Comparison of Incremental Costs and Medicare Reimbursement for Intra- Versus Extra-Articular Distal Radius Fracture Surgery Using Time-Driven Activity-Based Costing.

PURPOSE: Balancing surgical costs of care with reimbursements is important for the solvency of surgical practices and cost containment in the health care system. This study aimed to compare the day of surgery costs and incremental Medicare reimbursement for open reduction and internal fixation (ORIF) of intra-articular and extra-articular distal radius fractures (DRFs).

METHODS

Using time data and supply costs at a single, large academic health center, we used a time-driven activity-based costing analysis to calculate the total day of surgery costs for ORIF of DRFs for the three current procedural terminology (CPT) codes 25607, 25608, and 25609, representing the spectrum of extra-articular to comminuted intra-articular fractures. We included patients with age >65 years with an isolated closed DRF. We compared the total costs of care during surgery with the incremental Medicare reimbursements for DRF ORIF.

RESULTS

We identified 193 DRFs, including 46 extra-articular DRFs (CPT 25607), 57 two-part intra-articular DRFs (CPT 25608), and 90 intra-articular DRFs ≥ 3 fragments (CPT 25609). Significant differences in the total day of surgery costs were observed between comminuted intra-articular DRF versus two-part intra-articular and extra-articular DRFs. Specifically, CPT 25609 cost $2147.63 more than CPT 25607 but was reimbursed an incremental average of $406.65 by Medicare, yielding a negative earnings difference of $1740.98. Additionally, CPT 25609 was more costly than CPT 25608 by a mean of $1620.54, yet was reimbursed an incremental average of $286.83. The net negative earnings difference was $1333.71. The largest contributions to the total day of surgery costs were the operating room and materials for all DRF surgeries.

CONCLUSIONS

The current time-driven activity-based costing analysis indicates that complex, comminuted intra-articular DRF ORIF is undervalued by Medicare.

CLINICAL RELEVANCE: The results may justify higher reimbursements for complex DRFs, although practicing surgeons should continue to lower the costs of care by efficiently performing ORIF and judiciously using implants.