Cost-effectiveness of upper extremity arthroplasties at orthopedic specialty hospitals

Major joint/limb reattachment procedures of upper extremities (Diagnosis-related group 483, DRG-483) are increasingly utilized, while average costs have increased yearly. This study seeks to determine the influence of volume, neighborhood demographics, and orthopedic specialization on the cost of DRG-483. Utilization and cost data for DRG-483 was extracted from Centers for Medicare and Medicaid Services (CMS) inpatient charge data from 2014-2018. Neighborhood demographic data was queried as USDA Rural-Urban Commuting Area codes (RUCA) from the United States 2010 census and Esri’s ArcMap software. Orthopedic specialization ratios for each hospital (OSR = Musculoskeletal discharges/Total Discharges) was utilized to compare Orthopedic Specialty Hospitals (OSH) = OSR>0.99 and Nonspecialty Hospitals (NSH) = OSR≤0.99. The cost of DRG-483 procedures and the influence of volume, hospital demographics, and orthopedic specialization was analyzed using linear regression models. OSH performed DRG-483 procedures at lower average Medicare payments (AMP) than NSH in all years studied (P<0.001), averaging 15% saved per surgery. DRG-483 volume was weakly negatively correlated with AMP, averaging $2.95 saved per discharge. Finally, population density of hospital location was inversely proportional to DRG-483 AMP with metropolitan centers performing the procedure at the lowest cost to the CMS. CMS payments are optimized at urban orthopedic specialty hospitals. Eliminating the AMP difference for the 222,519 DRG-483 performed at NSH would have saved CMS over 480 million dollars between 2014-2018.