GAO-12-583R Implantable Medical Devices

United States Government Accountability Office

Washington, DC 20548

May 14, 2012

The Honorable Orrin Hatch

Ranking Member

Committee on Finance

United States Senate

Subject: Medicare: Trends in Beneficiaries Served and Hospital Resources Used in 

Implantable Medical Device Procedures

Dear Senator Hatch:

The use of implantable medical devices (IMD) among Medicare beneficiaries is 

widely recognized as a way to prolong and improve the quality of life for patients that 

receive them.1 In 2009, about 1.6 million IMD procedures were performed on 

beneficiaries under traditional, fee-for-service Medicare at a cost of roughly 

$20 billion. Orthopedic and cardiac implantations—the most common IMD 

procedures provided to beneficiaries—accounted for nearly all IMD-related Medicare 

spending in that year. With beneficiaries expected to live longer and innovations in 

IMD technology, the use of orthopedic and cardiac IMDs is likely to continue to have 

important implications for hospital services paid for by Medicare.

The number of hospital admissions for IMD procedures, the duration of hospital 

stays, and the location to which patients are discharged are influenced by such 

factors as age and health status. In that light, you expressed interest in obtaining 

descriptive information about changes in the demographics of Medicare 

beneficiaries undergoing major IMD procedures and their use of hospital and 

postacute care resources. In this report, we examined three trends for Medicare 

beneficiaries who received orthopedic or cardiac IMDs: (1) hospital admission rates, 

by age and health status; (2) hospital lengths of stay, by health status; and 

(3) discharge disposition following admission for these procedures, by health status.

Our review of orthopedic IMD procedures focused on those related to knees, hips, 

shoulders, and lumbar fusions. We defined knee, hip, and shoulder replacement 

procedures as stays where the procedure was a primary elective new total knee, 

total hip, or total shoulder replacement. We defined lumbar fusion procedures as 

stays where the procedure was a primary elective initial lumbar or lumbosacral 

 

1

We define IMDs as artificial devices implanted entirely within the body that are intended to remain 

there permanently. However, some of these devices have a limit to their effective life span and will 

require replacement.
2 GAO-12-583R Implantable Medical Devices

fusion with a posterior technique.2,3 Our review of cardiac IMDs focused on 

procedures related to certain devices used to treat blocked coronary arteries—drugeluting stents—or heart rhythm problems—automatic implantable cardioverter 

defibrillators (AICD) and dual-chamber pacemakers. The orthopedic IMD procedures 

we studied are nearly always performed in the hospital inpatient setting. However, 

procedures involving drug-eluting stents, AICDs, and dual-chamber pacemakers can 

be performed in either inpatient or outpatient settings. We focused only on inpatient 

trends in the use of cardiac IMDs. Further research on topics such as readmission 

rates4 and revisions5 would be needed to understand the full impact of orthopedic 

and cardiac IMD use patterns.

To examine trends for Medicare beneficiaries who received orthopedic or cardiac 

IMDs, we obtained hospital discharge data on individuals age 65 and over from the 

Healthcare Cost and Utilization Project (HCUP) Nationwide Inpatient Sample (NIS) 

files from 2003 through 2009.6,7 To calculate trends in Medicare hospital admission 

rates, we divided the number of inpatient IMD procedures performed on these 

individuals by the total number of Medicare Part B beneficiaries age 65 or over 

during the same period, as reported by the Centers for Medicare & Medicaid 

Services (CMS).8 We sorted beneficiaries into four age cohorts—65 to 69, 70 to 74, 

75 to 79, and 80 or older—and categorized beneficiary health status as good or fair,

poor, or very poor based on the patient’s condition at admission and other factors.9

 

2

Lumbar and lumbosacral fusions are those that involve certain vertebrae in the lower region of the 

spine. Posterior fusions refer to how the surgeon approaches the spine—through the lower back.

3

We excluded (1) partial joint replacements and procedures involving more than one joint, 

(2) replacement surgeries needed when the effective performance of some devices declines, 

(3) lumbar fusion procedures that did not use the posterior technique, and (4) other types of spinal 

fusions, such as those related to the cervical spine.

