Abstract| Volume 19, ISSUE 9, SUPPLEMENT , S108, September 2019

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

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      Current bundled-payment programs in spine surgery, such as the BCPI, 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 instance, 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.


      We carried out a comprehensive analysis to report the factors responsible for cost-variation in a bundled payment model for spinal fusions.


      Retrospective review of a 5% national sample of Medicare claims from 2008-2014 (SAF5).


      The 2008-2014 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.


      All payments made to service providers (surgeon, anesthesiologists and post-acute care) starting from day 0 of surgery up to 90-days postoperatively were used to calculate 90-day costs.


      Multivariate linear regression models were built to assess the independent marginal cost impact (decrease/increase) of each patient-level, state-level and procedure-level characteristic on the average 90-day cost while controlling for other covariates.


      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 (70-74y: + $2,387, 75-79y: + $3,389, 80-84y: + $2,872, ≥85: + $1,627). With regards to procedure-level factors – undergoing an anterior fusion (+ $3,118), >3 level fusion (+ $5,648) vs 1-3 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 (+ $4,415) and coagulopathy (+ $3,810) having the highest marginal 90-day cost-increases. The top 5 states with the highest marginal cost-increase, in comparison to the study population average, were Maryland (+ $12,657), Alaska (+ $11,292), California (+ $10,040), Massachusetts (+ $8,800) and DC (+ $8,315).


      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.


      This abstract does not discuss or include any applicable devices or drugs.
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