Can laparoscopic cholecystectomy be performed with a positive margin at medicaid reimbursement rates?

Abstract

Background: The Affordable Care Act provides health care coverage to an increasing segment of the population at Medicaid reimbursement rates. Health care systems currently offset lower Medicaid reimbursement through higher payers. The ability to "cost shift" will be diminished as the Medicaid population increases.

Study design: A financial cost and revenue analysis of outpatient laparoscopic cholecystectomy at our institution was performed. Cost was defined as actual expense to the health care institution. Fixed and variable costs were identified to calculate a break-even point. Time spent from check in to dismissal was based on historic averages. When actual costs could not be pinpointed, estimates from industry experts were used. Reimbursement included surgeon and anesthesia professional fees and facility fees.

Results: A total of 501 laparoscopic cholecystectomies were performed at the main operating room facility in 2012. Annual fixed costs were $252,637. Variable costs were $1,860/case. Personnel and single-use equipment made the largest contribution to variable costs. Reimbursement for professional and facility fees totaled $2,444/case. The break-even point occurred at 454 cases. Based on historic volume, the break-even point for the calendar year would occur on November 27.

Conclusions: Our analysis demonstrates that laparoscopic cholecystectomy can be performed with a positive margin at Medicaid reimbursement rates with sufficient volume. The minimal margin, however, could substantially limit the ability of lower-volume hospitals to provide these services and negatively impact access to care in this patient population.