Drivers of Medicare Reimbursement for Thoracolumbar Fusion

Study Design. A retrospective observational study. Objective. The purpose of this study is to examine the variation in thoracolumbar fusion (TLF) payment and determine the drivers of this variation. Summary of Background Data. As health care spending continues to increase, variation in surgical procedures reimbursements has come under more scrutiny. TLF is an example of a high-cost, proven-benefit procedure that is often the focus of Centers for Medicare and Medicaid Services (CMS) administrators. There is a wide variation in TLF charges, but the drivers for this variation are not clear. Methods. Claims for TLF were identified in the CMS data by analyzing Diagnosis Related Group (DRG) number 460 ("Spinal Fusion Except Cervical without Major Complications or Comorbidities"). Data on factors that may impact cost of care were collected from four sources: the United States Census Bureau, CMS, the Dartmouth Atlas, and WWAMI Rural Health Research Center. These were then grouped into seven categories: quality, supply, demand, substitute treatment availability, patient characteristics, competitive factors, and provider characteristics. Predictive reimbursement models were created from the data using multivariate linear regression to understand the factors that influence TLF reimbursement. Results. There was significant geographic variability in reimbursement. The largest contribution to reimbursement variation came from variables in the demand (ΔR 2 =13.4%, P<0.001), supply (ΔR 2 =9.2%, P<0.001), and competitive factor domains (ΔR 2 =9.1%, P<0.001). The top three drivers that increased reimbursement were provider charges (β=0.37, P<0.001), total Medicare reimbursement in the region (β=0.19, P<0.001), and the number of spinal surgeries per 1000 patients in that region (β=0.06, P=0.02). Institutional volume, a surrogate for quality was negatively associated with TLF reimbursement. Conclusion. There was wide variation in reimbursement for TLF across the U.S. The variables that drive TLF reimbursement variation include supply, demand, and competition. Interestingly, quality of care was not associated with increased TLF reimbursement.