A study recently published in Spine examines the variation in spine surgery costs and the implications that variation could have on evidence-based bundled payments.
The researchers analyzed data from 196,918 patients who underwent cervical or lumbar spine surgery from 2000 to 2009 and had at least two-year preoperative and 90-day postoperative follow-up data. Patients were tracked as though they were part of a simulated episodes-of-care/payment bundles that lasted 30 days, 60 days and 90 days after discharge.
Here are five findings from the study:
1. Patient DRGs ranged from $11,180 to $107,642 for 30-day bundles, with additional significant cost variations within each individual DRG. "Better characterization of impacts of a bundled payment system in spine surgery is important for understanding the costs of index procedure hospital, physician services and postoperative care on potential future healthcare policy decision making," concluded the study authors.
2. Postdischarge care accounted for a small portion of the overall bundle. For the 90-day bundles, the postdischarge care accounted for 4 percent to 8 percent of the overall costs. Patients can be discharged home or to a skilled nursing facility. Through their research, Stryker Performance Solutions experts found the biggest variance in cost of care for one popular DRG Bundle (lower extremity joint replacement — DRGs 469 and 470) was between patients who were discharged to outpatient therapy and those who went to nursing homes after surgery.
"Data shows that people are better off going home and to outpatient therapy after joint replacement than nursing homes when it's possible," says Geoffrey Walton, MHA, Vice President of Alignment, Strategy and Reform at Stryker Performance Solutions in a Becker's Spine Review report. "People are shocked when they see that 50 percent of total costs for TJR are out of the hospital, and only 10 percent is physician costs. Providers have the opportunity now to see what is best for their individual patients and reduce costs. It really empowers these groups to make wise decisions and improve the Triple Aim."
3. Total bundle costs were relatively flat when the researchers increased bundle length. The total average cost of the 30-day bundle was $33,522 compared to the average 90-day bundle cost of $35,165. This could indicate the bulk of charges happen within the first 30 days of surgery.
4. The largest portion of the bundled costs were associated with hospital payments; 76 percent of the bundle went toward hospital payments on average. There are a few factors surgeons can control to reduce the cost of care, including: implant/materials choice, surgical location and type of procedure. A 2012 study shows total hospital costs were reduced by around $3,000 when surgeons performed minimally invasive posterior lumbar interbody fusion instead of the open procedure.
Richard Wohns, MD, founder of NeoSpine in the Puget Sound Area, Wash., published an article describing the cost-effectiveness of outpatient cervical disc arthroplasty in Surgical Neurology International in 2010. The cost of outpatient single-level cervical disc arthroplasty was 62 percent less than outpatient single-level cervical anterior discectomy with fusion using allograft and plate. The arthroplasty procedure cost 84 percent less than inpatient single-level cervical disc arthroplasty.
5. Transition toward bundled payments has been slow for the spine specialty, but many see a risk-sharing payment model in the future. In 2013, Wal-Mart launched bundled payments for their workers to cover six specialties — including spine surgery — with six hospitals. Texas Back Institute in Plano and SpineCare Medical Group in Daly City, Calif., are among the spine practices considering bundled payments.
"I have concluded that spine practices will need business partners to represent their groups in order to negotiate and generate profits from bundled payment strategies," said Paul Slosar, MD, is president of the San Francisco-based SpineCare Medical Group in Daly City, Calif., and medical director of Spine Care Institute of San Francisco, in a Becker's Spine Review report. "Most spine practices have a great depth of talent in working traditional fee-for-service reimbursement strategies but have neither the experience nor capacity to negotiate favorable bundled payment terms from payers."
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