Medicare Spends 14% Less Than Commercial Payors on Total Knee Replacements

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The average cost for a 180-day episode of total knee replacement for Medicare patients is $22,611, while that figure is $25,872 for patients with commercial health insurance — a 14 percent difference, according to a report from the Health Care Incentives Improvement Institute.

Researchers at HCI3 looked at 19,127 Medicare beneficiaries and 31,949 commercially insured patients who underwent a total knee replacement procedure between Jan. 1, 2008, and June 30, 2010. Medicare spent 14 percent less on the total average cost of the total knee replacement episode, while variation also existed in the average hospital index stay costs and average professional services costs.


Overall, the authors of the study concluded that bundling services into a single episode could help reduce the variation of payment for total knee replacements in addition to reducing the variation in hospital stays, professional services, post-acute care and readmissions.

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