Insurers pay double the selling price of knee, hip implants

The U.S. has seen high demand for knee replacements, raising questions about ways to reduce the cost of the procedure. (Getty/JodiJacobson)

The average price insurance companies pay for knee and hip replacements is roughly double the cost of the device itself, according to a recent study.

A research letter published in the Journal of the American Medical Association details a study of deidentified data from individuals younger than 65 who were admitted to hospitals in the U.S. between 2011 and 2015 for total knee arthroplasty or total hip arthroplasty procedures.

Noting that the cost of the device itself typically accounts for the majority of the expense associated with such a procedure, the study’s authors compared mean insurance payment data with the average selling price of replacement knee and hip devices.

Across over 63,000 patients in the study population, researchers found average selling prices of $5,023.01 for knees and $5,619.75 for hips, compared to mean insurance payments of $10,604.52 and $11,751.25, respectively. In total, the implants cost insurers roughly $425 million more than the price of the devices themselves.

The U.S. has seen high demand for knee replacements, with potential for continued growth raising questions about ways to reduce the cost of the procedure, particularly for Medicare patients. The JAMA study’s authors note that its results “may not be generalizable to publicly insured patients,” especially given their exclusion of elderly patients. Still, the inability to track price and performance of devices has already led to calls for unique device identifiers from federal agencies.

From a broader perspective, as more consumers seek replacements, the need for better price and performance information will likely grow, study co-author Kenneth Mandl, M.D., a researcher for Boston Children’s Hospital, told STAT. That taps into ongoing questions about how to get a better handle on the true cost of healthcare, an issue likely to see greater attention from insurers and consumers alike as the healthcare industry evolves.