Bundled payments in spine: 12 key thoughts for 2020

Written by Alan Condon | January 21, 2020 | Print  | Email

As rising healthcare costs continue to be a burden for patients and providers, new payment models such as bundled payments are gaining traction at healthcare facilities across the country. 

Value-based care is anticipated to grow in popularity over the next decade as the industry looks for alternatives to the current fee-for-service reimbursement model. Ultimately, healthcare organizations are developing bundled payment initiatives to financially incentivize providers to improve outcomes, reduce length of stay and advocate for a multidisciplinary approach to care. 

A transformation is underway, but the jury is still out on the future impact of bundled payments in spine due to the wide variation in surgeries, approaches and levels that may be operated on in any given diagnosis. 

Here are 12 key thoughts and trends on bundled payments in spine and what to expect in 2020:

1. David Janiec, director of payment strategy at Philadelphia-based Rothman Institute, said the spine industry is in the middle of a learning curve. Mr. Janiec believes a well-rounded value-based model can be established within the next eight to 10 years that supports proper patient care, but physicians should be consulted on how to achieve this, not administrators. 

Early bundle developments have highlighted the expansion of evidenced-based medicine, a better understanding of costs, improvements in care coordination and higher quality patient care. For these reasons, it's imperative "not only to participate in these value-based models for educational and financial benefit … but also to look with a critical eye to ensure a sustainable final model evolves."

2. UnitedHealthcare expanded BPCI Bundled Payments to include Medicare Advantage beneficiaries this year. The UnitedHealthcare Care Bundles program came into effect Jan. 1, 2020, offering bundled payments for noncervical spinal fusions. The payer has about 3 million people enrolled in Medicare Advantage plans that have providers participating in value-based models and aims to have $75 billion in reimbursement tied to value-based care annually by the end of 2020.

3. Following the success of its 2016 total joint replacement bundle — which includes 78 practices in 21 states — Humana began offering Humana Medicare Advantage members access to bundled payments for spinal fusion surgery last year. The payer initiated the Spinal Fusion Episode-Based Model at four practices, which has grown to nine practices across seven states, a Humana executive told Becker's. The bundle increases reimbursement for physicians with improved outcomes and cost for spine surgery episodes of care, which is determined by readmission rates, complications and average risk-adjusted episodic cost-of-care. 

4. Domagoj Coric, MD, chief of the department of neurosurgery at Carolinas Medical Center and spine division chief of Atrium Musculoskeletal Institute, both of Charlotte, N.C., told Becker's bundled payments are here to stay, but spine procedures will be more difficult to bundle than orthopedic procedures such as total joint replacement. "More straightforward spine procedures … such as lumbar discectomy, anterior cervical discectomy and fusion or cervical artificial disc replacement lend themselves to bundling. Conversely, more complex procedures such as deformity correction surgery will be difficult — if not impossible — to bundle."

5. Current value-based programs in spine such as the Bundled Payments for Care Improvement initiative depend on diagnosis related groups to determine payments, according to orthopedic researcher Azeem Malik of the Ohio State University Wexner Medical Center in Columbus. One primary concern for spine surgeons is that DRGs may not be enough to deal with the wide variation in spine procedures, as outlined above.

In an article published in The Spine Journal, Mr. Malik's study calculated 90-day costs for all lumbar fusions to be $31,716 ± $18,124, with individual 90-day payments being $54,607 ± $30,643 in DRG-459 — spinal fusion except cervical with major comorbidity or complication — and $30,338 ± $16,074 in DRG-460 — spinal fusion except cervical without major comorbidity or complication. He and his co-authors called on policymakers to account for individual patient, state and procedure variation seen within DRGs to stop the formation of financial disincentives in caring for sicker patients and performing more complex fusions.

6. In a 2019 study on bundled payments for lumbar spinal fusions, Wesley Bronson, MD, et al., of New York City-based NYU Langone Medical Center-Hospital for Joint Diseases, found that increased case complexity was responsible for rising costs relative to the negotiated baseline target price. 

