Reimbursement Related to a 90-Day Episode of Care for a One or Two-Level Anterior Cervical Discectomy and Fusion

Virk, Sohrab S. MD, MBA; Phillips, Frank M. MD; Khan, Safdar N. MD

Journal of Bone & Joint Surgery - American Volume:
doi: 10.2106/JBJS.15.01169
Scientific Articles

This article was updated on September 7, 2016, because of a previous error. On page 1381, the third column in Table V had read “Reimbursement per Patient*” and now reads “Total Reimbursement per Code*.” Additionally, the footnote for Table V had read “*The values are given as the reimbursement, with the percentage of the total reimbursement in parentheses. The total percentage from the top 5 CPT codes is 15.79%” and now reads “*The values are given as the total reimbursement for each code, with the percentage of the total reimbursement of $69,469,550 in parentheses. The total percentage from the top 5 CPT codes is 15.79%.”

An erratum has been published: J Bone Joint Surg Am. 2016 Oct 19;98(20):e94.

Background: A bundled payment represents a single payment for services during an episode of care for a surgical procedure. Anterior cervical discectomy and fusion (ACDF) and associated 90-day costs have been suggested as a bundle amenable to such a payment structure; however, to our knowledge, there are limited available data with regard to costs related to this procedure and subsequent care.

Methods: The Medicare 5% National Sample Administrative Database was used to catalog clinical and financial data associated with the day of the surgical procedure and the 90-day postoperative period for patients undergoing a one to two-level ACDF procedure from 2005 to 2012. We simultaneously queried the database for total knee replacement as a means to compare the payments and to verify the reliability of our analysis.

Results: A total of 4,506 patients underwent an ACDF procedure for cervical radiculopathy. The total 90-day reimbursement was $69,469,550 or a mean cost per patient (and standard deviation) of $15,417 ± $947 (median, $15,589). As a comparison, the mean reimbursement for patients who had undergone a total knee replacement amounted to $17,451 per patient. The physician reimbursement for ACDF represented 20.42% of the total, with the surgeon receiving 18.07% of the total reimbursement. Revision surgery, readmission, and emergency department reimbursement accounted for 0.71% of the total reimbursement. Reimbursement for rehabilitation services, including physical therapy, skilled nursing facilities, and home care, represented 3.11% of the total reimbursement. There was a significant variation in reimbursement among geographic regions in the United States (p < 0.001), with the highest in the West.

Conclusions: To our knowledge, this study is the first report on 90-day reimbursement per patient for one to two-level ACDF procedures in a Medicare cohort. Payments varied significantly among geographic locations. Our study provides a reimbursement benchmark for one to two-level ACDF procedures. Clarifying the payments relative to costs will help providers to understand whether a bundled payment for the ACDF procedure is economically viable.

Author Information

1Department of Orthopaedics, Wexner Medical Center at The Ohio State University, Columbus, Ohio

2Midwest Orthopaedics at Rush, Rush University Medical Center, Chicago, Illinois

E-mail address for S.N. Khan:

Article Outline

The Patient Protection and Affordable Care Act (PPACA) will likely result in substantial changes to the delivery of medical care in the United States. The goals of these changes will be to make health care more affordable, accessible, and of higher quality for all patients1. To accomplish these goals, there has been a movement away from separate payments for individual services toward a system that provides bundled payments for multiple services during an episode of care2.

There has been research into the role of a bundled payment for an episode of care in operative procedures including total joint arthroplasty and lumbar spinal fusion3-5. Simultaneously, there have been numerous Centers for Medicare & Medicaid Services (CMS) trials aimed at prospectively paying select institutions for specific diagnosis-related groups (DRGs) for the day of the surgical procedure to 90 days afterward. This payment would encompass services provided by physicians, hospitals, rehabilitation facilities, and others involved with the care of a patient over the defined time period.

As studies by Bozic et al. and Ugiliweneza et al. have shown, there can be substantial variation in the amount of care and costs related to a specific episode of care3,4. The purpose of the current study is to delineate and to analyze 90-day reimbursement for one to two-level anterior cervical discectomy and fusion (ACDF) in the treatment of symptomatic cervical radiculopathy. In this study, we analyzed data from the Medicare 5% National Sample Administrative Database to determine the 90-day reimbursement and medical coding associated with one and two-level ACDF procedures. This database has been used for a variety of clinical and financial studies to draw conclusions on treatment provided across the United States6-8. We simultaneously queried the database for total knee replacement as a means to compare the payments for these two common procedures as well as to ensure that our financial analysis matched with previously published literature on costs associated with total knee replacements.

