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The Spine Blog

Friday, February 8, 2019

Bundled payments for spinal fusion

In an effort to increase the value of surgery, the Centers for Medicare and Medicaid Services (CMS) created the Bundled Payments for Care Improvement (BPCI) program. This program has changed the traditional fee for service model to one in which hospitals and providers are paid a lump sum for the surgical care episode (generally defined from 3 days prior to surgery to 90 days after surgery) independent of the costs and events associated with the episode. The goal is to shift financial risk onto the hospitals and providers in order to motivate them to limit the cost of care while maintaining quality. This payment model has been shown to reduce the cost of care for total joint arthroplasty. In order to determine the effect of this payment model on costs and outcomes in spinal fusion, Dr. Bronson and colleagues from the Hospital for Joint Diseases in New York evaluated their experience with BPCI for non-cervical posterior spinal fusion for degenerative conditions from 2013-2014. They compared costs and outcomes for 350 patients enrolled in BPCI to a baseline cohort of 518 patients treated from 2009-2012. In both cohorts, approximately 94% of patients were classified in DRG 460 (posterior spinal fusion one to eight levels without major complication or comorbidity) with the remainder in DRB 459 (spinal fusion with major complication or comorbidity). The BPCI cohort was more likely to undergo a "complex" surgery, defined as a revision surgery, greater than 3 level fusion, or a procedure including an interbody fusion (i.e. TLIF or PLIF), as compared to the baseline group (45% vs. 23%). Most of this increase in case complexity was driven by increased use of interbody fusion (16% BPCI vs. 2% baseline). They found that the overall Medicare cost for episode was $52,655 in the BPCI cohort compared to $48,913 for the baseline cohort. They calculated that this resulted in a $1.3 million net loss for the BPCI group, despite a shorter length of stay, unchanged readmission rate, and lower rate of discharge to inpatient rehab or skilled nursing facility.

The authors have done a nice job auditing and reporting their experience with the BPCI for spinal fusion. It provides a cautionary tale to institutions considering enrollment in the program. The challenging part of interpreting this paper is that the costs are not itemized, making it impossible to determine what was driving the increased Medicare cost. They also did not perform a micro-cost analysis, so the hospital costs associated with performing the operation were not quantified. This makes it impossible to calculate the margin, which is ultimately what determines the financial viability of any surgical program. While they report a "loss" of $1.3 million, this is relative to what they would have received in Medicare payments outside of the BPCI program. If the institution made changes to reduce their costs associated with surgery (i.e. lower implant costs, lower length of stay, less imaging, lower rate of discharge to facilities, etc.), they may have actually increased their margin despite lower reimbursement by Medicare. Given that they reported increased case complexity including longer fusions and more interbody fusions, this is unlikely given that implant costs likely rose. The authors are correct in stating that a single reimbursement rate for any posterior fusion from one to eight levels regardless of revision status or use of interbody instrumentation is inappropriate. As can be seen from the high standard deviations around the Medicare costs (over 50% of the mean), this is a highly heterogeneous group. The actual hospital costs are likely much more variable given that the Medicare cost is not affected by length of stay or cost of instrumentation and includes a single payment for the inpatient stay based on the DRG. Under the current BPCI model, hospital systems are incentivized to perform the simplest, lowest cost procedure covered by the DRG on the healthiest patients they can find. This could result in the most vulnerable patients with significant comorbidities and complex spine pathology losing access to care. Hopefully this is not the goal of CMS, and future iterations of this program should do a better job of taking case complexity into account.

Please read Dr. Bronson's article on this topic in the February 15 issue. Does this change how you view the role of bundled payments in spine surgery? Let us know by leaving a comment on The Spine Blog.