A Wrinkle in the COVID-19 Financial Recovery

2020 has not been kind to orthopedic surgeons.

Within the year’s first 90 days, a novel coronavirus chased them from the operating room as fear, widespread lockdowns, and personal protection equipment shortages prompted hospitals and governments to suspend elective surgeries. Impact data is still lacking at this point but a British Journal of Surgery study projected the global pandemic would postpone or outright cancel 6.3 million orthopedic procedures.

Despite its transience, however, surgeons have yet to fully recover from the shutdown: Although seven of 10 orthopedic specialists performed elective surgeries in June—up from 0 percent in March and 2 percent in April—procedure volume was down 43 percent from last year, according to Canaccord Genuity survey results.

And few surgeons expect to regain that volume this year. The investment bank’s monthly polling shows steadily waning optimism throughout the spring about caseload normalization, with significantly fewer physicians in June than in April expecting pre-virus procedure volumes to return by Q3 (8 percent vs. 32 percent). The same pattern emerged for a fourth-quarter normalization target (46 percent in April vs. 18 percent in June), dashing any hopes doctors had—howbeit small—for salvaging earnings this year.

Indeed, confidence is low for a return to normal anytime soon. Most orthopedic surgeons surveyed by Canaccord Genuity expect their practices to be adversely affected by rising COVID-19 cases through 2020’s end, and some even predict another round of lockdowns and work stoppages around the holidays. In fact, the number of surgeons expecting procedural volume normalization in the second half of 2021 doubled between May and June (from 14 percent to 28 percent).

“The virus is not one-size fits all; some areas are much worse than others, and I don’t think the return of elective procedures will be one-size-fits-all,” Teresa McRoberts, lead healthcare portfolio manager for Alger, told Bloomberg Law this past spring. “I don’t think things are going back to normal this year. It’ll get better hopefully, but normal is a ways away.”

“Normal” is bound to look quite different, though, when it finally does arrive. Streamlined services, virtual trainings, sales rep-less surgical procedures, and a reduced workforce are all predicted for the post-COVID-19 era, according to industry experts. And while a procedural rebound is virtually inevitable, the surge in volume may not necessarily translate into higher earnings for surgeons, thanks to a proposed policy change for Medicare payments.

In early August, the Centers for Medicare & Medicaid Services (CMS) drafted a new rule that would reduce orthopedic surgical services reimbursement by roughly 5 percent beginning Jan. 1, 2021. The CMS proposal also would reduce the work relative value units (RVU) for hip and knee arthroplasty by an additional 5.4 percent.

The change arose from an American Medical Association committee recommendation to reduce by slightly more than one the RVU used to measure total joint arthroplasty value. Not surprisingly, the suggestion spawned immediate industry criticism for its devaluing of orthopedic care and potential financial impact on surgeons already struggling to financially recover from COVID-19.

In a prepared statement, the American Association of Hip and Knee Surgeons (AAHKS) said the rule change sends mixed messages to physicians, as the federal government is both attempting to ease regulatory burdens and deliver health provider relief but undermining its efforts by cutting doctors’ payments. 

“If these Medicare cuts are finalized, it sends a strong signal: when providers in the vanguard of value-based care begin to achieve some efficiencies in the delivery of care, CMS will use those positive developments as a justification to cut Medicare fee-for-service reimbursement regardless of the extra work that goes into achieving these outcomes,” AAHKS president C. Lowry Barnes, M.D., stated.  

AAHKS attributes the idea for the proposed rule change to a commercial insurance company that reportedly exploited the CMS public nomination process for potentially misvalued codes, possibly to drive down reimbursement to contracted physicians who are paid a percentage of Medicare rates. The evaluation of these codes noted a reduction in physicians’ post-operative time due to emerging efficiencies under value-based care arrangements, but did not recognize corresponding increases in physicians’ pre-operative time which has successfully improved clinical outcomes for hip and knee replacement patients.

The American Academy of Orthopaedic Surgeons expressed concerns that CMS’ s proposal would impact older Americans’ access to life-improving surgery.

“The AAOS is extremely disappointed in CMS’ decision to disregard our petitioning, many discussions and data presented against these cuts,” an Aug. 5 statement read. “Devaluing the time and effort that orthopaedic surgeons spend prioritizing value-based care communicates a larger plan by the agency to gradually reduce the value of these procedures. Not to mention the fact our surgeons have the highest participation rates across medical subspecialties in alternative payment models, where they work to optimize care and improve patient outcomes all while reducing costs.

“Worsening the financial strain on these practices, at a time when they have been disproportionately affected by COVID-19 federal guidelines to delay care, will have a severe and lasting impact on American seniors’ access to these life-improving surgeries. The AAOS urges CMS to reconsider the significant preoperative work that is required to make value-based care both cost-effective and high-quality, and to refrain from finalizing both of these punitive cuts on the value of orthopaedic care.”