Lower Revenue Surplus in Medicare Advantage vs Private Commercial Insurance for Total Joint Arthroplasty: An Analysis of a Single Payor Source at One Institution

Since the Affordable Care Act was passed in 2010, reductions in Medicare reimbursement have led to larger discrepancies between the relative cost of Medicare patients and privately insured patients. The purpose of this study was to compare reimbursement between Medicare Advantage and other insurance plans in patients undergoing total hip (THA) and total knee (TKA) arthroplasty. Methods Patients of a single commercial payor source who underwent primary unilateral TKA or THA at one institution between the dates of January 4 and June 30, 2021 were included (n=833). Variables included insurance type, medical comorbidities, total costs, and surplus amounts. The primary outcome measure was revenue surplus between Medicare Advantage and Private Commercial plans. T-tests, Analyses of Variance (ANOVA), and Chi-Squared tests were used for analysis. A THA represented 47% of cases and a TKA 53%. Of these patients, 31.5% had Medicare Advantage and 68.5% had Private Commercial insurance. Medicare Advantage patients were older and had higher medical comorbidity risk for both TKA and THA. Results Significant differences were observed in medical costs between Medicare Advantage and Private Commercial insurance for THA ($17,148 vs $31,260, P<0.001) ***cap and italicize P values throughout ****and TKA ($16,723 vs $33,593, P<0.001). Additionally, differences were seen in surplus amounts between Medicare Advantage and Private Commercial insurance for THA ($3,504 vs $7,128, P<0.001) and TKA ($5,581 vs $10,477, P<0.001). Deficits were higher in Private Commercial patients undergoing TKA (15.2 vs 6%, P=0.001). Discussion The lower average surplus associated with Medicare Advantage plans may lead to financial strain on provider groups who care for these patients and face additional overhead costs.