Spine bundled payments – 12 things to know

Written by Laura Dyrda | March 26, 2019 | Print  |

Here are 12 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. UnitedHealthcare reported its value-based care program for spine surgeries were associated with 10 percent reduced readmissions and 3.4 percent fewer complications. The bundled payments for total joint replacement and spine bundles was almost $18 million. The payer reported its bundled payment solution reduced hospital readmissions for spine surgery by 10 percent and complications by 3.4 percent.

Furthermore, UnitedHealthcare reported the average lumbar spinal fusion performed through its bundled payment program at a center of excellence was $65,800, compared to the national average of $80,000; discectomies were $24,550 through the bundled program, compared to $38,000 as the national average.

3. Humana expanded its Humana Medicare Advantage bundled payment program to include spinal fusion for four practices: Fort Wayne (Ind.) Orthopedics, Fort Wayne-based Ortho NorthEast, Cincinnati-based Mayfield Brain & Spine and OrthoVirginia with locations in Lynchburg, Richmond and northern Virginia. The payer has had a total joint bundle since 2016, which now has programs in 19 states at 60 practices.

4. 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.

In March, Geisinger and Walmart teamed up to pen an article for the Harvard Business Review, detailing the program's success and outcomes. Around 2,3000 Walmart employees underwent spine surgery or evaluation at a center of excellence from 2015 to 2018; 46 percent underwent surgery. The employees who underwent care at a center of excellence reported 0.4 days shorter lengths of stay at the hospital and 8 percent lower cost of care. The cost for COE patients was $32,177 on average, compared to $29,770 for non-COE patients.

The article also reported 0.6 percent of the COE patients were discharged to a skilled nursing facility, compared to 2.9 percent of the non-COE patients.

5. An analysis of spine bundled payments published in the March 2019 issue of World Neurosurgery found hospitals are the primary recipient of bundled spine reimbursement, receiving 59.7 percent to 77 percent of the reimbursement. Surgeons typically receive 12.8 percent to 14 percent of the reimbursement while post-acute care rehabilitation receives 3.5 percent to 7.3 percent of the reimbursement.

The average hospitalization index was $32,467 but could range from $11,880 to $107,642 and readmission could increase the 90-day payment by 50 percent to 200 percent for patients undergoing uncomplicated fusions.

6. The Bundled Payment for Care Improvement program has covered lumbar fusions for Medicare beneficiaries undergoing surgery at select hospitals. Initiated in January 2013, the voluntary program covers 90-day episodes of care. A May 2018 study published in Spine examines 89,605 Medicare beneficiaries who underwent lumbar fusions, with 7 percent coming from risk-bearing hospitals and 36 percent seen by a preparatory hospital.

The study authors found procedure volume at risk-bearing hospitals increased slightly compared to non-participants, and the 90-day episodes did not reduce the cost of care. The bundled payment group also had a 2.7 percent increase in readmissions and 30.6 percent increase in repeat surgery rate.

7. 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."

8. 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."

9. 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.

Three quotes from spine surgeons about bundled payments in the future:

10. J. Brian Gill, MD. Nebraska Spine Hospital (Omaha): Bundled-payments continue to gain traction as Medicare has launched a program for hospitals in an attempt to control costs. There is more pressure to be more vertically integrated in an attempt to control costs from start to finish for procedural episodes such as spine surgery. Ongoing reports show independent practices are continuing to dwindle as healthcare systems drive to control costs and gain market share. As a partner in an independent practice, we have to continue to work with our healthcare systems to provide value with mutual strategic goals and alliances.

11. Brian Su, MD. Marin General Hospital (Greenbrae, Calif.): Participation in BPCI-A is critical because it forces surgeons to be responsible for cost of care. Emphasis on reducing days in rehabilitation, hospital readmissions and emergency room visits continues to drive savings. The shared savings of cost reduction will be significant over the next several years and is a win-win both for spine surgeons and patients.

I believe that the transition of Medicare bundled payment to commercial insurance is inevitable. Surgeons who are initial adopters of the bundled payment system will have a significant advantage. Included in BPCI is the ability for surgeons to participate in internal cost savings, allowing surgeons to share in savings related to reduction in implant costs in their hospitals. The natural progression is for the surgeon to not only control 90-day postsurgical care but also to control the hospital-based DRG. In that situation, the hospital or surgery center becomes a cost center since anything left in the bundle would go to the surgeon.

12. Jim Sanfilippo, MD. Reconstructive Orthopedics (Marlton, N.J.): As a group, we have entered both bundle payment arrangements that have no downside risk, as well as those with risk sharing. The biggest opportunities for bundled payments and other risk-based alternative payment programs revolve around patient navigation, moving cases to the appropriate site and level of care including hospital outpatient and ASCs, and in partnering with our healthcare systems to streamline our delivery and eliminate unnecessary pre- and postoperative testing and treatments.

With patient navigation we can intervene at the necessary times to help prevent urgent care and ER visits, help drive down readmissions, promote overall compliance following surgery and limit the number of patients needing to go to expensive inpatient rehab facilities. By moving patients to the appropriate level of care, as well as eliminating unnecessary testing and treatments, we can drive down the cost associated with the procedure.

However, my biggest concern is this "race to the bottom" with target pricing being adjusted down with each new contract. Eventually, there will be no more water to squeeze from this stone.

 

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