Healthcare employers and insurers are adopting or considering several tactics to limit payments for medical services, and since spine surgery can be a high-priced elective procedure, it could be a target going forward.
The price caps seek to limit payments for lab tests, imaging and surgery in "reference pricing" efforts, according to a Kaiser Health News report featured in Medpage Today. Reference pricing already exists for orthopedic procedures in some places — the California Public Employees' Retirement System implemented reference pricing for elective hip and knee replacements three years ago. Here are three quick facts on the program:
• The insurer would pay $30,000 for surgeries performed within the preferred provider organization plan.
• When patients underwent surgery at a "preferred" hospital for $30,000 for less just paid regular cost-sharing.
• Patients had to pay the difference if an in-network hospital charged more than $30,000.
CalPERS saved around $6 million after two years on hip and knee replacements and members saved $600,000, according to the report. Now, CalPERS is setting caps for cataract surgery, colonoscopy and arthroscopic surgery. Could this trend go nationwide? And if it does, will spine surgery caps be next?
Large group and self-insured health plans are now allowed to use reference pricing, and 15 percent of employers with 10,000 or more employees used reference pricing last year; the number was 10 percent among employers with 500 or fewer workers.
Whether reference pricing is good for the healthcare system remains controversial. Some price capping initiatives did not create huge savings, and opponents worry patients will lose access to good quality care.
There are several factors impacting the cost of spine care, and surgeons are now finding ways to lower the overall cost — with or without price caps. They are using less expensive but still high quality implants, performing less invasive procedures that don't require blood transfusions, taking cases into the less expensive outpatient ambulatory surgery center setting and taking steps to lower infection rate and reoperation risks.
A Surgical Directions study from 2013 shows joint replacement hardware typically was 50 percent to 70 percent of total procedure costs; in spine surgery, the hardware can be up to 90 percent of the total cost. With reference pricing initiatives knocking at the door, supply purchasing could be a great first step toward lowering the cost of care and becoming a sustainable specialty in the future.