Economic Burden of Foot and Ankle Surgery in the US Medicare Population

Abstract

Background:

Musculoskeletal diseases affecting the foot and ankle are common and can result in debilitating pain and chronic disability. The purpose of this study was to estimate the economic burden associated with operative interventions targeting these afflictions in the Medicare population.

Methods:

Procedure incidence was determined using data from Medicare Part B National Summary Data Files (for 2000-2011). Health care and productivity costs were estimated for each year using an incidence-based cost model, using demographic information from 10 633 patient encounters at the University of Iowa Hospitals and Clinics over the period January 1, 2000, to December 31, 2010.

Results:

The estimated economic burden of foot and ankle surgery in the Medicare population was $11 billion in 2011, up 38.2% since 2000. Direct health care costs were responsible for only 11% of this total, while indirect productivity costs contributed the remainder. Procedures targeting the foot accounted for over two-thirds of total economic burden, or $7.6 billion. Treatments for fracture and dislocation contributed the most to overall economic burden (31.0% of total), followed by reconstructive procedures (30.7%) and amputations (13.3%).

Conclusion:

Even in an older population, considerable productivity losses are associated with foot and ankle surgery. An increasing share of the population older than 65 expects to be fit to work, making disability in older Americans more monetarily important. At the same time, trends in chronic disease mean that the incidence of foot and ankle problems is likely to increase in the Medicare population.

Level of Evidence:

Level III, economic analysis.

Keywords

Medicare economic burden economics health care costs disability ankle foot

Musculoskeletal diseases are among the most common, disabling, and costly conditions suffered by Americans today. Over 45% of adults self-reported a musculoskeletal problem in the 2008 National Health Interview Survey.²⁴ Yet while these diseases clearly cause pain and disability, they are very rarely fatal. Perhaps this explains why the National Institutes of Health currently devotes less than 2% of its budget to musculoskeletal research.¹⁶ The fact remains, however, that the total costs associated with treating musculoskeletal disease totaled $950 billion in 2006, 7.4% of US GDP that year, and aging demographics suggest this price tag will only increase in coming years.²⁴ These trends will place especially heavy burdens on the Medicare system, which provides health care to the vast majority of Americans over the age of 65.

Economic analyses are increasingly important in this environment, as they are able to provide a more complete picture of the financial burden that results from a patient’s decision to pursue surgery. Substantial work absenteeism and disability often follow musculoskeletal surgery. These indirect costs have been shown to surpass direct medical payments in several subsets of care, including hand and wrist injuries, osteoarthritis, and lower extremity amputations.^1,2,13 A few authors have attempted to establish the prevalence of foot and ankle disorders in various populations, but none have yet attempted a comprehensive analysis of economic burden.^{5,7,9,11,13,22} With this in mind, this study was devised as an exclusive investigation of the health care and productivity costs due to foot and ankle disease in the US Medicare population. A secondary aim of the study was to examine changes in economic burden since the turn of the century.

Methods

We devised an incidence-based economic burden model with inspiration from the large body of literature on the economic impact of injury.^6,14 This model considered both the direct (“health care”) and indirect (“productivity”) costs associated with foot and ankle surgery. Figure 1 presents the overall structure and components of the model. In brief, we selected for inclusion all musculoskeletal procedures involving the foot (CPT 28001-28899) and ankle (CPT 27600-27899), and first used Medicare administrative data to establish the health care costs related to foot and ankle surgery. We then calculated average productivity costs for each procedure type, using economic metrics from various sources and patient demographics from our own institution. These averages were multiplied by Medicare procedure volumes to give total productivity costs. Further details about our model and its sources are given below.

Medicare administrative data formed the backbone of our model for health care costs. Each year the Centers for Medicare and Medicaid Services releases a Part B National Summary Data File, providing information on 100% of Medicare encounters involving Part B expenses (including professional fees, outpatient and ambulatory operative care, and related supplies including implants).⁴ We made use of these files for years 2000 to 2011 to generate the procedure volumes and outpatient expenses associated with foot and ankle surgery. To avoid double counting, modifier codes were excluded from estimates of procedure volume but were included in calculation of total payment amounts, as instructed by the Readme file prepared by CMS. Unfortunately, there is no complete, publically available database for Part A expenses (inpatient care), and so we estimated these charges by multiplying our professional fee estimates by 3.28, the ratio recommended by Miller et al.¹⁴

