TCT: Net margins for AVR vary as much as $33K across regions

MIAMI—An analysis of procedure volumes with aortic valve replacement (AVR) for various regions revealed that Medicare policies dictating volume requirements may lead to variability in care and costs. The study, which found tremendous variability in costs and net margins across five U.S. medical centers, was presented as a scientific poster Oct. 23 at the Transcatheter Cardiovascular Therapeutics (TCT) conference.

As Medicare coverage policies around utilization of new aortic valve technologies begin to include procedure utilization requirements for hospital certification, it is increasingly important to know more about the geographic variation of current aortic valve replacement (AVR) procedures, according to the study authors. As a result, this study sought to describe the variation in patterns of care and costs associated with AVR procedures in the hospital inpatient setting from a Medicare perspective.

For the study, Laura Okpala, BA, and her colleagues from the healthcare consulting firm Neocure, identified Medicare inpatient hospitalizations for AVR procedures using ICD-9 procedure codes found in the Medicare Provider Analysis and Review (MedPAR) 2010 database. They summarized hospital volumes, charges, costs and reimbursements by hospital, hospital referral region (HRR) and Medicare region.

The researchers found a total of 48,449 inpatient AVR procedures completed across 1,147 Medicare participating hospitals in 2010. Total inpatient AVR procedure costs were $2.1 billion, with Medicare reimbursement totaling almost $2.4 billion.

Per procedure, the average hospital net Medicare margin was 10.3 percent or $5,927. The top five HRRs with the highest volume of AVR procedures were New York City (Manhattan), Los Angeles, Cleveland, Boston and Philadelphia.

In Cleveland, the Cleveland Clinic had Medicare AVR procedure volume of 928, with the average AVR hospital costs of $38,742 and an average AVR hospital reimbursement of $51,093, resulting in an average AVR hospital Medicare net margin of $12,351 (24.2 percent).

In New York City, the New York-Presbyterian Hospital had Medicare AVR procedure volume of 648, with the average AVR hospital costs of $51,437 and an average AVR hospital reimbursement of $73,242, resulting in an average AVR hospital Medicare net margin of $21,986 (29.9 percent).

In Rochester, Minn., the Mayo Clinic’s St. Mary’s Hospital had Medicare AVR procedure volume of 503, with the average AVR hospital costs of $40,494 and an average AVR hospital reimbursement of $50,629, resulting in an average AVR hospital Medicare net margin of $10,135 (20 percent).

In Boston, Brigham and Women’s Hospital had Medicare AVR procedure volume of 364, with the average AVR hospital costs of $55,486 and an average AVR hospital reimbursement of $62,379, resulting in an average AVR hospital Medicare net margin of $6,893 (11.1 percent).

Importantly, in Roslyn, N.Y., the reimbursement did not cover the costs involved with the procedure. St. Francis Hospital had Medicare AVR procedure volume of 413, with the average AVR hospital costs of $61,885 and an average AVR hospital reimbursement of $50,735, resulting in a negative average AVR hospital Medicare net margin of $11,150 (-22 percent).

Also, they reported that Medicare Region 4 (Atlanta) and Region 5 (Chicago) represented the highest regional volume of AVR procedures capturing more 36 percent of market share with Region 8 (Denver) having the lowest AVR procedure volume. Similarly, 36 percent of AVR procedures were performed at 9.4 percent of hospitals.

Based on their findings, Okpala and her colleagues concluded, “AVR procedures are seemingly concentrated in certain parts of the country and at certain hospitals. As Medicare sets volume requirements to allow hospitals to perform certain new AVR procedures, the implications of this variation warrant further analysis.”