Neighborhood deprivation and Medicare expenditures for common surgical procedures

Introduction: The Center of Medicare and Medicaid Services valued based payments for inpatient surgical hospitalizations are adjusted for clinical but not social risk factors. While research has shown that social risk is associated with worse surgical patient outcomes, it is unknown if inpatient surgical episode Medicare payments are affected by social risk factors. Methods: Retrospective review of Medicare beneficiaries, age 65-99, undergoing appendectomy, colectomy, hernia repair, or cholecystectomy between 2014 and 2018. Neighborhood deprivation measured by Area Deprivation Index for beneficiary census tract. We evaluated Medicare payments for a total episode of surgical care comprised of index hospitalization, physician fees, post-acute care, and readmission by beneficiary neighborhood deprivation. Results: A total of 809,059 patients (Women, 56.0%) and mean (SD) age of 75.7 (7.4 years were included. A total of 145,351 beneficiaries lived in the least deprived neighborhoods and 134,188 who lived in the most deprived neighborhoods. Total surgical episode spending was $2654 higher among beneficiaries from the most deprived neighborhoods compared to those from the least after risk adjustment for clinical and hospital factors. These differences were driven in part by higher rates of readmissions (12.9% vs 10.8%, P < 0.001) and post-acute care (67.8% vs. 61.2%, P < 0.001) among beneficiaries living in the most deprived neighborhoods. Conclusion: These findings suggest that value-based payment models with inclusion of social risk adjustment may be needed for surgical cohorts. Moreover, efforts focused on investing in deprived communities may be aligned with surgical quality improvement.