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To evaluate the effect of the Affordable Care Act (ACA) on the payer distribution and reimbursement rate for hand surgery at our institution.
We reviewed records of 4,257 patients who underwent hand surgery at our institution between January 2008 and June 2016; 2,601 patients underwent surgery before the implementation of the ACA, and 1,656 patients after. Type of procedure, insurance status, amount of money billed, and amount collected were recorded.
After the implementation of the ACA, we performed fewer metacarpal fracture repairs, distal radius fracture repairs, and abscess incision and drainage procedures. We performed more endoscopic carpal tunnel releases. The proportion of uninsured patients decreased significantly (15% to 6.4%), and the proportion of patients on Medicare (15.4% to 20.3%) and Medicaid (9.5% to 17.8%) increased significantly. The overall reimbursement rate did not change significantly (32.3% to 30.3%) between the 2 time periods.
After the implementation of the ACA, we observed a significant reduction in the number of uninsured patients and an increase in Medicaid and Medicare patients. However, this led to no significant change in reimbursement rates.
The uninsured status of a large proportion of patients not only had a negative impact on access to hand surgery, but also placed a financial burden on some medical centers that provided free care to uninsured individuals, because in certain cases, providing care to uninsured individuals can result in a financial loss to the medical center.
Therefore, measures to lower the proportion of patients who are uninsured would be expected to not only improve patient access to subspecialty care, but also to lessen the financial burden on “safety net” medical centers. Indeed, in Massachusetts, the health care reform of 2006 resulted in a significant decrease in the proportion of patients who were uninsured, positively affecting access to hand surgery.
The Affordable Care Act (ACA), implemented on January 1, 2014, had 3 main goals: to make health insurance mandatory and more affordable, to decrease the number of uninsured individuals, and to decrease health care costs.
The ACA included a health insurance mandate that imposed penalties on individuals who did not purchase health insurance. It also led to the expansion of Medicaid in several states to individuals above the federal poverty level.
A previous study evaluated the effect of the ACA on insurance status and reimbursement rate in maxillofacial trauma surgery, and found that as the proportion of uninsured patients decreased, the proportion of patients on Medicaid increased, and the overall reimbursement rate increased.
Our goal, in this study, was to evaluate the effect of the ACA on the payer distribution and reimbursement rate for hand surgery at our institution. Our hypothesis was that the ACA led to a decreased proportion of uninsured patients, an increased proportion of patients on Medicaid, and improved reimbursement rates in hand surgery.
After approval by our institutional review board, all patients who underwent hand surgery at our institution over an 8.5-year period (January 2008 to June 2016) were reviewed. This encompassed 6 years before the implementation of the ACA, and 2.5 years after. The Current Procedural Terminology codes included in the study were chosen to encompass a broad range of hand procedures commonly performed at our institution, and included the following: first carpometacarpal joint arthroplasty (25447); metacarpal fracture repair (26605, 26607, 26608, 26615); distal radius fracture repair (25609, 25608, 25607); endoscopic carpal tunnel release (29848); and incision and drainage of upper extremity abscess (25028, 26010, 26011). Insurance status included uninsured, private insurance (all belonging to the ACA exchange), Medicare, Medicaid, workers’ compensation, and others, such as Tricare (for active military personnel) and Veterans Administration.
For each patient, insurance status at the time of surgery, amount (in US dollars) billed by the physician group, and amount collected by the physician group were recorded. Physician reimbursement rate was defined as amount collected divided by amount charged. Patients treated before the ACA were compared with patients treated after the ACA using the t test and chi-squared analysis, with P < .05 representing statistical significance.
A total of 4,257 patients were included in the study. Of them, 2,601 patients underwent surgery before the implementation of the ACA (433.5 patients per year), and 1,656 patients after (662.4 patients per year). Payer distribution and reimbursement before and after the implementation of the ACA are shown in Table 1.
Table 1Characteristics of the Patients Before and After the Implementation of the ACA
Metacarpal fracture repair
Distal radius fracture repair
Endoscopic carpal tunnel release
ACA, Affordable Care Act; CMC, carpometacarpal; I&D, incision and drainage.
After the implementation of the ACA, we performed fewer metacarpal fracture repairs, distal radius fracture repairs, and abscess incision and drainage procedures. We performed more endoscopic carpal tunnel releases. The proportion of uninsured patients decreased significantly (15% to 6.4%, P < .05), and the proportion of patients on Medicare (15.4% to 20.3%, P < .05) and Medicaid (9.5% to 17.8%, P < .05) increased significantly (Table 1, Fig. 1). The overall reimbursement rate did not change significantly (32.3% to 30.3%, P > .05) between the 2 time periods.
Figure 1 shows the payer distribution for each procedure before and after the ACA. For 2 of the 5 procedures (distal radius fracture repair and endoscopic carpal tunnel release), there was a significant decrease in the proportion of patients who were uninsured. For 4 of the 5 procedures (all procedures except incision and drainage abscess), there was a significant increase in the proportion of patients who were on Medicaid.
When analyzing the data by payer, the highest reimbursement rate was provided by workers’ compensation (57.1%), followed by private insurance (40.9%), Medicare (24.8%), Medicaid (21.9%), and uninsured patients (0%) (no payment was received from any uninsured patients). Figure 2 shows the reimbursement by payer before and after the ACA. There was a significant decrease in reimbursement by private insurance (43% to 38%, P < .05) and Medicare (27% to 22%, P < .05), and a significant increase in reimbursement by Medicaid (19% to 24%, P < .05). When analyzing only uninsured and Medicaid patients, the reimbursement rate increased from 7.1% to 17.3% (P ≤ 0.05), where 7.1% represents the reimbursement rate when uninsured and Medicaid patients are combined into one group before the ACA, and 17.3% after the ACA.