4

Research has found an increase in 30- and 90-day all-cause readmission rates for total hip 

replacement patients in recent years. Xueya Cai, et al., “Clinical Characteristics and Outcomes of 

Medicare Patients Undergoing Total Hip Arthroplasty, 1991-2008,” Journal of the American Medical 

Association 305, no. 15 (2011): 1560-1567. 

5

Revisions, procedures that replace part or all of an IMD, accounted for 8.9 percent of all orthopedic 

IMD procedure Medicare expenditures in 2004 and 11.0 percent in 2009, increasing from about 

$0.5 billion to about $1 billion. Some revisions may reflect device recalls. From 2005 through 2009, 

orthopedic and cardiovascular devices constituted 12 and 15 percent of medical device recalls, 

respectively. See GAO, Medical Devices: FDA Should Enhance Its Oversight of Recalls, GAO-11-468

(Washington, D.C.: June 14, 2011).

6

Medicare covers virtually all of the population age 65 and over. We defined Medicare admissions as 

those of individuals who are in that age cohort. 

7

The NIS is designed as a representative 20 percent sample of all hospitals. It contains hospital 

discharge data provided by states that participate in HCUP. In 2009, 44 states provided data from 

about 1,000 hospitals. NIS data do not include outpatient procedures.

8

We define Medicare admission rates as admissions per 10,000 Medicare Part B beneficiaries.

Among other things, Medicare Part B covers the physicians’ services used in IMD procedures.

9

Across all procedure types, we assigned health status using several patient variables, including a 

beneficiary’s principal and secondary diagnosis, procedures codes, age, sex, and discharge 

disposition. Patient demographics, such as secondary diagnoses, can be risk factors for in-hospital 

complications and mortality. For example, research on patients undergoing bilateral total knee 

arthroplasty has shown that the presence of congestive heart failure and pulmonary hypertension 

have been associated with increased risk for adverse outcome. See Ya-Lin Chiu, et al., “Bilateral 

Total Knee Arthroplasty: Risk Factors for Major Morbidity and Mortality,” Anesthesia & Analgesia, 

July 13, 2011.
3 GAO-12-583R Implantable Medical Devices

To analyze trends in average lengths of stay, we excluded beneficiaries with hospital 

stays of zero days and outliers with exceedingly long stays. To examine trends in 

discharge disposition, we stratified beneficiaries into those discharged to home or 

self-care, to home for home health care, and to inpatient rehabilitative facilities, such 

as a skilled nursing facility (SNF) or an inpatient rehabilitation facility (IRF).10 In 

addition, we reviewed relevant journal articles and CMS regulations. We determined 

that the data we used were sufficiently reliable for the purposes of our analysis by 

performing appropriate electronic data checks.

We conducted this performance audit from March 2011 to April 2012 in accordance 

with generally accepted government auditing standards. Those standards require 

that we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable basis for 

our findings and conclusions based on our audit objectives.

Results in Brief

Overall, orthopedic IMD admission rates were substantially higher in 2009 compared 

with 2003, while admission rate patterns among cardiac IMDs were mixed.

Admission rates rose for each of the orthopedic IMDs in our study, with knee 

replacement rates growing 6.7 percent per year. The picture for inpatient cardiac 

IMD procedures was more mixed; admission rates for dual-chamber pacemakers 

decreased steadily while rates for AICDs and drug-eluting stents increased through 

2006 and generally declined thereafter, in part reflecting a shift of surgeries to the 

outpatient setting. While the proportion of both orthopedic and cardiac IMD 

beneficiaries in poor or very poor health grew throughout our period of study, this 

trend was far more evident for cardiac IMD beneficiaries after 2007.

Even with the increase in admissions of IMD beneficiaries in poorer health, overall 

lengths of stay for the IMD procedures we studied generally did not rise. Average 

lengths of stay for orthopedic IMD beneficiaries decreased from 2003 through 2009, 

while the lengths of stay for cardiac IMD beneficiaries fell through 2007 but 

increased thereafter. For all orthopedic IMD procedures in our study, lengths of stay 

declined during the period for beneficiaries in all reported health status groups. From 

2003 through 2007, the average length of stay decreased among cardiac IMD 

beneficiaries in each health status group. From 2007 to 2009, average lengths of 

stay patterns varied by health status and specific cardiac IMD procedure.

