Applying economic principles to outcomes analysis

Why Is Calculating the "True" Cost-to-Heal Wounds So Challenging?

Objective: The aim of the study was to illustrate the differences in the cost-to-heal wounds using two methods: (1) reimbursement-based costing and (2) activity-based costing (ABC). Approach: A small cohort (100 patients with multiple wounds of which 1 was a diabetic foot ulcer [DFU]) was randomly selected from the U.S. Wound Registry to be representative of all patients with DFUs in the registry. Unit costs, resource utilization, and total costs were estimated through both methods. For the ABC method, costs were calculated in ranges: low, mid, and high. Results: The mean cost to heal through the reimbursement-based costing method was US$20,618 compared with a range of US$18,627-US$35,185 for the ABC method. About 20% of DFUs that cost US$10,000-US$20,000 to heal with the reimbursement-based costing method shifted to much higher values based on the ABC method. The percentage of costs represented by inpatient procedures was much lower for the reimbursement method compared with the ABC method. Innovation and Conclusions: The results show that (1) the "true" cost-to-heal DFUs strongly depend on the method used to calculate the costs, and (2) the reimbursement-based costing method may not accurately reflect real costs. The concept of aggregating episodes of care to obtain a single value equating to cost to heal is likely to remain a challenging exercise for the foreseeable future. A better approach may be to provide a range of cost values that are dependent on specific methods, such as the ABC method.

Geographic and Age-Based Variations in Medicare Reimbursement Among ASSH Members

Background: The purpose of this study was to investigate how American Society for Surgery of the Hand (ASSH) members' Medicare reimbursement depends on their geographical location and number of years in practice. Methods: Demographic data for surgeons who were active members of the ASSH in 2012 were obtained using information publicly available through the US Centers for Medicare and Medicaid Services (CMS). "Hand-surgeons-per-capita" and average reimbursement per surgeon were calculated for each state. Regression analysis was performed to determine a relationship between (1) each state's average reimbursement versus the number of ASSH members in that state, (2) average reimbursement versus number of hand surgeons per capita, and (3) total reimbursement from Medicare versus number of years in practice. Analysis of variance (ANOVA) was used to detect a difference in reimbursement based on categorical range of years as an ASSH member. Results: A total of 1667 ASSH members satisfied inclusion in this study. Although there was significant variation among states' average reimbursement, reimbursement was not significantly correlated with the state's hand surgeons per capita or total number of hand surgeons in that given state. Correlation between years as an ASSH member and average reimbursement was significant but non-linear; the highest reimbursements were seen in surgeons who had been ASSH members from 8 to 20 years. Conclusions: Peak reimbursement from Medicare for ASSH members appears to be related to the time of surgeons' peak operative volume, rather than any age-based bias for or against treating Medicare beneficiaries. In addition, though geographic variation in reimbursement does exist, this does not appear to correlate with density or availability of hand surgeons.

Plastic surgery practice models and research aims under the Patient Protection and Affordable Care Act

As the health care landscape in the United States changes under the Affordable Care Act, providers are set to face numerous new challenges. Although concerns about practice sustainability with declining reimbursement have dominated the dialogue, there are more pressing changes to the health care funding mechanism as a whole that must be addressed. Plastic surgeons, involved in various practice models each with different relationships to hospitals, referring physicians, and payers, must understand these reimbursement changes to dictate adequate compensation in the future. In this article, the authors discuss bundle payments and accountable care organizations, and how plastic surgeons might best engage in these new system designs. In addition, the authors review the value of a focused and driven health-services research agenda in plastic surgery, and the importance of this research in supporting long-term financial stability for the specialty.