Incremental Reimbursement Undervalues Cost of Complex Cataract Surgery

Shahzad I. Mian, MD

Courtesy of University of Michigan

Incremental reimbursement for complex cataract surgery may undervalue the resource costs required for the procedure, according to an economic analysis published in JAMA Ophthalmology.¹

Using time-driven activity-based costing, investigators led by ​​Shahzad I. Mian, MD, Kellogg Eye Center, University of Michigan, observed that complex cataract surgery was more costly than simple cataract surgery, with the difference exceeding Medicare reimbursement rates for complex cataract surgery.

“These findings may affect ophthalmologist practice patterns and access to care for certain patients and may ultimately justify increasing the reimbursement rates for complex cataract surgery,” wrote the investigative team.

An estimated 3.7 million cataract surgeries were performed annually in the United States in 2020, making it one of the most performed surgeries across medicine. However, estimating costs in the current health care setting in the US can be challenging. Investigators in the current economic analysis applied time-driven activity-based costing to clarify the cost difference between these two types of cataract surgery and correlate the difference with incremental reimbursement.

Given the greater importance of cataract surgery, an accurate assessment of the differences in surgical costs between simple and cataract surgery may be important for both clinicians and patients, as well as insurance payers. Cataract surgeries performed at the Kellogg Eye Center between 2017 and 2021 were included in the analysis.

Investigators used process flow mapping to define the operative episode on the day of surgery and time estimates were obtained using an internal anesthesia record system at the academic health center. Financial estimates, including capacity cost calculation and reimbursement, were obtained using internal institution sources, as well as prior literature. The primary endpoint was the difference in day-of-surgery costs and margin differential between simple and complex cataract surgery, with secondary endpoints consisting of the total calculated costs and the component costs.

The analysis included a total of 16,092 cataract surgeries, including 13,904 simple and 2,188 complex surgeries. Data showed the mean cost of total materials for complex cataract surgery ($570.36) was greater than the cost for simple cataract surgery ($412.10) with a mean difference of $158.26 (95% confidence interval [CI], $117,00 - $199.60; P <.001).

The mean total time-based costs for simple and complex cataract surgery were $1486.24 and $2205.83, respectively. This led to a statistically significant net difference of $719.59 (95% CI, $684.09 - $755.09; P <.001). When including both the supply and material costs and time-based costs, data showed the mean difference in day-of-surgery costs was $877.85.

Complex cataract surgery is reimbursed an incremental $231.01 by Medicare on average, according to the data. The net earnings differential between simple and complex cataract surgery, when considering the increased day-of surgery costs, was –$646.84 for complex cataract surgery.

In addition, after accounting for increased supply and material costs ($158.26), the remaining incremental reimbursement is $72.75. Considering the per-minute operative costs of the surgeon, anesthesiologist, and operating room ($43.96/min), the incremental payment compensates for less than 2 minutes of operating time.

“These findings suggest that incremental day-of surgery costs of complex cataract surgery exceed the incremental reimbursement and therefore suggest complex cataract surgery is undervalued by current Medicare reimbursement rates,” investigators wrote.

They added that further research is necessary to validate the findings across other institutions and practice structures, noting the potential for differences between hospital-based outpatient departments and ambulatory surgery centers.

References

1. Portney DS, Berkowitz ST, Garner DC, et al. Comparison of Incremental Costs and Medicare Reimbursement for Simple vs Complex Cataract Surgery Using Time-Driven Activity-Based Costing. JAMA Ophthalmol. Published online March 09, 2023. doi:10.1001/jamaophthalmol.2023.0091