Poorer health status and reductions in lengths of stay for inpatient IMD beneficiaries 

were not accompanied by an increase in discharges to rehabilitative facilities.

Rather, the proportion of orthopedic IMD beneficiaries discharged to home health 

care increased substantially while the proportion discharged to a skilled nursing or 

rehabilitation facility dropped sharply. The discharge disposition pattern for cardiac 

IMD beneficiaries remained relatively stable throughout the study period, with a large 

majority of cardiac IMD beneficiaries discharged to home or self-care.

 

10Discharge disposition indicates the postacute care, if any, a beneficiary received directly after 

discharge. However, beneficiaries can receive a series of postacute care services in various settings. 
4 GAO-12-583R Implantable Medical Devices

Background

IMD Device Descriptions

In 2009, procedures related to knees, hips, shoulders, and the spine accounted for 

98 percent of Medicare’s orthopedic IMD expenditures. Typically, hip, knee, and 

shoulder implants have a variety of components and are made up of different 

materials, which may be configured in various ways to make the total device. For 

example, for a hip replacement with four different components, there are several 

configurations and materials (metal, plastic, and ceramic) that can be used, as well 

as different ways to secure the implant (cemented in place or fitted into the bone 

with new bone growth to hold the implant in place). Lumbar fusion surgeries may 

involve many different IMDs; some of the most common IMDs used in lumbar 

fusions include screws, rods, cages, and bone morphogenetic protein (BMP).11

In 2009, procedures involving pacemakers, AICDs, and stents represented most 

Medicare spending on cardiac IMD procedures. A pacemaker monitors a patient’s 

underlying heart rhythm and delivers an electrical pulse to cause the heart to beat at 

the desired rate. An AICD is similar to the pacemaker in design, but it is capable of 

delivering a higher energy electrical pulse—called a defibrillation shock—to correct 

more serious, rapid, and sustained heart rhythm irregularities. A coronary stent is a 

wire mesh tube used to prop open a blocked coronary artery. Drug-eluting stents are 

coated with drugs that slowly release and are intended to help keep the artery open.

Medicare IMD Spending and Overall Lengths of Stay

In Medicare’s traditional fee-for-service program, spending on IMD procedures 

performed in the inpatient and outpatient settings has grown at the same rate as 

spending for other hospital services.12 As we previously reported, from 2004 through 

2009, expenditures for IMD procedures rose from about $16 billion to about 

$20 billion, an increase of 4.3 percent per year—a rate equal to that of Medicare 

spending for other hospital care. Spending on orthopedic IMD procedures performed 

grew substantially faster than that for cardiac IMD procedures. From 2004 through 

2009, Medicare hospital expenditures related to orthopedic IMD devices increased 

8.1 percent per year, while expenditures related to cardiac IMD procedures 

increased 1.2 percent yearly.13

A factor that contributes to Medicare inpatient spending is beneficiaries’ length of 

stay. From 2003 through 2009, average hospital lengths of stay declined for 

Medicare beneficiaries overall. For instance, the average annual decrease in length 

of stay ranged from 0.6 percent to 7.0 percent for 10 hospital inpatient services that 

 

11Screws and rods are used to hold the spine still to aid the fusion process. Cages placed between 

two vertebrae and BMP, a synthetic bone-forming protein, are often used together to promote fusion 

in lumbar fusion surgeries.

12In 2011, about three quarters of all beneficiaries were in fee-for-service Medicare and the rest were 

enrolled in private health plans under the Medicare Advantage program.

13See GAO, Medicare: Lack of Price Transparency May Hamper Hospitals’ Ability to Be Prudent 

Purchasers of Implantable Medical Devices, GAO-12-126 (Washington, D.C.: Jan. 13, 2012). 
5 GAO-12-583R Implantable Medical Devices

ranked among those with the highest number of non-IMD elective admissions in 

2009. The proportion of beneficiaries admitted with poor or very poor health also 

increased for each of those 10 services from 2003 to 2009.