Productivity costs attempt to estimate the economic value of work lost as a result of an event, which obviously will depend on the individual’s gender, age, and occupation. Since the Medicare data lacked this sort of detail, we decided to calculate average productivity costs for each CPT code of interest based on data from the University of Iowa Hospitals and Clinics, a 711-bed tertiary care academic medical center. We identified 10 633 unique patient encounters over the period January 1, 2000, to December 31, 2010, to include in our analysis. These records were deidentified for use in this study, which was approved by the Institutional Review Board. Summary demographics for these patients are presented in Table 1. Based on data, averages for 3 types of productivity loss were calculated for each included CPT code. This general approach follows the revised injury cost model developed by the US Consumer Product Safety Commission.¹⁴ We suggest following along in Figure 1 as each type of cost is discussed below.

Table 1.

University of Iowa Hospitals and Clinics, Demographic Profile of Included Patients.

	Number	Percentage
Gender
Male	5944	55.9
Female	4689	44.1
Age
0-18	1686	15.9
19-29	1626	15.3
30-39	1376	12.9
40-49	2027	19.1
50-59	1948	18.3
60-69	1175	11.1
70-79	568	5.3
80+	227	2.1
Primary payer
Private	4127	38.8
Self	1891	17.8
Medicare	1416	13.3
Medicaid	882	8.3
Other/not reported	775	7.3
IowaCare	693	6.5
Government	467	4.4
Workers’ comp	382	3.6
Primary service
Orthopaedics	9801	92.2
General surgery	639	6.0
Vascular surgery	111	1.0
Others	82	0.8
Inpatient status
Inpatient	6976	65.6
Outpatient	3659	34.4
Race
European	8881	83.5
Asian	640	6.0
Hispanic	422	4.0
African	365	3.4
Native American	213	2.0
Other/not reported	112	1.1

“Temporary work loss” simply refers to the value of workdays initially missed due to the procedure. Average workdays lost were derived for each patient from the return-to-work “all absences” guidelines of the Work Loss Data Institute. As an example, bunion correction (CPT 28296) resulted in an mean of 12 days lost.¹⁷ Age- and gender-specific data from the Bureau of Labor Statistics were used to calculate daily wages.²⁵ To account for nonworkers, we added in an age- and gender-specific corrections (Table 2) based on the labor force participation rate.²⁶

Table 2.

Labor Force Participation Rate, 2010.

Gender	Age group	Participation rate (%)
Men	65-69	36.5
	70-74	22.0
	75+	10.4
Women	65-69	27.0
	70-74	14.7
	75+	5.3

Civilian noninstitutional population, Current Population Survey, US Bureau of Labor Statistics.²⁶

The other 2 types of indirect costs only apply to those cases in which the patient is left permanently disabled—either totally or partially—as a result of the procedure or related injury or disease. In these instances, it was necessary to consider the present value of future lifetime earnings foregone due to the impairment. These calculations were made for each individual in the University of Iowa institution database, based on the age- and gender-specific productivity loss tables tabulated by Dr Scott Grosse based on US Census data,⁸ as well as percentage and probability of disability for each CPT code, based on data from the Work Loss Data Institute.¹⁷ The magnitude of these productivity costs depended on both the surgery itself, as well as the average earning potential of patients undergoing that surgery. Generally very small percentages of patients face permanent disability as a result of foot and ankle procedures—for example, even transtibial amputation (CPT 27880) resulted in only a 1.5% chance of permanent total disability. Given the magnitude of lifetime earnings foregone due to disability, however, the contribution of even small disability fractions can be considerable.

To accurately portray growth in the number of procedures independent of population growth, we calculated utilization rates per 10 000 Medicare enrollees, using the population estimates tabulated by the Kaiser Family Foundation for 2000 and 2011.¹⁰ We elected to present the growth in our estimated economic impact since 2000 in 3 ways: (1) as a raw percentage increase, (2) as a compound annual growth rate (CAGR), and (3) as a CAGR corrected for inflation. CAGR was calculated according to the formula ((Ending Value/Beginning Value)^(1/# of Years))–1, while the corrections for inflation were based on the Consumer Price Index.²⁷ Calculations were carried out using Microsoft Excel software (Redmond, WA).

