Retrospective, economic analysis.
To analyze the distribution of 90-day payments for a primary single-level posterior lumbar interbody fusion from Commercial payers and Medicare.
Summary of Background Data.
Episode-based bundled payments aim to align incentives of all health care providers toward the common goal of high quality and economic health care. Understanding the evolving reimbursement models for spine surgery will require knowledge on existing payments, distribution, and variation. Also, it will help identify areas for cost reduction. This is currently not known for a primary single-level posterior lumbar interbody fusion.
Administrative claims data were used to study reimbursements from Commercial payers (2007–Q3 2015), Medicare Advantage (2007–Q3 2015), and Medicare (2005–2012) for a primary single-level posterior lumbar interbody fusion. Distribution of payments among various service providers was studied. In addition to descriptive analysis, variation between regions and payers was studied by a one-way analysis of variance and post hoc Tukey test.
Average hospital costs comprise 74.2% to 77% of the total payments, followed by surgeon's fees which accounted for 12.8% to 13.7%. Overall burden of readmissions/revisions was 2.1% to 2.7%, but for the readmitted patient it constitutes 25% to 54% of the 90-day payment. Inpatient surgery had significantly higher facility costs than outpatient surgery (P = 0.02). The average 90-day payment amount was $51,465, $26,234, and $25,501 for Commercial payers, Medicare Advantage, and Medicare, respectively. There was some regional variation, however not consistent among different payers.
Hospital costs constitute the majority share of 90-day payments, which can be reduced by performing surgery in the outpatient setting. Reducing hospital costs and readmissions can lower the financial burden associated with this common spine procedure.
Level of Evidence: 3