Discharge Disposition after IMD Procedures

After receiving an orthopedic or cardiac IMD, Medicare beneficiaries can be 

discharged home or to one of several postacute care settings. Numerous factors 

such as age, functional status, and whether the beneficiary lives alone can affect the 

decision about where a beneficiary is discharged. Those discharged to home or selfcare require minimal postacute care or only need to receive services, such as 

physical therapy, on an outpatient basis. Other beneficiaries who are discharged 

home but require a higher, or more intense, level of postacute care may receive 

home health care services, such as intermittent skilled nursing and physical therapy.

Orthopedic and cardiac IMD beneficiaries may also be discharged to inpatient 

facilities such as SNFs or IRFs for rehabilitation services. In general, the cost of 

postacute care is more expensive for individuals discharged to SNFs and IRFs than 

to home, with or without home health care or outpatient rehabilitation services.

Inpatient Admission Rates Increased Consistently across Orthopedic IMDs, 

but Varied across Cardiac IMDs; IMD Procedures for Beneficiaries in Poor or 

Very Poor Health Were Increasingly Common, a Trend More Pronounced 

Among Cardiac IMD Beneficiaries

Admission Rates for Orthopedic IMD Procedures Increased Steadily

• Admission rates for knee, hip, and shoulder replacements and lumbar fusion 

procedures increased steadily overall among Medicare beneficiaries from 2003 

through 2009. (See fig. 1.)

• The admission rate for knee replacements, by far the most common 

orthopedic procedure of those we studied, rose substantially from 2003 

through 2009. The admission rate increased from 59 to 87 per 10,000 

beneficiaries, an average annual increase of 6.7 percent.

• The admission rate for hip replacements, the second most common 

orthopedic procedure studied, grew moderately over the study period. The 

admission rate increased from 29 to 37 per 10,000 beneficiaries, an average 

annual increase of 4.1 percent.

• Although shoulder replacements and lumbar fusions were far less common 

than knee or hip replacements, their admission rates grew most rapidly during 

the time period, with shoulder replacement and lumbar fusion admissions 

growing at annual rates of 20.1 percent and 11.0 percent, respectively.
6 GAO-12-583R Implantable Medical Devices

Figure 1: Medicare Admission Rates for Orthopedic Implantable Medical Devices, 2003-2009

Note: We define Medicare admissions as those of individuals who are age 65 and over.

• Increases in knee replacement surgeries have been attributed to changes in 

medical practice, enhanced awareness of the benefits of knee replacements, 

increased patient satisfaction rates, and an increasing prevalence of 

osteoarthritis, which in turn may be related to an increase in obesity rates.14

• According to the National Institutes of Health, 85 percent of beneficiaries who 

undergo knee replacement surgery are satisfied with the results.15

• The rate of obesity among Medicare beneficiaries who received a knee 

replacement was higher than those who received the other IMD procedures 

studied; they also experienced the largest increase in obesity rates over the 

time period.16

 

14C. Mehrotra, P. Remington, T. Naimi, W. Washington, and R. Miller, “Trends in Total Knee 

Replacement Surgeries and Implications for Public Health, 1990–2000,” Public Health Reports 120 

(2005): 278-282. S. Kurtz, F. Mowat, K. Ong, N. Chan, et. al, “Prevalence of Primary and Revision 

Total Hip and Knee Arthroplasty in the United States from 1990 through 2002,” Journal of Bone and 

Joint Surgery; July 2005; 87, 7; ProQuest Medical Library, pg. 1487.

15Patient satisfaction rates are even greater for hip and shoulder replacements at 90 percent and 

97 percent, respectively. See: E. Fisher, J. Bell, I. Tomek, A. Esty, and D. Goodman, “Trends and 

Regional Variation in Hip, Knee, and Shoulder Replacement,” Dartmouth Atlas Surgery Report

(2010). 

16Obesity appears to be undercoded in hospital data given the much higher prevalence in the general 

population. See http://www.hcup-us.ahrq.gov/reports/statbriefs/sb20.jsp. Accessed on March 23, 

2012.
7 GAO-12-583R Implantable Medical Devices

• The nearly twofold increase in the admission rate for lumbar fusions may 

exemplify the role that new technology plays in IMD utilization. For example, from 

2003 to 2009, the proportion of lumbar fusions performed with BMP, a relatively 

new technology, increased from approximately 7 percent to 40 percent of all such 

surgeries.17

Changes in Inpatient Admission Rates for Cardiac IMD Procedures Differed by 

Device

• The trends in cardiac IMD inpatient admission rates were mixed over the study 

period. (See fig. 2.)