Researchers analyzed two-year data of one institution participating in the BPCI program and determined that the value-based model "may discourage advancement in spine surgery due to the financial penalty associated with novel techniques and technologies." Four study details:

7. The proposed transition from fee-for-service to bundled payments may drive further private equity interest in spine surgery, according Matthew Galetta, an orthopedic spine research fellow at Rothman Institute in Philadelphia. Advances in technology and minimally invasive surgery have made it possible for several spine procedures to be performed outpatient at a reduced cost. Mr. Galetta describes an ideal private equity target as stable with recurring cash flow to enable liquidity to pay off debt and interest payments, which orthopedic practices typically possess. 

"Arguably the most attractive aspect of orthopedic practices for private equity firms is the opportunity of less invasive ancillary services, such as medical imaging, physical therapy, and sports medicine," Mr. Galetta said. "Not only [do they] provide practices with an in-house complement to surgery for bundled payment reimbursements purposes, but also offer an entirely new business opportunity that circumvents bundled payments altogether.

8. In a 2017 study published in The Spine Journal, Susan Odum, PhD, senior research scientist at OrthoCarolina Research Institute in Charlotte, N.C., set out to determine if there was value in retrospective 90-day bundled payment models for lumbar spinal fusions. Despite OrthoCarolina's efforts to contain costs with clinical practice guidelines and a BPCI management team, "expenditures were only slightly lower for BPCI lumbar patients." Dr. Odum ultimately found that lumbar fusion bundles were very challenging to manage due to the high variability of complex surgeries and discontinued the spine BPCI.

Key thoughts from four spine surgeons on how bundled payments will develop in the field:

9. Jeffrey Wang, MD. Keck School of Medicine of University of Southern California (Los Angeles): [Value-based care] is already developed and is making surgeons think more globally about treating patients and all the steps involved in the care of the patient. In the end, I am hopeful this will enhance the patient experience as it looks at the global situation, trying to make things more efficient and cost-effective for all. Hopefully, [bundled payments] will eventually result in more efficient and effective care with less complications and better patient satisfaction. It forces the interaction of the clinicians with the hospital system and scrutinizes all aspects of care. I know it will be fraught with frustrations, initial struggles and some pushback. However, as clinicians work with hospitals and make improvements in the entire system, there will hopefully be benefits in efficiencies.

10. Zeeshan Sardar, MD. NewYork-Presbyterian Och Spine Hospital (New York City): Spine surgery is quite unique due to the variability in the number of levels to be addressed during surgery and the type of surgery performed which may or may not involve the use of instrumentation. These new payment models would have to start with more homogenous procedures such as one level decompression, discectomy and ACDF. Implementation of such models may provide the opportunity to review the entire episode of care and optimize the use of resources as well as identify potential areas that require improvement. On the other hand, bundled payments could make surgeons and hospitals more wary of performing surgery on certain high risk patients.

11. Jonathan Gottlieb, MD. Minimally Invasive Spine Center of South Florida (Miami): I think at some level we are always striving towards efficiency whether it's in the operating room or when it comes to the best value for your dollar. There are a number of measures that are utilized to determine whether we are offering value-based care. But at the end of the day, it is going to be incumbent upon us to deliver a certain quality of care within an allocated number of dollars given to us. If somebody says, 'do what you need to do and let me know the cost,' in most cases it's going to cost more. But if you have an entity that says you have 'x' amount of dollars to complete the procedure, you will look for the most efficient ways to do it and I think invariably there will be cost savings in the system. It will put pressure on the people who are the least efficient and the ones that consume the most resources without providing anything meaningful in return. 

12. Lali Sekhon, MD, PhD. Reno (Nev.) Orthopedic Clinic: It sounds good in principle — tying reimbursement to efficiency and effectiveness. However, the execution is difficult. I have presented outcomes data to payers in contract negotiations and it is mostly ignored. The cynic in me says it will be used like meaningful use was; a stick rather than a carrot. Another way for payers to reduce reimbursement and increase denials. 

More articles on spine:
Inspired Spine completes 1,000 OLLIF procedures — 4 things to know
10 things to know about Hospital for Special Surgery for 2020
Former Medtronic R&D director joins Miach Orthopaedics — 3 things to know

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