Trends of Medicare Reimbursement Rates for Common Plastic Surgery Procedures

Charalampos Siotos, M.D.; Michael A. Cheah, M.D.; George Damoulakis, M.S.; Jonathan Kelly, M.B.B.S., B.Ch.D.; Kalliopi Siotou, D.D.S.; Loren S. Schechter, M.D.; Deana S. Shenaq, M.D.; Gordon H. Derman, M.D.; Amir H. Dorafshar, M.D.

Disclosures

Plast Reconstr Surg. 2021;147(5):1220-1225. 

In This Article

Abstract and Introduction

Abstract

Background: Knowledge of Medicare reimbursement is essential for plastic surgeons providing care to Medicare beneficiaries. The authors sought to evaluate changes in Medicare reimbursement for common plastic surgery procedures from 2010 to 2020.

Methods: The authors assessed the Physician Fee Schedule of the Centers for Medicare and Medicaid Services website. Rates of work-, facility-, or malpractice-related relative value units and total monetary units for 26 common plastic surgery procedures between 2010 and 2020 were evaluated. Descriptive statistics were used to calculate relative differences and to compare observed changes over time with the rate of inflation.

Results: For the selected procedures, the authors found an average relative difference in terms of monetary units of an increase by 2.02 percent. However, after adjusting for inflation, the average relative difference was a decrease by 14.31 percent. The authors' analysis indicates that, on average, there was a 1.55 percent decrease in physician relative value units between 2010 and 2020.

Conclusions: Medicare reimbursement rates have changed significantly over the past decade. However, these changes did not keep pace with the rate of inflation. Plastic surgeons should be aware of these trends and advocate for more fair reimbursement rates.

Introduction

Established in 1966 under the Social Security Administration, Medicare is the primary health insurance for many Americans older than 65 years.[1] In 2018, Medicare represented more than 61.5 million individuals, and its budget was approximately $750 billion.[2] Medicare reimburses physicians based on a national fee schedule.[1] To establish this fee schedule, each medical procedure or service is represented by a CPT code and linked to an International Classification of Diseases, Tenth Revision, diagnosis. This represents the relative resources required to provide a particular service and forms the basis for physician and hospital reimbursement.[3] These relative value units are updated annually by the Centers for Medicare and Medicaid Services and effectively set the standard by which hospitals and/or physicians are reimbursed. Relative value units consider expenses related to physician work, practice expenses, and malpractice insurance. The final fee schedule for each procedure/service is then determined by applying the conversion factor to the relative value units. The conversion factor is a number selected by Centers for Medicare and Medicaid Services every year based on complex formulas that take into consideration the Medicare charges the year prior, the number of Medicare enrollees, the overall status of the U.S. economy, and any expected regulations that may affect Medicare services. The goal of the conversion factor is to limit potential increases in the Medicare budget higher than 20 percent from the last year's budget.[4]

Growth in the aging population, steadily rising health care costs, and increased demand for health care services combined with fluctuations in the national political and financial landscape lead to financial unpredictability in the health care system. In addition, and in the past decade alone, significant regulations that affect the Medicare budget have been established, including the Medicare Access and CHIP Reauthorization Act of 2015,[5] and the Center for Medicare and Medicaid Innovation[6] (under the Affordable Care Act of 2010).[7] An appreciation of the longitudinal changes in Medicare reimbursement will allow physicians and their practices to adapt to the ever-evolving health care landscape. Although data are available in general surgery,[8] orthopedic surgery,[9] and neurosurgery,[10] these data are not readily available in plastic surgery. This study seeks to evaluate changes in Medicare reimbursement for common plastic surgery procedures between 2010 and 2020. This study conforms to the Declaration of Helsinki ethical principles for medical research. The study is based on deidentified information and is exempt from institutional review board approval.

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