• Inpatient admission rates for drug-eluting stents increased rapidly from 2003 

through 2006, declined sharply from 2006 through 2007, and remained flat 

thereafter. Rates for AICDs also increased through 2006 and then declined, 

although both the increase and subsequent decline were much more 

moderate.

• In contrast, the rate of inpatient dual-chamber pacemaker admissions 

declined slowly and steadily.

 

17Since BMP has not been approved for use in posterior lumbar fusion, growth in usage during this 

period is off label.
8 GAO-12-583R Implantable Medical Devices

Figure 2: Medicare Admission Rates for Cardiac Implantable Medical Devices, 2003–2009

Note: We define Medicare admissions as those of individuals who are age 65 and over.

• Decreases in the rates of cardiac IMD admissions were associated with 

beneficiaries receiving cardiac IMD procedures in the outpatient rather than the 

inpatient setting. Had the pattern of care not changed after 2006, it is likely that 

more beneficiaries would have been admitted to a hospital for a cardiac IMD 

procedure.

• As we previously reported, Medicare claims data indicated a general shift of 

cardiac IMD procedures from the inpatient to the outpatient setting from 2004 

through 2009, with the largest growth in outpatient cardiac IMD procedures 

occurring from 2007 through 2009.18

• This trend coincided with Medicare Recovery Audit contractors collecting 

overpayments for certain inpatient cardiac IMD procedures that could have 

been performed in the outpatient setting, possibly prompting other hospitals to 

change their admission patterns.19 Generally, Medicare pays hospitals a 

relatively lower rate for the same procedure when it is delivered in the 

outpatient rather than the inpatient setting.

 

18GAO, Medicare: Lack of Price Transparency May Hamper Hospitals’ Ability to Be Prudent 

Purchasers of Implantable Medical Devices, GAO-12-126 (Washington, D.C.: Jan. 13, 2012).

19Recovery audit contractors conduct postpayment reviews to identify overpayments and 

underpayments and recoup any overpayments they identify.
9 GAO-12-583R Implantable Medical Devices

• In addition to the general shift to the outpatient setting, the significant decrease in 

inpatient drug-eluting stent admission rates from 2006 to 2007 may have resulted 

from a shift to the use of bare metal stents or a decline in overall stent utilization.

Admission Rates Rose across All Age Groups for All Orthopedic IMD Procedures 

and Drug-Eluting Stents but Fell for AICDs and Dual-Chamber Pacemakers

• From 2003 through 2009, admission rates rose for all four orthopedic IMD 

procedures among every beneficiary age group. (See table 1.)

• Rates for knee and hip replacements increased most rapidly for the youngest 

Medicare beneficiaries.

• In contrast, older Medicare beneficiaries exhibited the fastest growth in 

shoulder replacements and lumbar fusion procedures.

Table 1: Average Annual Percentage Growth in Medicare Beneficiary Admission Rates for Orthopedic 

IMD Procedures, by Age, 2003-2009

Growth in admissions

Age

Total knee 

replacement

Total hip 

replacement

Total shoulder 

replacement Lumbar fusion

65 to 69 7.9 5.9 16.5 12.2

70 to 74 6.6 3.7 23.2 11.3

75 to 79 6.8 4.7 26.0 11.2

80 or older 5.8 3.2 26.0 15.2

Source: GAO analysis of Healthcare Cost and Utilization Project Nationwide Inpatient Sample data.

Note: We define Medicare admissions as those of individuals who are age 65 and over.

• Across all age groups, inpatient admission rates for drug-eluting stents 

increased, while AICD and dual-chamber pacemaker rates declined during our 

study period. (See table 2.)

Table 2: Average Annual Percentage Growth in Medicare Beneficiary Admission Rates for Cardiac IMD 

Procedures, by Age, 2003-2009

Growth in admissions 

Age Drug-eluting stent AICD Dual-chamber pacemaker

65 to 69 10.1 -3.3 -1.3

70 to 74 10.5 -5.9 -3.0

75 to 79 11.5 -2.5 -1.9

80 or older 13.1 -4.1 -0.9

Source: GAO analysis of Healthcare Cost and Utilization Project Nationwide Inpatient Sample data.