Results

Our model returned a total estimate of $11 billion for the economic burden of foot and ankle surgery in the Medicare population in 2011 (Table 3). Of this total, $1.2 billion could be attributed to direct health care costs, while an additional $9.8 billion was derived from indirect productivity costs. Temporary work loss accounted for the greatest proportion of economic burden (44%), while the fees of physicians and other providers accounted for the least (3%). Procedures targeting the foot accounted for over two-thirds of total economic burden, or $7.6 billion, and contributed a higher share of those costs due to temporary work costs.

Table 3.

Distribution and Total Estimates of Economic Burden for Foot and Ankle Surgery, 2011.

	Ankle		Foot		Total
	Estimate	%	Estimate	%	Estimate	%
Professional fees	$0.1	2.4	$0.2	2.5	$0.3	2.5
Hospital charges^a	$0.3	7.8	$0.6	8.1	$0.9	8.0
Permanent total disability^a	$1.3	37.5	$2.5	33.4	$3.8	34.7
Permanent partial disability^a	$0.5	14.4	$0.7	9.5	$1.2	11.0
Temp work loss^a	$1.3	37.9	$3.5	46.4	$4.8	43.8
Total	$3.4	100.0	$7.6	100.0	$11.0	100.0

Estimates.

Figure 2 displays the contributions of various types of procedures to overall economic burden, as well as how costs were distributed within these procedural categories. Procedures treating fractures and dislocations contributed the greatest amount—$3.4 billion—to overall economic burden. Reconstructive procedures, such as tendon repairs and bunion corrections, were not far behind. Each of the procedure categories derived more than 80% of its impact from indirect costs, although there was some variation in cost structure. Direct costs played the biggest role in procedures involving arthrodesis.

Table 4 shows the 10 highest impact foot and ankle procedures in 2011, together accounting for 40% of total economic burden ($4.4 billion), and breaks down the costs associated with each procedure. Hammertoe repair, treatment of metatarsal fracture, and transtibial amputation were the 3 highest impact procedures.

Table 4.

Top 10 Procedures, 2011.

CPT	Description	Volume	Professional fees ($, millions)	Hospital charges ($, millions)	Permanent total disability ($, millions)	Permanent partial disability ($, millions)	Temp work loss ($, millions)	Total ($, millions)
28285	Repair of hammertoe	114 993	29.5	96.7	301.1	65.8	544.2	1037.3
28470	Treat metatarsal fracture	40 553	5.5	17.9	150.5	61.3	571.1	806.3
27880	Amputation of lower leg—thru tibia and fibula	13 754	10.0	32.8	155.0	26.2	205.7	429.8
27814	Treatment of ankle fracture^a	12 245	7.7	25.3	108.2	83.4	201.9	426.6
28810	Amputation toe and metatarsal	16 344	5.0	16.4	88.7	16.3	235.1	361.6
28296	Correction of bunion	23 446	13.9	45.6	65.7	17.7	182.1	325.1
28270	Release of foot contracture	35 278	8.7	28.6	92.8	28.4	115.1	273.7
28124	Partial removal of toe	15 402	3.7	12.1	91.0	24.4	133.8	265.0
28122	Partial removal of foot bone	13 865	5.1	16.8	72.1	23.7	116.7	234.4
27822	Treatment of ankle fracture^b	6211	4.3	14.0	56.4	42.9	110.0	227.5
	Total							4387.3

Ranked according to overall economic burden.

Open treatment of bimalleolar ankle fracture. Includes external fixation, when performed.

Open treatment of trimalleolar ankle fracture. Includes external fixation, when performed.

We were also able to track changes in economic burden over the past decade. In 2000, a total of 548 214 foot and ankle surgeries occurred in the Medicare population, corresponding to a utilization rate of 138.9 per 10 000 beneficiaries. Utilization increased by 21.6% over the next decade, to 168.9 per 10 000 beneficiaries in 2011, or 804 985 procedures. Over this period, the overall economic burden associated with foot and ankle surgery increased by an estimated 38.2% (Figure 3). Annual growth in impact was modest, however, proceeding at a CAGR of 2.98%, equivalent to just 0.54% above consumer inflation for the period.