When analyzing the data by procedure, the highest reimbursement rate occurred with carpometacarpal arthroplasty (35.1%), followed by distal radius fracture repair (34.2%), endoscopic carpal tunnel release (30.5%), metacarpal fracture repair (30%), and incision and drainage (16.7%). Figure 3 shows the reimbursement by procedure before and after the ACA. There was a significant decrease in reimbursement for carpometacarpal arthroplasty (38% to 32%, P < .05), metacarpal fracture repair (33% to 25%, P < .05), and endoscopic carpal tunnel release (32% to 30%, P < .05).
Because there were changes in the procedure distribution between the 2 time periods, we performed additional analysis controlling for this. If the procedure distribution had remained the same after the ACA as it had been before the ACA, the overall reimbursement rate would have been 30.0%, compared with 32.3% before the ACA (P > .05). This is the change in reimbursement rate corrected for the types of procedures performed between the 2 times periods.
Over 3 years after the implementation of the ACA, the debate regarding whether its effects on health care costs and insurance premiums have been advantageous to patients continues.
However, one of the major ways by which the ACA has been able to decrease the number of uninsured is by expanding Medicaid in 32 states, including ours. In our study, the proportion of patients who are uninsured decreased from 15% to 6.4% (absolute decrease of 8.6%). In parallel, there was an almost equal increase in the proportion of patients on Medicaid, from 9.5% to 17.8% (absolute increase of 8.3%). The acquisition of Medicaid has previously been shown in Oregon to allow patients to have improved preventive screening and decreased out-of-pocket medical expenses, compared with being uninsured.
when compared with patients with private insurance. A study across 8 states found that, even after the implementation of the ACA, the access of patients with Medicaid to carpal tunnel release was still poor, when compared with patients with Medicare and private insurance.
From a physician and academic hospital perspective, a decrease in the proportion of patients who are uninsured would be expected to improve reimbursement rates, because the overwhelming majority of uninsured patients are unable to pay for their care. However, in our study, we found no change in the overall reimbursement rate (32.3% before the ACA, 30.3% after the ACA, 30.0% after the ACA when adjusting for procedure distribution). This is contrary to our hypothesis. Several findings in our study may explain this: first, the uninsured were essentially replaced by Medicaid recipients, and Medicaid has the lowest reimbursement rate of any insurance payer (21.9%). Our findings regarding the ACA are different from the effects resulting from the Massachusetts health care reform: Earp et al
found that the decrease in uninsured was matched by an increase in privately insured patients in that state.
Secondly, the reimbursement rates by private insurance and Medicare unexpectedly decreased significantly after the implementation of the ACA, as shown in Figure 2. This decrease in reimbursement rate was broad, affecting 3 of the 5 procedures included in this study, as shown in Figure 3. The reasons behind this decrease are unknown, but this trend should be monitored over the next few years. We did find an increase in Medicaid reimbursement (from 19% to 24%), which is expected given that the ACA mandated a temporary increase in Medicaid reimbursement.
This means that receipts from patients who had Medicaid increased, whereas receipts from patients who had private insurance decreased. The end result was a small, nonsignificant decrease in overall reimbursement rates from 32.3% to 30%.
Hospitals that care for large numbers of patients on Medicaid incur significant financial losses.
To offset these losses, the government has historically compensated these hospitals with “Disproportionate Share” payments. However, the ACA stipulates that Disproportionate Share payments will be cut significantly by the year 2020.
As these payments decrease, safety net hospitals may incur greater financial losses, and this, in turn, may negatively impact Medicaid patients’ access to care. Hand surgeons can play an active role in patient advocacy to ensure continued access to quality care.
The proportion of patients undergoing fracture repairs and abscess drainage decreased after the ACA, whereas the proportion of patients undergoing endoscopic carpal tunnel release increased. This is likely due to 2 factors: before the ACA, our institution took care of many patients with traumatic injuries and abscesses who were uninsured and could therefore not go to their local community hospitals. After the ACA, many of those patients may now have insurance, and would be able to go to community hospitals closer to their home for their injuries. In addition, it is likely that before the ACA, many patients with carpal tunnel syndrome may not have been able to be treated. Once those patients acquired insurance after the ACA, they were likely able to come to our institution for treatment.
Our study has several limitations. We did not evaluate the clinical outcomes of the patients included in the study. Numerous previous studies have shown that patients with any form of insurance have better outcomes than uninsured patients, but that patients with Medicaid have worse outcomes than patients with private insurance. Our study also examines the financial effects of the ACA on physician reimbursements, but not hospital reimbursements. Therefore, no conclusions about hospital reimbursement can be made. We are also unable to determine the causes for decreased reimbursement rates by private insurance and Medicare. The number of patients treated at our institution increased by approximately 50% over the study period, as a result of an increase in the number of procedures per surgeon (because the number of surgeons before and after the ACA remained constant at 5). The strengths of our study include a large number of patients, a broad range of hand surgery procedures, and an 8.5-year timeframe.
We found that, in hand surgery, the proportion of patients who are uninsured decreased, and the proportion of patients covered by Medicaid increased after the implementation of the ACA. However, physician reimbursements did not change, mainly due to unexpected decreases in reimbursement from private insurance and Medicare.
Financial impact of emergency hand trauma on the health care system.