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Materials and Methods

We queried the Medicare 5% National Sample Administrative Database using software from PearlDiver (PearlDiver Technologies). This database is compliant with all regulations associated with the Health Insurance Portability and Accountability Act (HIPAA), as all patient identifiers were removed from the clinical and financial data. The database query began first by identifying patients who had a Current Procedural Terminology (CPT) code associated with a one to two-level fusion and by excluding those patients who had undergone a revision ACDF procedure (Table I). Only ACDF procedures performed in an inpatient hospital setting were included within this study. We only included those patients with International Classification of Diseases, Ninth Revision (ICD-9) codes related to degenerative disc disease and cervical radiculopathy. Those patients with CPT codes associated with more complex cervical procedures were excluded from the analysis. Patients who had ICD-9 codes or CPT codes associated with trauma or cancer were excluded (Table I).

The clinical and financial data for each patient were followed starting on the day that either CPT 63075 or CPT 22554 was entered on the patient’s chart. CPT, DRG, and ICD-9 codes were collected from this date to 90 days after the index procedure. CPT and DRG codes for procedures, such as colonoscopies, carpal tunnel surgical procedures, or shoulder injections, unrelated to the primary cervical diagnosis were excluded. All reimbursement amounts are in U.S. dollars from 2005 to 2012. No adjustments were made for inflation. CPT codes related to diagnostic imaging and injections were included within this analysis. CPT and DRG codes related to revision surgical procedures or readmissions, dysphagia, and neuromonitoring were grouped to perform a subset analysis (Table II). The analysis was repeated in a similar fashion for total knee replacement. The CPT code used to identify patients within this subset was CPT 27447 (arthroplasty, knee, condyle and plateau; medial and lateral compartments with or without patella resurfacing). Codes for revision knee procedures, bilateral procedures, infections, and partial knee replacements were excluded (Table III). There is no inclusion of reimbursement for services provided for diagnostic work-up of cervical radiculopathy prior to the day of the index procedure. Any preoperative medical evaluations, laboratory tests, or imaging studies that did take place on the day of the index procedure are included within the hospital and inpatient admission reimbursement amount.

A total of 4,506 patients underwent a one or two-level ACDF procedure and met the study inclusion criteria. The overall demographic data for patients who had undergone an ACDF procedure are listed in Table IV. The overall demographic data for the entire Medicare database from which the 5% Medicare database is derived are also shown in Table IV.

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Statistical Analysis

A one-way analysis of variance (ANOVA) was used to assess variations in payment in geographic areas and across different years in which the procedures were performed. A one-way ANOVA was also performed to compare CPT and DRG codes among regions. If any results were significant, we performed a post hoc analysis using paired Student t tests between each group. The p value was adjusted in the post hoc analysis using the Bonferroni correction. Significance was set at p < 0.05.

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The total reimbursement for 4,506 patients who had undergone ACDF procedures was $69,469,550, or a mean cost per patient (and standard deviation) of $15,417 ± $947 (median, $15,589) from the day of the operation to 90 days after that index procedure. The CPT codes with the largest total reimbursement were CPT 63075 (discectomy, anterior, with decompression of spinal cord and/or nerve root[s], including osteophytectomy; cervical, single interspace), CPT 22845 (anterior instrumentation; 2 to 3 vertebral segments), CPT 22554 (arthrodesis, anterior interbody technique, including minimal discectomy to prepare interspace [other than for decompression]; cervical below C2), CPT 22851 (application of intervertebral biomechanical device[s] [eg, synthetic cage(s), threaded bone dowel(s), methylmethacrylate] to vertebral defect or interspace), and CPT 22551 (arthrodesis, anterior interbody, including disc space preparation, discectomy, osteophytectomy, and decompression of spinal cord and/or nerve roots; cervical below C2) (Table V). The top 5 CPT codes accounted for 15.79% of the total reimbursement. A complete breakdown of the proportion of reimbursement for various subcategories of care for patients who have undergone ACDF procedures is shown in Table VI. The surgeon-related CPT codes represented 18.07% of reimbursement and the anesthesia-related CPT codes represented 2.35% of reimbursement. The overall physician reimbursement was 20.42% of the total reimbursement. These codes include reimbursement for all CPT codes related to surgical procedures as well as anesthesia-related work. The total reimbursement to hospitals for inpatient care represented 72.84% of the total reimbursement. Reimbursement for the highest reimbursed DRG codes is listed in Table VII. The 90-day reimbursement for rehabilitation service, including physical therapy, skilled nursing facilities, and home care, totaled $2,162,200 and represented 3.11% of the total reimbursement.

