Cost-Effectiveness of Peritoneal Dialysis Catheter Implantation by Laparoscopy Versus by Open Dissection

John H. Crabtree, Kim E. Kaiser, Isan T. Huen,1 Arnold Fishman
From: Department of Surgery, Southern California Permanente Medical Group, and 1Operating Room Services, Kaiser Permanente Bellflower Medical Center, Bellflower, California, U.S.A.

This study evaluates the cost-effectiveness of laparoscopic implantation of peritoneal dialysis (PD) catheters as compared with insertion by open dissection.
The cost analysis was based on clinical experience with 232 consecutive implants and 23 procedures to rescue catheters from flow dysfunction. Institutional expenses were calculated from the costs of labor and of disposable and reusable materials. Payer costs were taken from Medicare reimbursement schedules for outpatient, inpatient, professional, and ancillary services.
A break-even percentage was calculated, representing the point at which the laparoscopic procedure became cost-effective because of a lower incidence of costly catheter rescue procedures. An observed difference in the incidence of catheter obstruction between laparoscopic and open procedures exceeding this percentage would indicate that the laparoscopic approach was cost effective.
The calculated break-even value varied between 1.5% and 26% depending on whether the procedures were performed exclusively on an inpatient or outpatient basis. Given our inpatient/outpatient case mix, a weighted calculation of the break-even value was 9.4%. The observed difference in incidence between the two implant methods was 10.8% overall and 16.4% for the last 91 consecutive laparoscopic procedures.
The analysis demonstrates that our laparoscopic implantation procedure is a cost-effective means of establishing PD access as compared with the open dissection technique.

Key words

Introduction

The cost-effectiveness of laparoscopic procedures as compared with traditional surgical approaches is usually realized from the savings produced by a shorter hospital stay and an early return to work—factors that favorably balance against the higher cost of performing the operation. Given these factors, laparoscopic cholecystectomy is cost-effective when compared to its traditional counterpart (1,2). But this type of analysis is not applicable when comparing implantation of peritoneal dialysis (PD) catheters using laparoscopic and open dissection methods. Regardless of the approach, most implantation procedures are performed on an outpatient basis. Hospitalization is most often related to non surgical comorbidity factors. Furthermore, lost wages are not a factor, because most renal failure patients reaching the point of requiring dialysis are no longer gainfully employed. Considering these parameters, the high cost of performing laparoscopic catheter implantation seemingly fails to be offset by any economic benefit.
However, the outcome of procedures to implant PD catheters must be measured in terms of successful long-term function of the implanted device. Any analysis of the cost-effectiveness of implantation procedures must include the economic downside of correcting dialysis catheter dysfunction. Proponents of the laparoscopic approach for PD catheter implantation cite more precise placement of the peritoneal catheter with an associated lower incidence of mechanical flow obstruction as the primary advantage of this modality.
The present study was undertaken to compare the cost-effectiveness of laparoscopic implantation of PD catheters to that of open dissection while incorporating the cost considerations of correcting catheter flow dysfunction. The analysis is presented from the perspective of the institution and the payer.

Patients and Methods

Total costs were calculated for dialysis catheter implantation by open dissection and by laparoscopic technique, and for laparoscopic rescue of catheters from mechanical flow obstruction. The cost analysis was based on 63 open dissections, 169 laparoscopic implantations, and 23 laparoscopic rescue procedures performed between August 1992 and September 2000 at the Kaiser Permanente Bellflower Medical Center. Our operative techniques for the procedures discussed here have been reported in detail (3–5). All procedures were performed by the authors (JHC, AF) working from a supply list monitored and controlled by one of us (ITH). All cost data is presented in year 2000 U.S. dollars.
Materials costs are the actual purchase prices in 2000, as provided by the suppliers. For reusable instruments and laparoscopic equipment, a 5-year lifetime was assumed, with annual operating and maintenance costs estimated at 10% of the purchase price (6). The per-procedure cost of reusable instruments and equipment was estimated as the sum of the annualized purchase price and of the operating and maintenance cost, divided by the number of procedures performed per year (7).
Labor costs were calculated by multiplying monitored labor time for each activity by the wage cost per unit time. For calculations from the viewpoint of the payer, professional fees for all procedures and related institutional services were conservatively estimated from Medicare reimbursement schedules, with adjustment for our geographic location.
To determine the difference in the incidence of catheter obstruction at which laparoscopic implantation becomes cost effective, the total cost of correcting the catheter dysfunction was divided by the difference in the total costs of the laparoscopic and the open dissection procedures. This calculation represents the number of open procedures performed, plus the occurrence of one catheter rescue, that breaks even in cost with an equal number of laparoscopic procedures. Expressed as a percentage (1 rescue / n procedures performed × 100), it yields the minimum difference in incidence of catheter obstruction. At this point, laparoscopic implantation becomes cost effective.
Calculation of the percentage difference that produces a break-even point in cost can be summarized in the equation