Note: We define Medicare admissions as those of individuals who are age 65 and over.
10 GAO-12-583R Implantable Medical Devices

Growing Share of IMD Beneficiaries Were Admitted in Poor or Very Poor Health, a 

Trend More Pronounced among Inpatient Cardiac IMD Beneficiaries

• We found moderate increases in the proportion of orthopedic IMD beneficiaries 

who were in poor health from 2003 through 2009. (See fig. 3.)

• For the four orthopedic IMD procedures studied, the increase in the 

proportion of beneficiaries in poor health ranged from 2.9 to 3.9 percentage 

points from 2003 through 2009.

Figure 3: Proportion of Inpatient Orthopedic IMD Beneficiaries in Poor Health, by Type of Procedure, 

2003-2009

Note: We define Medicare admissions as those of individuals who are age 65 and over.

• The proportion of orthopedic IMD beneficiaries in very poor health increased 

slightly but remained relatively low—roughly 1 percent—throughout the study 

period.

• We found an increase in the proportion of beneficiaries who were admitted in 

poor health for inpatient cardiac IMD procedures from 2003 through 2009. (See 

fig. 4.)

• The percent of cardiac IMD beneficiaries in poor health rose for every type of 

device procedure. This was particularly evident for drug-eluting stent and 

dual-chamber pacemaker recipients from 2007 forward.
11 GAO-12-583R Implantable Medical Devices

Figure 4: Proportion of Inpatient Cardiac IMD Beneficiaries in Poor Health, by Type of Procedure, 2003-

2009

Note: We define Medicare admissions as those of individuals who are age 65 and over.

• We also found an increase in beneficiaries in very poor health being admitted for 

each of the cardiac IMD devices from 2003 through 2009. (See fig. 5.)

• Again, the proportion of beneficiaries admitted with very poor health 

increased more rapidly from 2007 forward.

• The increase was particularly dramatic for AICDs; the share of beneficiaries 

that received an AICD who were in very poor health nearly doubled from 2007 

through 2009.
12 GAO-12-583R Implantable Medical Devices

Figure 5: Proportion of Inpatient Cardiac IMD Beneficiaries with Very Poor Health, by Type of Procedure, 

2003-2009

Note: We define Medicare admissions as those of individuals who are age 65 and over.

• The migration of cardiac IMD beneficiaries to the hospital outpatient setting most 

likely removed healthier beneficiaries from the inpatient population, leaving a 

greater proportion of beneficiaries in the inpatient setting with poor or very poor 

health.

Lengths of Stay for Orthopedic IMD Beneficiaries Fell Steadily; Stays for 

Cardiac IMD Beneficiaries Grew After 2007, Reflecting a Marked Decline in 

Patient Health Status

Lengths of Stay Consistently Declined for Orthopedic IMD Beneficiaries

• When comparing 2003 and 2009 data, we found substantial decreases in the 

average length of stay for all orthopedic IMD beneficiaries in our study. (See 

fig. 6.)

• For example, the length of stay for knee replacement beneficiaries fell from 

4.02 to 3.38 days, or 2.8 percent per year. This represented a reduction of 

64 days per 100 hospital admissions.

• The rates of decline in lengths of stay for these procedures were similar to 

those of non-IMD elective procedures.
13 GAO-12-583R Implantable Medical Devices

Figure 6: Beneficiary Average Length of Stay, by Orthopedic IMD Procedure, 2003-2009

Note: Lengths of stay are those of individuals who are age 65 and over.

Cardiac IMD Beneficiaries’ Lengths of Stay Generally Declined through 2007, but 

Increased Afterward

• The average length of stay of beneficiaries admitted for cardiac IMD procedures 

generally declined from 2003 through 2007 but increased thereafter. (See fig. 7.)

• For example, the length of stay for those receiving drug-eluting stents fell 

1.0 percent annually from 2003 through 2007 and increased at an annual rate 

of 5.5 percent during the last 2 years of our study period.

