Variations in Payer-Negotiated Prices for Head and Neck Reconstructive Surgery

Abstract

Objective: Little is known about pricing for reconstructive procedures of the head and neck. As of January 2021, the Centers for Medicare and Medicaid Services requires hospitals to disclose payer-negotiated prices for services, offering new insight into prices for privately insured patients.

Study design: Cross-sectional analysis.

Setting: Turquoise database.

Methods: Payer-negotiated facility fees for 41 reconstructive surgeries were grouped by procedure type: primary closure, skin grafts, tissue rearrangement, locoregional flaps, or free flaps. Prices were normalized to account for local labor costs, then calculated as percent markup in excess of Medicare reimbursement. The mean percent markup between procedure groups was compared by the Kruskal-Wallis test. Subset analyses were performed to compare mean percent markup using a Student's t test. We also assessed price variation by calculating the ratio of 90th/10th percentile mean prices both across and within hospitals.

Results: In total, 1324 hospitals (85% urban, 81% nonprofit, 49% teaching) were included. Median payer-negotiated fees showed an increasing trend with more complex procedures, ranging from $379.54 (interquartile range [IQR], $230.87-$656.96) for Current Procedural Terminology (CPT) code 12001 ("simple repair of superficial wounds ≤2.5 cm") to $5422.60 ($3983.55-$8169.41) for CPT code 20969 ("free osteocutaneous flap with microvascular anastomosis"). Median percent markup was highest for primary closure procedures (576.17% [IQR, 326.28%-1089.34%]) and lowest for free flaps (99.56% [37.86%-194.02%]). Higher mean percent markups were observed for rural, for-profit, non-Northeast, nonteaching, and smaller hospitals.

Conclusion: Wide variation in private payer-negotiated facility fees exists for head/neck reconstruction surgeries. Further research is necessary to better understand how pricing variation may correlate with out-of-pocket costs and quality of care.

Keywords: free flap; head and neck; price transparency; reconstructive ladder; reconstructive surgery; skin graft.