Here are seven key trends and findings on bundled payments in spine surgery as well as thoughts from four surgeons who believe bundling will become more prevalent in the future.
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1. At the Association for Collaborative Spine Research during ISASS17 meeting, Philadelphia-based Rothman Institute President Alexander Vaccaro, MD, gave a presentation about his organization's efforts to implement bundled payments. SpineUniverse published coverage of the presentation. Key takeaways from Dr. Vaccaro's presentation include:
• Identify costs for all individuals who have contact with the patient or case from preoperative through the postoperative period to determine costs
• Physicians can determine controllable expenses and identify unnecessary costs, including imaging overuse
• Conduct a risk assessment for each patient to determine whether the inpatient or outpatient setting is the most appropriate for care
• Understand how the complexity of each case can influence associated costs
• Negotiate reimbursement for episodes of care with the patient characteristics in mind
• Discharge patients based on their condition instead of maximizing insurance coverage benefits, especially for postoperative rehabilitation
"A patient-facing compensation model would reimburse the same amount for the same service and not backload support payments for general — often unneeded — facility resources into procedure reimbursement," said Dr. Vaccaro during the presentation. "Be aware the differentials are becoming glaringly obvious to payers and the landscape is changing. Expect a narrowing of these margins as payers get better control of their data."
2. Developing the right global payment is one of the biggest challenges for bundled payment initiatives. A 2014 study published in Spine found the average patient DRGs for cervical and lumbar spine surgery ranged from $11,180 to $107,642 for the 30-day episode of care, based on data from 196,918 patients. The post-discharge care accounted for 4 percent to 8 percent of the overall cost in 90-day bundles, and the total bundled costs were relatively flat when researchers increased the bundle length:
• 30-day bundles: $33,522
• 90-day bundles: $35,165
Hospital payments received the biggest portion of the payment, at 76 percent of the bundle.
3. UnitedHealthcare began a bundled payment pilot program for spine surgery and joint replacements in 2015 and expanded efforts to 40 hospitals in 28 markets the following year; by the end of 2017, the program was in 40 markets. Early results from the pilot program show employers recorded $10,000 or more in average savings per operation when compared with the average cost for surgery in their areas, and employees saved around $1,000 out-of-pocket at participating facilities.
4. A 2017 study by Sullivan et al., published in the Current Review of Musculoskeletal Medicine, found spine bundled payments worked better than the total joint bundles because they have the potential to be more cost-effective. After analyzing Medicare data for spinal fusion over a 10-year period, study authors found spinal fusion increased at a higher rate than total joint replacements and hospital charges were up 3.3-fold, hitting $33.9 billion in 2008.
An analysis of one- and two-level ACDFs over seven years showed complications accounted for 0.7 percent of the 90-day reimbursement fund, and just 3.1 percent of reimbursements went to physical therapy, skilled nursing facilities and home health services. The 90-day bundled reimbursement hit $15,417 on average.
"Bundled payments may also affect the location of and disposition following the procedure," concluded study authors. "A shift in case volume will continue towards ambulatory surgical centers. Early data suggests that, with the correct indications and patient population, decreases in cost, morbidity and reoperation are observed."
5. Hospitals with spine bundled payments cite increased volume from large employers, including Walmart and Lowes, as well as third-party administrators was the biggest motivation for creating bundles, according to "A Survey of Innovative Reimbursement Models in Spine Care," published in a 2016 edition of Spine. The additional advantages include:
• Pre-screening mechanisms to increase the percentage of patients requiring surgery
• Profit sharing abilities between physicians and hospitals when they achieve efficiency
• Implant vendor negotiations to drive down costs
6. Bundled payments have shown the ability to reduce the costs associated with a single episode of spine care, but not the overall procedure volume, according to Sullivan et al. Surgeons can influence the cost of procedures by their choice of procedure, implant and surgical setting. Patient selection also comes to the forefront in bundled payments.
"If bundled payments become the primary means of reimbursement, healthcare systems will be forced to calculate financial risk based on patients' demographics and comorbidities," concluded Sullivan et al. "Some spine programs already have explicit guidelines which exclude smokers, patients with body mass index over 40 and patients with prior lumbar fusion. These financial risk calculations have inherent ethical implications."
7. An International Society for the Advancement of Spine Surgery survey published in the International Journal of Spine Surgery examined how bundled payments affected spine surgery resource utilization. The 43 survey respondents answered questions about how bundled payments might change their decision making in eight clinical scenarios. The study authors found:
• Cases performed without implants were unchanged for half of the scenarios and increased by an average of 8 percent for the other half
• Autologous iliac crest bone graft use increased in all scenarios 18 percent on average
• Neuromonitoring use would decrease by an average of 21 percent in all scenarios
"Financial disincentives to resource utilization may result in some changes to surgeons' practices, but these appear limited to items with less clear benefits to patients. Choices of implants, which account for the majority of intraoperative costs, did not change meaningfully. A bundling strategy targeting perioperative costs solely related to surgical practice may not yield substantial savings while rationing potentially beneficial treatments to patient care," the study authors concluded.
What spine surgeons are saying
Frank Phillips, MD. Director of the Section of Minimally Invasive Spine Surgery and Director of the Division of Spine Surgery at Rush University Medical Center (Chicago): Bundled payments will continue to evolve with the inevitable march away from a fee-for-service model. Bundles are readily managed for spinal procedures with reproducible and predictable outcomes, such as ACDF. More complex treatments, such as surgery for advanced spinal deformity, will remain a challenge in a value-based purchasing system. With increased emphasis on value and transparency, practices' and practitioners' outcomes will become increasingly available to the public, who will become much more sophisticated healthcare shoppers.
Dwight Tyndall, MD. Spine Surgeon in Private Practice (Munster, Ind.): Important trends are the growth of outpatient spine surgery, bundled payments and application of robot technology. The key business challenges spine surgeons will face this year are decreasing reimbursements and access to patients as narrow networks continue to grow. The best opportunity is to show value within bundled care and to capitalize on outpatient spine surgery as a way to contain cost while showing superior patient outcomes and satisfaction.
Paul Slosar, MD. President of SpineCare Medical Group (Daly City, Calif.): Although it's been on the radar for several years, this may be the year that bundled payment models finally hit their stride. While CMS has adopted a more voluntary posture toward participation, that hasn’t discouraged interest in their Bundled Payments for Care Improvement program, now entering its third year. Commercial payers are following and, in 2018, some will begin with small, selective networks of spine specialists to grow their own risk-sharing programs.
Adam Bruggeman, MD. Texas Spine Care Center (San Antonio): I think it is clear that public and private insurers are increasingly interested in quality over quantity, but they pay based on quantity. With the transition to [the Merit-based Incentive Payment System] and the significant cost pressures, the treatment (operative and nonoperative) of spinal issues will be required to show value for the services provided. The easiest way surgeons will be able to show value is through partnering with CMS and private insurers through bundling in a way that financially incentivizes the physician significantly and also provides the insurance company with cost savings.