Cost offsets to medicare attributable to receipt of hip, knee, and shoulder arthroplasty.

OBJECTIVE: To estimate trends in numbers of and Medicare payments for hip, knee, and shoulder arthroplasties for beneficiaries with osteoarthritis (OA) and potential savings to Medicare from arthroplasty during followup.

METHODS: The analysis was based on longitudinal 5% Medicare enrollment and claims data for 1992-2010. The analysis of changes in Medicare payments attributable to total arthroplasty receipt used propensity score matching to obtain beneficiary control groups matched on demographic characteristics, general health, joint pain, and Medicare payments by major condition in the year preceding the index arthroplasty. An average treatment effect on the treated (ATT) overall and for each major condition was calculated for payments for care 7-36 months following the index arthroplasty procedure.

RESULTS: Growth in incident OA diagnoses of the hip, knee, and shoulder was substantially higher than growth in real Medicare spending on hip, knee, and shoulder arthroplasties. ATTs showed a mean saving to Medicare of $471/beneficiary/procedure for hip, no difference for knee, and a payment increase of $1,062 for shoulder arthroplasty during followup. For hip arthroplasty, the largest savings was for the circulatory system. For shoulder arthroplasty, increased payments during followup reflected increased payments for musculoskeletal care, especially for hip and knee arthroplasty. Overall, payment differences during followup by major condition were small.

CONCLUSIONS: Provision of hip but not knee and shoulder arthroplasty generated savings to Medicare during followup, but even for hip arthroplasty, the cost offset during followup was small relative to the program cost for the procedure itself.