• The more recent increases in length of stay for cardiac IMD beneficiaries were 

associated with a change in the mix of patients receiving these procedures. As 

cardiac IMD surgeries shifted to the outpatient setting, more of the remaining 

inpatient beneficiaries were in poor or very poor health.
14 GAO-12-583R Implantable Medical Devices

Figure 7: Beneficiary Average Length of Stay, by Cardiac IMD Procedure, 2003-2009

Note: Lengths of stay are those of individuals who are age 65 and over.

Lengths of Stay Differed Substantially by IMD Beneficiaries’ Health Status; Stays 

Declined across Health Status Groups

• For both orthopedic and cardiac IMD procedures, beneficiaries’ lengths of stay 

differed substantially by health status across all years studied. Hospital stays 

were generally 1 to 3 days longer for beneficiaries in poor health compared with 

those in good or fair health.

• For all IMD procedures in our study, lengths of stay declined during the period for 

beneficiaries in all reported health status groups, falling most dramatically for 

IMD beneficiaries in poor health.

• From 2003 to 2009, for each of the four types of orthopedic IMDs,

• The average length of stay for orthopedic IMD beneficiaries decreased 

considerably across all health status groups.

• Because the rate of decline in the average length of stay was greater for IMD 

beneficiaries in poor health compared with those in good or fair health, the 

differences in lengths of stay narrowed significantly by 2009. (See fig. 8.)
15 GAO-12-583R Implantable Medical Devices

Figure 8: Average Length of Stay for Orthopedic IMD Beneficiaries, by Procedure and Health Status, 

2003-2009

Note: Lengths of stay are those of individuals who are age 65 and over. The average lengths of stay for orthopedic IMD 

beneficiaries in very poor health are not shown because relatively few beneficiaries were in this category.

• For the period studied, the average IMD beneficiary length of stay generally 

declined for all cardiac procedures and in all health status groups. (See fig. 9.)

• From 2003 through 2007, the average length of stay for inpatient cardiac IMD 

beneficiaries declined for all health status groups.

• From 2007 through 2009, the average length of stay for those in good or fair 

health increased but generally decreased for those in poor or very poor 

health.
16 GAO-12-583R Implantable Medical Devices

Figure 9: Average Length of Stay for Cardiac IMD Beneficiaries, by Procedure and Health Status, 2003-

2009

Note: Lengths of stay are those of individuals who are age 65 and over.

Orthopedic IMD Beneficiaries Were Increasingly Discharged to Home Health 

Care Rather Than Rehabilitative Facilities, while Cardiac IMD Beneficiaries’ 

Discharge Disposition Pattern Was Relatively Unchanged

Orthopedic Beneficiaries Were Increasingly Discharged to Home Health Care

• From 2003 through 2009, an increasing percentage of inpatient orthopedic IMD 

beneficiaries were discharged to home health care. (See fig.10.)

• For example, the share of beneficiaries receiving knee or hip replacements 

who were discharged to home health care grew from 22 to 35 percent and 20 

to 34 percent, respectively.

• At the same time, there was generally a notable reduction in the proportion 

that was discharged to a rehabilitative facility.
17 GAO-12-583R Implantable Medical Devices

• The shift from rehabilitative facilities to home health care has the potential to 

lower Medicare expenditures. In 2008, the estimated overall average Medicare 

payment for SNF and IRF stays were $8,910 and $16,649, respectively, whereas 

the average payment for a home health episode of care was $2,800.20

Figure 10: Beneficiaries’ Discharge Disposition Following Orthopedic IMD Admissions, by Procedure, 

2003-2009

Note: Rehabilitative facilities include inpatient rehabilitation facilities, skilled nursing facilities, and other facilities that provide 

rehabilitative care. Discharge dispositions are those of individuals who are age 65 and over.

• The migration of orthopedic IMD beneficiaries to home health care discharges 

was most evident among those in good or fair health but was also observable for 

those in poor health. (See table 3.) 