Complications related to ACDF procedures such as dysphagia, revision procedures, and emergency room visits accounted for a small portion of overall reimbursement for patients who had undergone ACDF procedures. Dysphagia-related reimbursements (that is, reimbursements related to swallowing studies and laryngoscopy) accounted for 0.05% of overall reimbursement. Revision surgical procedures, readmission, and emergency department reimbursement accounted for 0.71% of the total reimbursement.

The mean reimbursement per patient differed by U.S. geographic region (p < 0.001) (Table VIII). Our post hoc analysis showed that there is a significantly higher reimbursement for the West compared with that for the Northeast (p = 0.002) and compared with that for the Midwest (p = 0.039). This same post hoc analysis showed that reimbursement for the South was significantly higher than that for the Northeast (p = 0.043). The most highly reimbursed CPT/DRG codes are also broken down by region in Table IX (p > 0.05). The mean reimbursement per patient in each year from 2005 to 2012 is shown in Table X. There was a trend toward increased reimbursement from 2005 to 2012, but this was not significant (p = 0.082).

A separate analysis was performed comparing one and two-level ACDF procedures. The mean reimbursement was $15,927 ± $1,940 for a one-level ACDF procedure and $15,362 ± $1,197 for a two-level ACDF procedure (p = 0.24).

There were a total of 77,380 patients who met our inclusion criteria for total knee replacements from 2005 to 2012. The overall reimbursement for these patients was $1,350,359,472, or $17,451 per patient.

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In this study, we identified that per-patient payment for patients undergoing a one to two-level ACDF procedure from the day of operation to 90 days after that index procedure was $15,417 ± $947 (median, $15,589). More than 70% of the reimbursement was directed to hospital payments, excluding physician payments. Significant regional variations in reimbursement were observed. Revision surgical procedure and readmission-related reimbursement accounted for approximately 1% of the overall reimbursement.

To our knowledge, this study is the first report of 90-day reimbursement per patient for one to two-level ACDF procedures in a Medicare cohort. These reimbursements represent both Part A payments to hospitals and Part B payments to providers. Our study did not take into account Medicare Supplemental Insurance (Medigap) payments, which would have increased our total reimbursement figures. A relative strength of this study is the fact that it represents an analysis of a large Medicare database with a wide cross-section of patients included within the study analysis. This access to reimbursement data can be difficult given the proprietary nature of such figures. Reimbursement data are valuable given that they represent the monetary impact of ACDF procedures on the Medicare system. As with other large database studies that rely on physician and hospital billing of CPT, ICD-9, and DRG codes, there were weaknesses associated with this study related to discrepancies between claims databases and patient chart reviews9. However, hospitals and providers have a vested interest in accurately portraying charges for third-party payers to avoid fraud allegations and to be appropriately compensated for their work. A major limitation was that there were no reimbursement figures included for prescription medications, which would potentially have meant an overall underestimate of total reimbursement per patient. No private payer data were included in this study, and it is likely that reimbursement in that population would have been higher than that in the Medicare population.

The reimbursement data for knee replacement in the current study closely match those described in a prior publication10, providing an internal test for the reliability of our data analysis. It is interesting to note the similarity in reimbursement per patient between the ACDF procedure and the total knee arthroplasty. Both procedures have been validated as cost-effective interventions11-13. Ament et al. reported that both ACDF and cervical disc replacement procedures were cost-effective over a 2-year period14. Similarly, Bedair et al. found that a total knee replacement for a patient in his fifties is cost-effective compared with nonoperative treatment15. The cost-per-quality-adjusted life-year (QALY) figures for total knee replacement have varied from $18,700/QALY to $9,680/QALY16-18. At 5 years, the cost per QALY gained for a one-level ACDF procedure has been shown to be $23,460/QALY. Both procedures fall well below the generally accepted $50,000/QALY threshold typically used to determine if a procedure is cost-effective. The long-term economic impact of a repeat surgical procedure such as revision knee replacement or treatment of infection, as well as a revision cervical surgical procedure for pseudarthrosis or adjacent segment disease, requires further study. An important note is that the values provided in this article do not necessarily correlate with the cost or financial impact of an ACDF procedure on a surgeon, hospital, or third-party payer. The figures only represent reimbursement, which may underestimate the cost. Further research is required in areas such as time-driven activity-based costing to accurately determine the cost of any individual surgical procedure19-21. When cost analysis gets to this level of detail, the aspects of care that physicians control may play a larger role in determining the resources used for a particular bundled payment. This would likely include greater detail on the choice of implant and other direct costs22.