Discussion

This study is original in its attempt to demonstrate the economic burden of foot and ankle care in the US Medicare population. This hampers direct comparison of our results. Previous studies have indicated that as much as a third of the population may suffer from frequent foot and ankle pain,²² giving some idea as to the scale of the problem. Few authors, however, have gone beyond incidence to also consider the economics of foot and ankle disease. A couple of isolated studies have considered the economic burden associated with diabetic foot ulcers.^13,21 In contrast, the economics of hand and wrist injury has been better studied.^5,18
-20,23 In these studies, productivity costs were found to account for between 43% and 96% of total economic burden. Our estimate of 89% fits into the upper end of this range.

Our analysis revealed that Medicare spent over $269 million on professional fees, ambulatory operative clinics, and outpatient fees related to foot and ankle surgery in 2011. To give this number some scale, it is just slightly over 1/1000th of the $227 billion total for Part B expenditures in that year.³ We calculated the full burden of foot and ankle surgery in the Medicare population on the economy as a more substantial $11 billion in 2011. Placing this figure in context is more difficult, given the paucity of prior work and differences in methodology across studies. A 2006 analysis jointly sponsored by the American Academy of Orthopaedic Surgeons and 8 other scientific and professional organizations put an overall price tag of $950 billion on musculoskeletal disease in the United States.²⁴ As our study only considered a subset of procedures in the Medicare population alone, our estimates appear reasonable. While overall economic impact has increased considerably since 2000, annual growth has been quite conservative (0.54% CAGR above inflation), especially considering trends in health care spending and comorbidities like diabetes over the period. Foot and ankle surgery does therefore seem to present a slim profile to policy makers eager to pursue cost containment.

Any cost analysis faces 2 tasks: (1) determining the incidence of the events to be studied and (2) assigning costs to these events. We believe the principal strengths of this study lie in its approaches to these tasks. Incidence was determined directly by accessing a complete and deidentified Medicare database. Payments for professional fees, outpatient care, ambulatory operative facilities, and related expenses including implants were drawn directly from this same database, while hospital costs had to be estimated based on a national average. Estimates of productivity costs were made more accurate by the detailed demographic information of over 10 000 unique patient encounters at the University of Iowa Hospitals and Clinics.

There are limitations, however, inherent in any population-based cost analysis. Patient demographics at our institution are not a perfect match for national averages; 83.5% of patients in our sample were of European ancestry, for example (Table 1). Much of our methodology is inspired by investigations into economic losses due to workplace injury, which is not a perfect analog for more routine and planned nature of some foot and ankle surgeries (eg, bunion repair). For this reason, we always used the more conservative “all absences” estimates developed by the Work Loss Data Institute for days of work lost, instead of relying directly on worker’s compensation claims data.¹⁷ We also must note that we chose to calculate productivity costs according to the human capital method, which adopts the patient’s perspective and examines the value of productivity lost until retirement age. This results in higher estimates than the alternative friction-cost method, which assumes a disabled worker (and so his or her productive potential) will be replaced within a reasonable period of time. There is still considerable debate as to which method results in a more accurate estimate.¹² We felt the friction-cost method unacceptably devalued the contribution of the disabled worker to the total productive capacity of the economy.

While procedures targeting the foot and ankle may be responsible for a relatively small portion of the national health care bill, they clearly have a major impact on an older individual’s ability to enjoy life and contribute productively to the economy. The scale of productivity costs recorded by our study may seem surprising considering that the mean age of Medicare enrollees is 71.2 years.¹⁵ Our study did include age-appropriate corrections for the labor force participation rate. Currently, 31.5% of those aged 65 to 69 are employed at least part-time, and this percentage is forecast to increase to 37.8% by 2020.²⁶ At the same time, the baby boom generation is already beginning to swell the Medicare rolls. As the size and working share of the Medicare population continues to rise, so too will the economic cost of disabling injury.

Conclusion

This study demonstrates the considerable burden of foot and ankle disease in the US Medicare population associated with foot and ankle surgery. The majority of economic burden was found to result from work loss. Growth in utilization and economic burden is shown to be relatively modest. Improvements in operative outcome and rehabilitation regimens to shorten recovery time should be the focus of orthopedic surgeons and researchers to help mitigate the effects on associated productivity costs in our growing Medicare population.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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