%Diff = 1 / [ RC / ( LP – OP )] × 100

where %Diff is the percentage difference in incidence that produces a break-even cost; RC is the cost of rescuing a catheter with or without the use of temporary hemodialysis; LP is the cost of laparoscopic implantation; and OP is the cost of open dissection implantation.

Results

Table I itemizes the average hospital outpatient institutional cost per case for PD catheter implantation and for a rescue procedure. The differences in the costs of disposable and reusable supplies between the laparoscopic and the open-implantation procedure were related to laparoscopic equipment. Total operating room time accounted for the differences in labor costs between implantation and rescue procedures. During laparoscopic implantation procedures, adhesiolysis with a harmonic scalpel to eliminate intraperitoneal loculations was required in 6% of cases and omentopexy of redundant omentum was performed in 4% of cases. The costs of adhesiolysis ($387) and omentopexy ($89) were not included in the average cost per case in Table I.
Table II shows Medicare reimbursements for professional services. All services described are consistent with the current procedural terminology (CPT) published by the American Medical Association (8). The surgical fee for implantation of a PD catheter (CPT 49421) is approved as the primary procedure at 100% of the Medicare fee schedule. The diagnostic use of a laparoscope (CPT 49320) in the implantation process is considered a secondary procedure and is approved at 50% of the listed fee. Charges for laparoscopic rescue are reviewed by Medicare and paid, by report, using CPT 49329. The reimbursement shown for laparoscopic rescue is based on the performance of diagnostic laparoscopy, omentolysis, and omentopexy to restore catheter function. Insertion of a cannula for hemodialysis (CPT 36800) is considered a secondary procedure.
The itemized anesthesia fees for intraperitoneal procedures in the lower abdomen, including laparoscopy, (CPT 00840) are based on our average operating room start-to-stop time for each type of procedure. Nephrology services include a complex office visit for evaluation of new onset of catheter dysfunction (CPT 99215), hemodialysis evaluation (CPT 90935, 90925), and training for postoperative modified protocol for cyclic PD (CPT 90993). Radiology services include the professional component for an abdominal x-ray (CPT 74000) to evaluate catheter dysfunction, and fluoroscopy (CPT 76000-26) during insertion of a venous cannula for hemodialysis. Cardiology services for electrocardiogram interpretation (CPT 93010) are included.
Table III summarizes Medicare costs for outpatient and inpatient services. Reimbursement for outpatient services were estimated from the Hospital Outpatient Prospective Payment System (9). Payments were adjusted for multiple procedures performed on a single day, and for geographic location of the service. Diagnostic services such as laboratory tests and x-rays are not included in the outpatient prospective payment; they are paid separately. Supplies and drugs are ordinarily included in the outpatient prospective payment. The pharmaceutical payment listed in Table III is for epoetin alfa, which is reimbursed separately. The $303 represents the average increase in payment resulting from the average increase in epoetin alfa dosage given to our patients while on two weeks of temporary hemodialysis. The $99 cost for the dialysis center represents the reimbursement for patient training in the postoperative cycler protocol following abdominal surgery. The net increase in cost to Medicare for a single cyclic PD training session is $20 plus the composite rate, corrected for the patient’s usual daily rate.
Medicare payments for inpatient services were based on diagnosis-related groups (DRGs) and adjusted for geographic location of service (10). Implantation procedures are reimbursed on DRG 315. Rescue procedures performed for a primary diagnosis of mechanical complication due to peritoneal dialysis device (ICD 996.56) (11) are reimbursed on DRG 442 (10).
Using the payer costs in Table III, calculation of the percentage difference in the incidence of catheter obstruction between laparoscopic and open dissection methods at which laparoscopic implantation breaks even varies from as low as 1.5% to as high as 26%. The variance reflects implantation and rescue procedures performed exclusively in inpatient or outpatient settings (respectively). However, while approximately 80% of all our implantation procedures were performed in the outpatient setting, only one third of the rescue procedures were performed in this location. Following a rescue procedure, half of patients were managed with temporary hemodialysis. The remainder continued with PD using a two-week modified cycler program of low-volume exchanges while recumbent, and a dry peritoneal cavity while ambulatory.
Taking these factors into consideration, a weighted version of the formula to calculate the percentage difference resulting in break-even cost was used to more accurately reflect the experience at our institution. Table IV shows the assigned fractional weights. Accordingly:

RC = 0.33 [ 0.5 ( 2795 + 3902 ) ] 

+ 0.67 [0.5 ( 11929 + 12470 ) ]
= 9279

LP – OP = 0.8 ( 2821 – 1781 ) 

+ 0.2 ( 10219 – 10028)
= 870

%Diff = 1 / ( 9279 / 870 ) × 100

= 9.4

An observed percentage difference in the incidence of catheter obstruction exceeding 9.4% would indicate that laparoscopic implantation of PD catheters was more cost-effective to the payer than implantation by open dissection. Our observed incidence of catheter obstruction was 17.5% in the open dissection group and 6.7% in the laparoscopic group, a difference of 10.8%. Our catheter obstruction rate for the last 91 consecutive laparoscopic implantation procedures was just 1.1%, representing a 16.4% difference in incidence from the open dissection group. Therefore, our laparoscopic implantation procedures as a whole—and the last 91 cases especially—were shown to be a cost-effective means of establishing PD access.

Discussion

To put the more expensive laparoscopic technology in a favorable position on the balance sheet, studies analyzing the cost-effectiveness of laparoscopic procedures have relied upon shorter hospitalizations accompanied by earlier return to work without sacrifice of patient safety. These parameters are not applicable to performing a cost analysis of dialysis access techniques because the impact on each of these factors is the same no matter which implantation method is used. More important to determining the cost-effectiveness of PD catheter insertion are the successful long-term function of the access device and the cost of fixing the device when it fails.
Our analysis computed actual costs for both the institution and the payer, not charges. For the institution, costs included purchase price of materials, opportunity costs of capital for expensive laparoscopic equipment, reprocessing costs, maintenance, repair, disposal, and labor based on wage cost per unit time. Payer costs for outpatient, inpatient, professional, and ancillary services were taken from Medicare.
For our analysis, we chose to calculate a break-even value. This value was defined as the point at which the more expensive procedure became cost-effective because of a lower incidence of a complication that was expensive to fix. In addition, we weighted the calculation to better reflect our observed differences in cost based on the site of service and the manner in which the complication was repaired. This analysis is institution-specific and emphasizes the importance of each institution performing its own cost study.
For brevity, we reported cost data for only one modality (laparoscopic rescue) to remedy catheter-flow dysfunction. Other approaches—including catheter replacement, laparotomy with omentectomy, and various radiologic techniques—are more expensive from the standpoint of increased length of hospital stay, high recurrence rate of dysfunction necessitating more interventions, and loss of PD as renal replacement therapy with the additional cost of transfer to hemodialysis.

Conclusion

The cost analysis shows that payer reimbursement more than covers institutional costs in all procedures studied. The average net income for the institution was higher for procedures performed in the inpatient setting. For inpatient services, the payer saw a threefold to eightfold increase in cost as compared with the same services performed through the outpatient department. The greater the proportion of dialysis-related surgery performed on an inpatient basis, the easier it was to demonstrate a cost savings to the payer for laparoscopic PD catheter implantation. Reimbursement for professional fees was not influenced by location of service.
The analysis demonstrates that our laparoscopic implantation procedure is a cost-effective means of establishing PD access as compared with the open dissection technique. Laparoscopic PD catheter implantation results in a cost reduction by producing a better outcome. It therefore represents an effective improvement in health care.

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Corresponding author:

John H. Crabtree, md, Department of Surgery, Module 4400, Kaiser Permanente Bellflower Medical Center, 9400 E. Rosecrans Avenue, Bellflower, CA 90706 U.S.A.