 

20Other factors could also affect the cost of postacute care, such as readmissions.
18 GAO-12-583R Implantable Medical Devices

Table 3: Discharge Disposition of Orthopedic IMD Beneficiaries, by Health Status, 2003-2009

Percentage of beneficiaries

Health status

Discharge 

disposition 2003 2004 2005 2006 2007 2008 2009

Good or fair 

health

Rehabilitative facility 53 54 51 47 44 40 40

Home health care 21 25 27 31 32 35 34

Home or self-care 25 20 22 22 23 25 25

Poor health Rehabilitative facility 66 67 64 65 61 59 60

Home health care 15 18 20 21 23 24 24

Home or self-care 16 13 14 12 14 15 13

Source: GAO analysis of Healthcare Cost and Utilization Project Nationwide Inpatient Sample data.

Note: Rehabilitative facilities include inpatient rehabilitation facilities, skilled nursing facilities, and other facilities that provide 

rehabilitative care. Disposition data for orthopedic IMD beneficiaries in very poor health are not shown because relatively few 

beneficiaries were in this category. Discharge dispositions are those of individuals who are age 65 and over.

• The Medicare Payment Advisory Commission cited CMS actions when 

describing the shift in orthopedic IMD beneficiaries’ discharge disposition from 

rehabilitation facilities to home health care.21

• In 2004, CMS revised its list of conditions for determining the medical need of 

patients for inpatient rehabilitation services, recognizing only certain 

categories of patients with knee or hip replacements.22

• From 2005 to 2008, CMS Medicare Recovery Audit Contractors found 

medically unnecessary services performed in IRFs following joint replacement 

surgery. This may have further reduced the amount of IRF admissions related 

to joint replacements.

Changes in Health Status for Inpatient Cardiac IMD Beneficiaries Were Not 

Associated with a Substantial Increase in Use of Postacute Care

• During our study period, the share of inpatient cardiac IMD beneficiaries 

discharged to a rehabilitative facility remained relatively stable. (See table 4.) 

• Between 2003 and 2007, the share of inpatient cardiac IMD beneficiaries 

discharged to home or self-care remained at roughly 86 percent.

• After their general decline in health status since 2007, the share of inpatient 

cardiac IMD beneficiaries discharged to home or self-care began to fall 

slightly.

 

21See MedPAC, Report to the Congress: Medicare Payment Policy (Washington, D.C.: March 2011), 

28, accessed October 19, 2011, http://www.medpac.gov/documents/Mar11_EntireReport.pdf. 

22In order for an IRF to be paid under the IRF prospective payment system instead of the acute care 

hospital inpatient prospective payment system CMS requires that 75 percent of the facility’s 

beneficiaries have one or more qualifying medical conditions. CMS revised the 75 percent rule by 

requiring that beneficiaries who receive knee or hip replacements must have undergone bilateral

joint surgery, be extremely obese, or be 85 years or older at the time of admission to the IRF. See 

69 Fed. Reg. 25752, 25775 (May 7, 2004) (relevant provisions currently codified at 42 C.F.R. 

§ 412.29(b)(2)(xiii) (2011)) .
19 GAO-12-583R Implantable Medical Devices

Table 4: Discharge Disposition of Cardiac IMD Beneficiaries, 2003-2009

Percentage of beneficiaries

Discharge disposition 2003 2004 2005 2006 2007 2008 2009

Home or self-care 85 86 86 87 85 84 83

Home health care 7 7 7 6 7 9 9

Rehabilitative facility 7 6 5 5 7 7 7 

Source: GAO analysis of Healthcare Cost and Utilization Project Nationwide Inpatient Sample data.

Note: Discharge dispositions are those of individuals who are age 65 and over.

• The share of cardiac IMD beneficiaries who were discharged to a rehabilitative 

facility also remained relatively stable by health status.

Agency Comments

We obtained comments on a draft of this report from the Department of Health and 

Human Services. The agency responded that it had no general comments and 

provided technical comments, which we incorporated as appropriate.

– – – – – 

As we agreed with your office, unless you publicly announce the contents of this 

report earlier, we plan no further distribution of it until 30 days from its date. We are 

sending copies of this report to the Secretary of Health and Human Services. The 

report will also be available at no charge on our website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact me at 

(202) 512-7114 or cosgrovej@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page of this 

report. Individuals making key contributions to this report include Rosamond Katz, 

Assistant Director; Luis Serna III; and Brian O’Donnell. Zhi Boon also provided 

valuable assistance.

Sincerely yours,

James Cosgrove

Director, Health Care

(290938)
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