleagues hypothesized “that there was an additional cost associated with complex (cataract) surgeries that was not sufficiently covered by reimbursement”.

To prove this, they used a method they called “time-based activity-based cost” to measure the difference in surgery day costs and net revenue between simple and complex cataract surgery. .

Their results appear in the newspaper JAMA Ophthalmology.

Accurate calculation of health care costs can be difficult and traditional methods are not necessarily reliable for measuring the true cost of a process.

“The physician fee schedule was created in the 1980s to standardize the amount paid to a physician for a given service,” Dr. Christopher Childersa surgical oncology fellow at MD Anderson Cancer Center in Texas who was not involved in this study, said Medical News Today.

“But the tools available to researchers at the time were limited,” he explained. “Researchers only had to ask doctors how much effort and time they spent caring for patients. The fee schedule is being updated gradually, but the methods have not kept pace. We still rely primarily on survey data to inform these updates.

More accurate cost calculations can be achieved through a method called time-based activity-based costing (TDABC). This approach measures the time used by key personnel and assigns a cost rate to it. This allows for a more accurate calculation of the actual cost involved.

Some researchers have used TDABC to examine cost differences between telemedicine and face-to-face care in ophthalmology.

Others have sought to improve operational efficiency in ophthalmology facilities using TDABC.

In studyTDABC was used to compare the actual costs of vitrectomy surgery with Medicare reimbursement, highlighting the disparity between the two.

Childers says “these types of studies are extremely important” and “could inform and make (doctor’s) fee schedules more accurate.”

In their study, Portney and colleagues conducted an economic analysis of simple and complex cataract surgery cases that were performed at the University of Michigan Kellogg Eye Center from 2017 to 2021.

Their costing, which focused only on the day of the surgery itself, considered the following staff and resources:

  1. preoperative and postoperative nursing care and associated unit capacity
  2. anesthesia
  3. operating room (including associated washing technician and circulating nurse)
  4. surgeon (ophthalmologist)
  5. costs of supplies and materials

The researchers obtained time estimates for the surgeries from an internal anesthesia recording system. They also gathered financial estimates from a combination of sources internal to Michigan Medicine and previous literature. Costs of supplies used in surgeries were obtained from the electronic health record.

Dr. Robert Berensona senior researcher at the Urban Institute specializing in health policy, particularly Medicare, applauded the research for “real-time data collection as a basis for setting fees.”

Berensen, who was not involved in the recent study, said Medical News Today that empirical measures of time, such as timestamps for procedures, should be used to determine the relative costs of procedures.

The study included a total of 16,092 cataract surgeries, of which 13,904 were simple surgeries and 2,188 were complex surgeries.

The researchers calculated the time-based costs on the day of surgery to be $1,486 for simple cataract surgery and $2,205 for complex cataract surgery. This means that complex cataract surgery costs an average of $719 more than simple surgery.

The cost of supplies and equipment for complex surgery was $158 higher than for simple surgery.

Taking into account all costs on the day of surgery, the total cost difference between complex and simple cataract surgery was $877.

However, reimbursement for complex cataract surgery was $231 more than for simple surgery. This means that complex cataract surgery resulted in a financial loss of $646 compared to simple cataract surgery.

Medical News Today asked Portney to shed some light on how the discrepancy between cost and reimbursement for complex cataract surgery can affect doctors and patients.

“For doctors, the first thing it can do is hurt doctors financially,” he said. “Physicians are not motivated primarily by financial motives, but it is certainly something that plays a role in the functioning of practices and institutions… I cannot say directly whether ophthalmologists are changing their practice habits at because of this, but it’s theoretically possible that a for-profit ophthalmologist…may defer or refer patients who will require more complex care, potentially reducing access to care for those patients.

Childers shared similar thoughts.

“If reimbursement rates are too low, physicians may be deterred from taking on these cases,” he said. “As described in this study, ophthalmologists may not be inclined to do complex cataract surgeries because the reimbursement is not commensurate with the complexity of the care provided. Conversely, if the reimbursement is too high , this can create perverse incentives for physicians to perform this service too often.

Childers had two main concerns about this study.

“First of all, it’s just one institution,” he said. “The goal of a physician fee schedule is to be generalizable to a variety of different practices across the country. It is unclear whether the results of this study would be generalizable.

“Second, you have to be a little careful in interpreting their findings. They report the cost difference between simple and complex cases, but they don’t report the absolute cost/revenue of operations,” Childers explained. “The way whose data is presented gives the impression that the institution is losing money on complex cataract surgeries, but that is not really what is presented. It is possible that the institution earns a lot on simple cases, and then relatively less (but still positive amounts) on complex cases.

In Berenson’s view, the main limitation of the study is that it “calculates the absolute dollar costs of medical services…but the Medicare Physician Fee Schedule estimates relative costs.”

He pointed out that comparing the two values ​​is like comparing “apples to oranges” and noted that if this limitation is not taken into account, the results of the study could be misleading.

Portney hopes this study will be followed by “many more similar studies and a thoughtful discussion of possible reimbursement changes.”

This, he said, “will hopefully lead to sustainable and fairer reimbursement for doctors – not just ophthalmologists – to ensure that patients continue to receive excellent, high-quality care. “.

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