Studies have already demonstrated the efficacy and cost-savings offered by outpatient arthroplasty procedures, advocating that similar outcomes can be produced for a margin of the cost for aptly selected patients [3, 4, 11, 13, 14]. According to our review of the literature, this is the first study that explores the correlation between patient characteristics, specifically insurance status, and patient placement into either inpatient or outpatient care settings for total joint arthroplasty.
With the rapid shift in the industry towards commodity outpatient surgeries such as arthroplasty, the process behind selecting ideal candidates has become more relevant now than ever before [15]. Though some healthcare analysts claim that physicians may be looking for ways to transition patients into outpatient care, hospitalists maintain that proper management of preexisting conditions remains the most important factor [16]. Past literature similarly describes differences in co-morbidities as the primary driver. Historically, patients with pre-existing conditions such as uncontrolled hypertension or diabetes have been assigned to inpatient surgery in order to minimize risk [14]. This is reflected in many hospitals’ protocols where the requirements for outpatient surgery include age less than 80 and a lack of renal, liver, or heart conditions.3 Inpatient rehabilitation is also better equipped to handle the more intensive care schedules generally required by these patients [14, 17]. However, results from this study imply that comorbidities are not the sole determinant in choosing inpatient surgery. Medicaid and Medicaid-managed insurance statuses had the most positive correlation with the Elixhauser index (Table 3)—patients insured by these providers on average had the highest number of comorbidities. Yet it was Medicare insurees who had significantly higher odds of being assigned to an inpatient care setting for three of the four procedures considered. In addition, increased Elixhauser index scores only led to minimally increased odds of being placed into an inpatient care-setting, further affirming these results. (Table 4).
We posit that differences in both patient preferences and reimbursement structures across various insurance statuses may partially account for this discrepancy. Recent studies have elucidated that outpatient arthroplasty could increase patient satisfaction and facilitate faster rehabilitation while minimizing dependence on hospital resources [18]. With the advent of COVID-19, special emphasis was placed on strengthening remote recovery options leading to both increased availability and efficacy [13, 19]. In some Midwestern orthopaedic clinics, up to 90% of arthroplasty patients opt for home recovery with telehealth visits, and all patients expect the option [19]. In addition, the cost savings associated with outpatient care schedules lead to lower co-insurance and deductibles for commercially insured individuals, making this a significantly more attractive choice [20].
The majority of patients undergoing total arthroplasty are covered under Medicare [21]. Although it might be expected that Medicare patients would share the same preferences, the differences in patient cost structures between inpatient and outpatient procedures may play a role. CMS removed arthroplasty from the inpatient-only list in order to incentivize hospitals to place more Medicare covered patients into an outpatient care setting, thereby lowering costs [11]. This is complicated by the fact that outpatient procedures are billed through Medicare part B while inpatient services are covered by Medicare part A. Unlike most private insurances and Medicare part A, Medicare part B has a 20% coinsurance rate with no cap on out-of-pocket expenses [22]. While outpatient costs may be lower as a whole, patients under Medicare part B will be responsible for 20% of the Medicare-approved amount for each service rendered [11, 23]. With increases in health advocacy and education, it is plausible that Medicare patients therefore would prefer inpatient treatment as a means to lower out-of-pocket expenses.
From a hospital perspective, inpatient procedures allow a higher rate of reimbursement at 55% compared to only 47% for the same procedure in an outpatient setting [24]. With overall reimbursement rates for all orthopaedic surgical procedures in a steady decline (1.5% per year), the potentially beneficial variations in insurance reimbursement structures may factor into hospital decision-making [11, 23, 25]. It is well-known that private insurance reimburses more for the same procedure compared to Medicare and Medicaid regardless of the care setting; however the magnitude of this difference across care settings is noteworthy [26]. A 2018 study conducted by RAND considering over $33 billion in spending from over 3000 hospitals in every state in the country concluded that, on average, private insurance reimbursed 247% of what Medicare reimbursed for the same procedure [27]. Most of this difference stemmed from the outpatient setting, where private insurance paid 267% more than Medicare when compared to only 231% more in an inpatient setting for the same service rendered [27, 28]. A systematic review of 19 studies in 2020 demonstrated an even larger discrepancy; private insurance on average paid 264% and 189% more than Medicare for the same outpatient and inpatient services respectively [26, 28]. Profit margins also differ across care settings. A 2015 report by a healthcare financial management association discovered that margins on commercial insurance reimbursement were markedly higher for outpatient care settings [15]. Medicare reimbursement margins, on the other hand, were found to be higher for inpatient services [4, 15]. With overall reimbursement rates dropping, it may make sense for hospitals to reap greater profit margins with reduced resource utilization by placing privately insured patients in an outpatient care setting. In the same vein, profits can theoretically be maximized by placing Medicare patients in an inpatient care setting. Patient preferences held by those insured by private insurance and Medicare align well with hospital margins and reimbursement rates, a finding that warrants further research and potential policy refinement.
Limitations and Future Directions
The primary limitations associated with this study stem from the sample size, the singular location utilized, and the fact that CMS only recently removed many of the procedures considered from its inpatient only list (IPO). While the sample consisted of over 6,800 cases, most of these cases (60.3%) were performed in an inpatient care setting. Additionally, most of the cases studied were hip and knee arthroplasties. The correlations and conclusions drawn apply to inpatient knee and hip arthroplasty, while conclusions drawn regarding ankle and shoulder arthroplasty must be further confirmed by future works. Since ankle and shoulder arthroplasty were removed from the CMS IPO list less than two years ago, conducting a study with a similar design in the future could yield more reliable data regarding the results of this study. Certain insurance statuses, particularly Medicaid and Medicaid managed were poorly represented in the sample. Conclusions implicating these statuses must be further verified. Lastly, for analysis, return to hospital had to be used instead of readmissions to ensure that outpatient surgical candidates could also be considered—while a rather vague statistic, it was not heavily implicated in the analysis. Future work should aim to gather additional variables—information regarding socioeconomic status, readmissions/returns in other local hospitals, patient satisfaction, and hospital length of stay would strengthen the conclusions of the study.