Geographic variations in hospital charges and Medicare payments for major joint arthroplasty

National data on hospital-level charges and Medicare payments have shown that joint arthroplasty is the most common surgical procedure among the elderly. Yet, no study has investigated micro and macro level geographic variations in hospital charges and payment. We used the Medicare Provider Charge Data to investigate Medicare payments and charges for 2750 hospitals accounting for 427,207 patients who underwent major joint arthroplasty and 932 hospitals for 18,714 patients who had a complication/comorbidity. We found a significant difference in hospital charges and payments based on geographic region (P < 0.001). We concluded that hospital charges demonstrate a high variability even when using areas to control for differences in hospital wages and high variation in reimbursements in some areas remains unexplained by Medicare's current method of calculating reimbursement.