Fall 2006

UCSF Study Leads to Medicare Coding Changes

Total joint replacement (TJR) is one of the most commonly performed procedures in orthopaedics, with high rates of clinical success in terms of pain reduction and improved function and quality of life. However, the complexity of TJR surgeries, the number of such surgeries and the cost of implants have steadily increased over the past decade.

UCSF orthopaedic surgeon Kevin Bozic, M.D., M.B.A., and his colleagues conducted research to determine whether the way these procedures are coded and reimbursed accurately reflects the cost and complexity of the surgeries. Their research won a national award (see story below) and convinced federal authorities to change the way TJR surgeries are classified.

Major Policy Issues

Bozic's studies address two major health policy issues related to TJR. He investigated whether limitations in existing ICD-9 diagnosis and procedure codes related to TJR restrict the ability to use administrative claims data from large, public databases to evaluate patient outcomes and implant survivorship. Bozic also looked at whether the lack of distinction in reimbursement between primary and revision TJR procedures under DRG 209 — regardless of patient characteristics, the complexity of the procedure or the level of resource utilization — has created strong financial disincentives for hospitals and surgeons to perform revision TJR procedures.

"Current ICD-9-CM diagnosis and procedure codes and Medicare diagnosis-related group (DRG) codes related to primary and revision TJR are too broad to capture relevant differences in patient characteristics, procedure characteristics and resource utilization between primary and revision TJR procedures," Bozic found. "Right now, there are simply two codes for type of surgery: one for the initial surgery and one for any needed revision."

As a result, large public data sets such as the MedPAR database, which rely on administrative claims data, are of limited value in evaluating TJR patient outcomes and detecting premature failures associated with specific TJR implants and techniques. Having more detailed, accurate and descriptive ICD-9-CM diagnosis and procedure codes would enhance public health efforts such as the American Joint Replacement Registry (AJRR) project, which are intended to improve the overall quality of care and reduce revision rates in TJR.

The study points out that the most commonly used ICD-9 diagnosis code associated with failed TJR is 996.4 — mechanical complication of an internal orthopaedic device — regardless of the type or mechanism of failure. Furthermore, ICD-9 procedure codes categorize all revision TJR procedures simply as "revision of hip replacement" (81.53) or "revision of knee replacement" (81.55), regardless of the type of revision surgery or the complexity of the procedure. "The same codes would be used to describe anything from a loose screw to a complete redo of the joint replacement," Bozic says.

Bozic's study also addresses how discrepancies between resource utilization and reimbursement for primary and revision TJR can affect patient access to care. "Given that hospital reimbursement for all primary and revision TJR procedures is the same under DRG 209, tertiary care referral hospitals that perform a high proportion of revision TJR procedures often incur substantial financial losses related to these procedures," Bozic says. "The discrepancy between resource utilization and reimbursement for revision TJR procedures has created perverse financial disincentives that have deterred some hospitals from performing these procedures."

Bozic and his colleagues found that, on average, a hospital will pay 26 percent more than it is reimbursed for a revision TJR procedure. "Ultimately, it becomes an access-to-care issue," he says.

Bozic realized that the findings could be used to help define additional, more descriptive ICD-9-CM diagnosis and procedure codes related to revision TJR procedures, which would result in more accurate and useful administrative claims data.

In October 2004, Bozic and his colleagues were invited to present the results of their work to the ICD-9-CM Care & Coordination Committee at the Center for Medicare and Medicaid Services (CMS) headquarters in Baltimore, Md. Based on their findings, the group proposed a series of additional, more descriptive ICD-9-CM diagnosis and procedure codes related to revision TJR.

Changing DRGs

The research group was invited back to CMS in February 2005 to present their findings to the DRG Advisory Committee and to make recommendations regarding hospital reimbursement for TJR procedures. "Based on our data showing significant differences in resource utilization between primary and revision TJR procedures, we recommended that CMS create a separate DRG for revision TJR to recognize the higher resource intensity associated with these procedures," wrote Bozic.

In April 2005, the committee officially accepted these recommendations. CMS announced in the Federal Register that DRG 209 would be split into two separate DRGs: DRG 544 — primary hip and knee replacement — and DRG 545 — revision hip and knee replacement. In explaining its decision, CMS credited the importance of the input and the data presented by Bozic's research team. The new codes went into effect in October 2005.

Kevin Bozic can be contacted at (415) 353-2663.

Bozic, Ries Win Research Award

Kevin J. Bozic, M.D., M.B.A., principal investigator, Michael D. Ries, M.D., and their colleagues were presented the 2006 Clinical Research Award by the Orthopaedic Research and Education Foundation (OREF) for their research paper on the economics of total joint replacement.

The winning manuscript, "Using Clinical and Economic Outcome Data to Influence Health Policy in the United States: The Case of Total Joint Replacement," was written by Bozic; Michael D. Ries, M.D.; Jonathan Showstack, Ph.D.; James Naessens, M.P.H.; Harry E. Rubash, M.D.; and Daniel J. Berry, M.D.

The OREF Clinical Research Award is administered by the American Academy of Orthopaedic Surgeons. It recognizes outstanding clinical research related to musculoskeletal disease or injury and carries a $20,000 prize.

Related Information

News Releases

Orthopaedic Surgery Chair Named
Thomas Parker Vail, M.D., has been named the chair of Orthopaedic Surgery in the UCSF School of Medicine. Vail, director of adult reconstructive surgery at Duke University Medical Center, will assume his new post in January 2007.

UCSF Cited for Hospital Quality
UCSF Medical Center was one of eight California acute care hospitals among the top 50 U.S. hospitals named by the Washington, D.C.-based Leapfrog Group.