A very interesting study out of Philadelphia’s Rothman Orthopaedic Institute took a detailed look at the phenomenon of private insurer bundled payment programs for lumbar fusions and found that about a third lose money for the hospital or clinic.
As co-author Alex Vaccaro M.D., Ph.D., M.B.A., explained to OTW: “Although the U.S. government has an Advanced Model of the Bundled Payments for Care Improvement Initiative for spine, if surgeons use newer technology such as robots or artificial intelligence, then costs will increase, and any potential shared savings decreases.”
Furthermore, Dr. Vaccaro noted, “Bundles are based on DRG [diagnosis-related group] payments and not CPT [current procedural terminology] codes which better differentiate between smaller and larger procedures. Therefore, a multilevel fusion would be reimbursed by a payor at a similar amount to procedures with fewer levels fused.”
“Government bundles also do not account for economic price differences by region. It is much more expensive to undergo spine fusion in the Northeast than in the rural Midwest—and there is no CPT modifier for circumstances surrounding these complex procedures.”
To measure the full extent of these issues, Dr. Vaccaro and other members of the Rothman team designed and implemented a study of 542 lumbar fusion episodes. The resulting paper, “Procedures employing interbody devices and multi-level fusion require target price adjustment to build a sustainable lumbar fusion bundled payment model,” appears in the June 9, 2023 edition of The Spine Journal.
The Rothman team cited variability in surgical approaches, devices and costs for spine fusion and then homed in on the effects of such cost differences in a bundled payment model.
This is, we believe, the first study to evaluate these payment models in lumbar spine fusions.
The study was a retrospective single-institution cohort study which documented 120-day episode of care net financial surplus/deficit, 90-day readmission rates, discharge disposition, and length of hospital stay.
The Rothman research team mined the Rothman payer database and focused on:
- surgical approach
- posterior lumbar decompression and fusion,
- transforaminal lumbar interbody fusion, and
- circumferential fusion
- levels fused, and
- primary vs. revision surgery
The study collected data from 542 lumbar fusions, of which 312 were posterior lumbar decompression and fusion cases, 416 single-level fusion cases, and 477 primary fusion cases.
The researchers found that 197 of all procedures resulted in a net loss and were more likely to require three levels (7.11% vs. 2.03%), revisions (18.8% vs. 8.12%), and transforaminal lumbar interbody fusion (47.7% vs. 35.1%) or circumferential fusions (5.58% vs. 1.16%).
The team determined that one-level posterior lumbar decompression and fusions resulted in the most cost savings per episode ($6,883).
Both posterior lumbar decompression and fusions and transforaminal lumbar interbody fusion, 3-level procedures resulted in losses of -$23,040 and -$18,887, respectively.
For circumferential fusions, 1-level fusions resulted in a deficit of -$17,169 per case which rose to -$64,485 and -$49,222 for 2- and 3-level fusions.
All 2- and 3-level circumferential spinal fusions resulted in a deficit.
Using a multivariable regression approach to analyzing the data, transforaminal lumbar interbody fusion and circumferential fusions were independently associated with a deficit of -$7,378 and -$42,185, respectively. Three-level fusions were independently associated with an additional -$26,003 deficit compared to single-level fusions.
Race to the Bottom?
“While in their current state, bundled payment models are bending the cost curve, it’s essentially a ‘race to the bottom’ formula,” said Dr. Vaccaro to OTW. “Surgeons are put in the position of competing against themselves, rather than being compared to their peers or others in the same geographic region. We were part of the Medicare total joint arthroplasty bundle for 15 years, but we reached a point where we could not save any more money. Now we have reached that point with lumbar fusion.”
A Spine ≠ Hip or Knee
“Spine fusions are generally more inherently variable in terms of complexity and instrumentation than hip or knee surgery, and CPT codes must be added to account for the inconsistency in approaches and cost,” added Dr. Vaccaro. “Additionally, the Centers for Medicare and Medicaid Services should move forward with formulating appropriate modifiers for social determinants of health as well.”
“Spinal fusion spending in this country has increased roughly 500% between 1998 and 2006, which is clearly unsustainable. If adjustments are not made, we risk access to care issues as surgeons and hospitals will ultimately be reluctant to perform these procedures.”
