Back Surgery Cost Varies by Location

Surgical Rounds®, August 2014,

One might expect surgeons and hospitals would be reimbursed by Medicare at similar rates for similar surgical procedures; however, a new study in Spine Journal indicates that is not the case.

In the Medicare population alone, the rate of complex spinal surgery has increased roughly 15-fold since 2002. A 2008 economic analysis found that the costs associated with spinal disorders and surgery now exceed that of diabetes and cardiovascular disease.

One might expect surgeons and hospitals would be reimbursed by Medicare at similar rates for similar surgical procedures; however, a new study in Spine Journal indicates that is not the case.

Researchers from the Center for Healthcare Outcome and Policy at the University of Michigan in Ann Arbor examined variation in episode payments for spine surgery in the national Medicare population. Their interest was in identifying root causes when they observed variations. To conduct the study, they identified all patients (N=185,954) in the national fee-for-service Medicare population undergoing spinal stenosis, spondylolisthesis, or lumbar disc herniation surgeries between 2005 and 2007.

The researchers ranked hospitals from least to most expensive and placed them in quintiles. Average episode payments to hospitals in the highest quintile were $34,171, more than double those made to hospitals in the lowest quintile ($15,997). After risk- and price-adjustment, total episode payments to hospitals in the highest quintile remained 47% higher than those in the lowest quintile.

Procedure choice influenced total episode payment heavily. However, after adjusting for procedure choice, hospitals in the highest quintile remained 28% more expensive than those in the lowest.

Discretionary services accounted for the bulk of the differences. Use of post-acute care was the biggest driver of residual variation. Subgroup analyses for disc herniation, spinal stenosis, and spondylolisthesis showed that regardless of underlying diagnosis, hospitals that were expensive for one condition were expensive across all spinal diagnoses.

The authors conclude that high-cost hospitals could focus on spinal fusion use and post-acute care to reduce costs.