Comparison of Incremental Costs and Medicare Reimbursement for Simple vs Complex Cataract Surgery Using Time-Driven Activity-Based Costing

Abstract

Cataract surgery is one of the most commonly performed surgeries across medicine and an integral part of ophthalmologic care. Complex cataract surgery requires more time and resources than simple cataract surgery, yet it remains unclear whether the incremental reimbursement for complex cataract surgery, compared with simple cataract surgery, offsets the increased costs. To measure the difference in day-of-surgery costs and net earnings between simple and complex cataract surgery. This study is an economic analysis at a single academic institution using time-driven activity-based costing methodology to determine the operative-day costs of simple and complex cataract surgery. Process flow mapping was used to define the operative episode limited to the day of surgery. Simple and complex cataract surgery cases (Current Procedural Terminology codes 66984 and 66982, respectively) at the University of Michigan Kellogg Eye Center from 2017 to 2021 were included in the analysis. Time estimates were obtained using an internal anesthesia record system. Financial estimates were obtained using a mix of internal sources and prior literature. Supply costs were obtained from the electronic health record. Difference in day-of-surgery costs and net earnings. A total of 16 092 cataract surgeries were included, 13 904 simple and 2188 complex. Time-based day-of-surgery costs for simple and complex cataract surgery were $1486.24 and $2205.83, respectively, with a mean difference of $719.59 (95% CI, $684.09-$755.09; P < .001). Complex cataract surgery required $158.26 more for costs of supplies and materials (95% CI, $117.00-$199.60; P < .001). The total difference in day-of-surgery costs between complex and simple cataract surgery was $877.85. Incremental reimbursement for complex cataract surgery was $231.01; therefore, complex cataract surgery had a negative earnings difference of $646.84 compared with simple cataract surgery. This economic analysis suggests that the incremental reimbursement for complex cataract surgery undervalues the resource costs required for the procedure, failing to cover increased costs and accounting for less than 2 minutes of increased operating time. These findings may affect ophthalmologist practice patterns and access to care for certain patients, which may ultimately justify increasing cataract surgery reimbursement.