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Cited by 38Healthcare Policy and ManagementSpine and Intervertebral Disc PathologyHealthcare cost, quality, practices

Are current DRG-based bundled payment models for lumbar fusions risk-adjusting adequately? An analysis of Medicare beneficiaries

Malik, Azeem Tariq, Phillips, Frank M., Yu, Elizabeth, Khan, Safdar N.·2020·The Spine Journal
DOI 10.1016/j.spinee.2019.04.024
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Abstract

Background context Current bundled payment programs in spine surgery, such as the bundled payment for care improvement rely on the use of diagnosis-related groups (DRG) to define payments. However, these DRGs may not be adequate enough to appropriately capture the large amount of variation seen in spine procedures. For example, DRG 459 (spinal fusion except cervical with major comorbidity or complication) and DRG 460 (spinal fusion except cervical without major comorbidity or complication) do not differentiate between the type of fusion (anterior or posterior), the levels/extent of fusion, the use of interbody/graft/BMP, indication of surgery (primary vs. revision) or even if the surgery was being performed for a vertebral fracture.Purpose We carried out a comprehensive analysis to report the factors responsible for cost-variation in a bundled payment model for spinal fusions.Study design Retrospective review of a 5% national sample of Medicare claims from 2008 to 2014 (SAF5).Outcome measures To understand the independent marginal cost impact of various patient-level, geographic-level, and procedure-level characteristics on 90-day costs for patients undergoing spinal fusions under DRG 459 and 460.Methods The 2008 to 2014 Medicare 5% standard analytical files (SAF) were used to retrieve patients undergoing spinal fusions under DRG 459 and DRG 460 only. Patients with missing gender, age, and/or state-level data were excluded. Only those patients who had complete data, with regard to payments/costs/reimbursements, starting from day 0 of surgery up to 90 days postoperatively were included to prevent erroneous collection. Multivariate linear regression models were built to assess the independent marginal cost impact (decrease/increase) of each patient-level, state-level, and procedure-level characteristics on the average 90-day cost while controlling for other covariates.Results A total of 21,367 patients (DRG-460=20,154; DRG-459=1,213) were included in the study. The average 90-day cost for all lumbar fusions was $31,716±$18,124, with the individual 90-day payments being $54,607±$30,643 (DRG-459) and $30,338±$16,074 (DRG-460). Increasing age was associated with significant marginal increases in 90-day payments (70-74 years: +$2,387, 75-79 years: +$3,389, 80-84 years: +$2,872, ≥85: +$1,627). With regards to procedure-level factors-undergoing an anterior fusion (+$3,118), >3 level fusion (+$5,648) vs. 1 to 3 level fusion, use of interbody device (+$581), intraoperative neuromonitoring (+$1,413), concurrent decompression (+$768) and undergoing surgery for thoracolumbar fracture (+$6,169) were associated with higher 90-day costs. Most individual comorbidities were associated with higher 90-day costs, with malnutrition (+$12,264), CVA/stroke (+$5,886), Alzheimer's (+$4,968), Parkinson's disease (+$4,415), and coagulopathy (+$3,810) having the highest marginal 90-day cost-increases. The top five states with the highest marginal cost-increase, in comparison to Michigan (reference), were Maryland (+$12,657), Alaska (+$11,292), California (+$10,040), Massachusetts (+$8,800), and the District of Columbia (+$8,315).Conclusions Under the proposed DRG-based bundled payment model, providers would be reimbursed the same amount for lumbar fusions regardless of the surgical approach (posterior vs. anterior), the extent of fusion (1-3 level vs. >3 level), use of adjunct procedures (decompressions) and cause/indication of surgery (fracture vs. degenerative pathology), despite each of these factors having different resource utilization and associated costs. When defining and developing future bundled payments for spinal fusions, health-policy makers should strive to account for the individual patient-level, state-level, and procedure-level variation seen within DRGs to prevent the creation of a financial dis-incentive in taking care of sicker patients and/or performing more extensive complex spinal fusions.

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  • Precise cost information based on well-represented patient data may assist payers in adjusting payment policies to further increase efficiency and support new payment initiatives.

    “At the same time, precise cost information based on well-represented patient data may also assist payers in adjusting payment policies to further increase efficiency and support new payment initiatives19,20.”

    From Early prediction of diagnostic-related groups and estimation of hospital cost by processing clinical notes (2021) · cites this paper as [20]

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Authors
Malik, A. T., Phillips, F. M., Yu, E., & Khan, S. N.
Affiliations
  • The Ohio State University Wexner Medical Center (US)
  • Rush University Medical Center (US)
Corresponding author
Malik, Azeem Tariq
ORCID
Venue
The Spine Journal
Publisher
Elsevier BV
Published
2020-01
Volume
20
Issue
1
Pages
32-40
ISSN
1529-9430 (ISSN-L)
DOI
10.1016/j.spinee.2019.04.024
OpenAlex
W2945383076
Cited by
38
References
36
Citations by year
2026: 4 · 2025: 3 · 2024: 1 · 2023: 9 · 2022: 7 · 2021: 5 · 2020: 7 · 2019: 2
FWCI
6.55
Type
journal article
Language
en
Open access
closed
Licence
Locations
  • The Spine Journal (publishedVersion)
  • PubMed (publishedVersion)
Funders
Medtronic
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Healthcare Policy and Management
  • Health Sciences › Medicine › Pathology and Forensic Medicine › Spine and Intervertebral Disc Pathology
  • Health Sciences › Health Professions › General Health Professions › Healthcare cost, quality, practices
Keywords
diagnosis-related groups, bundled payment, lumbar fusion, spinal surgery, risk adjustment, Medicare reimbursement, cost variation, vertebral fractures, geographic variation in costs
MeSH terms
Aged, Diagnosis-Related Groups, Female, Medicare, Humans, Insurance Benefits, Lumbosacral Region, Male, Spinal Fusion, United States, Decompression, Surgical

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