Additional Changes to the Medicare Reimbursement Rates for Major Joint Procedures Are Needed

HRD-85-109: Published: Sep 12, 1985. Publicly Released: Sep 12, 1985.

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GAO reviewed the increase in the Medicare payment rate for bilateral or multiple joint replacement procedures in light of the resources used by the providers program costs.

GAO found that: (1) the payment rate for bilateral or multiple joint replacements was inadequate; (2) multiple replacements required more hospital resources than single replacements; (3) charges for these procedures exceeded payments by an average of $12,600; (4) performing multiple replacements under separate hospitalizations could unnecessarily increase the costs of the Medicare program; and (5) 18 percent of all revision surgeries performed in 1984 were paid for at a lower rate. GAO also found that: (1) all major joint revision surgeries should be included under diagnosis-related group (DRG) 209 where each diagnosis requires about the same amount of resources to treat; (2) all hip repair procedures should be included in DRG 210 and 211 because they are similar in resource requirements and clinical perspective; (3) the higher-cost revisions currently included in DRG 442 and 443 helped raise the overall Medicare payment rate and provided inadequate reimbursement for this surgery; and (4) the inequity in the payment rate for multiple replacements, if uncorrected, could adversely affect Medicare beneficiaries and the Medicare program.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: HCFA stated that the recommended change might provide a remedy for surgical procedures. HCFA stated that such a change would affect other DRG and, therefore, would require substantial study. Such a study has not been undertaken or planned. The data GAO developed demonstrated that the recommended change was needed.

    Recommendation: The Administrator of the Health Care Financing Administration (HCFA) should include all revisions of prior joint replacements under DRG 209.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  2. Status: Closed - Not Implemented

    Comments: HCFA disagreed with the recommendation based on the payment of averages theory of the prospective payment system. GAO believes that it has shown that the applicable procedure distorts the averages and the recommendation is valid.

    Recommendation: The Administrator, HCFA, should include the repair of the femoral head in DRG 210 and 211 with other similar hip repair procedures.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration


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