In this study, we identified significant variation in reimbursement for ACDF procedures between geographic regions. Prior studies have similarly shown differences in utilization of care between geographic regions for spine care23,24. Utilization of resources for common spinal procedures such as posterior lumbar fusion does vary on the basis of region25. Furthermore, reimbursement for posterior lumbar fusions also was found to vary on the basis of region, with the lowest rates in the Midwest26. These findings are consistent with our own study, which showed that overall reimbursement for ACDF in the Midwest was lower than that in both the West and South regions. The specific reason for and implications of this difference for patients undergoing ACDF procedures will require further research.

In the current study, reimbursement for the spinal surgeon was 18.07% of the total reimbursement. During the period of the study, surgical coding for anterior decompression (63075) and anterior fusion (22554) was bundled to code 22551. The mean reimbursement for these codes was $847 per patient for CPT 63075 and $586 per patient for CPT 22554 (total of $1,432) compared with $1,382 per patient for the bundled CPT 22551. Interestingly, total reimbursements for ACDF trended upward during the same period that surgeons’ fees were reduced as a result of the new bundled payment. Although payments to physicians have been implicated in the rise of health-care costs27, the data suggest that the greater opportunity for reducing expenses involves hospital-related reimbursement. Hospitals tend to be inefficient venues for providing elective surgical services on relatively healthy patients. Studies have shown that spinal surgical procedures performed in outpatient surgicenters are safe and provide substantial cost savings28. One retrospective study of 26 patients undergoing cervical disc arthroplasty in an outpatient setting showed cost savings of 84% when compared with cervical disc arthroplasty performed in an inpatient setting29. Since the introduction of the PPACA, hospital systems have merged and have expanded, making reining in hospital costs more challenging. Policy-makers will need to navigate the current climate to ensure that benefits from cost savings are shared among stakeholders such as patients, physicians, hospitals, and third-party payers as ACDF procedures move toward a more cost-efficient outpatient setting.

For numerous orthopaedic procedures, the costs associated with complication such as infections or venous thrombosis, often leading to readmissions or extended lengths of stay, are important drivers of costs. Complications from total knee arthroplasty can result in 65% higher 90-day costs for individual patients30. In fact, there have been efforts to tie reimbursement to eliminating certain complications (never events)31. In contrast, after ACDF for radiculopathy, complications were infrequent and accounted for a mean of only 0.71% of reimbursements in the 90-day surgical period. Postacute inpatient rehabilitation has been used by >50% of patients after they underwent a total knee arthroplasty, according to an analysis of the Medicare database between 1997 and 201032. Furthermore, 70% of post-discharge payments after total knee arthroplasty go toward postacute care facilities3. However, the impact of rehabilitation services for ACDF procedures within our study was much smaller. Only 3.11% of ACDF reimbursement went toward physical therapy, skilled nursing facilities, or a home health service.

The population analyzed in the current study is derived solely from Medicare patients. Of importance is that Medicare covers a substantial number of patients who are younger than 65 years of age (Table IV), and, given the diagnosis and procedures studies, it is not surprising that younger Medicare patients were overrepresented33.

In conclusion, the total reimbursement per patient as shown through the Medicare 5% database for one to two-level ACDF procedures was $15,417 per patient. CPT and DRG codes related to revision surgical procedure or readmission accounted for only 0.71% of total reimbursement. Rehabilitation and home-care services represented 3.11% of total reimbursement. There were significant geographic variations in reimbursement for an ACDF procedure and a trend toward increased overall reimbursement between 2005 and 2012. These data provide a benchmark for ACDF reimbursement in the treatment of radiculopathy in a bundled payment system.

Investigation performed at the Department of Orthopaedics, Wexner Medical Center at The Ohio State University, Columbus, Ohio

Disclosure: There was no source of external funding for this study. The Disclosure of Potential Conflicts of Interest forms are provided with the online version of the article.

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