Factors Affecting Medicare Diagnosis Related Group (DRG) Reimbursement for Minimally Invasive Deformity Spine Surgery

International Society for the Advancement of Spine Surgery (ISASS17) Meeting Highlight

Value and outcome in spinal surgery was an important focus at the 17th Annual Meeting of the International Society for the Advancement of Spine Surgery (ISASS17). In his presentation, Neel Anand, MD, Clinical Professor of Surgery and Director of Spine Trauma at Cedars-Sinai Spine Center in Los Angeles CA, addressed how case type, length of stay, and patient comorbidity affect Medicare Diagnosis Related Group (DRG) reimbursement for minimally invasive surgery (MIS) for deformity.
Calculator resting atop money, with the word "healthcare" shown on the displayHospitals need to adequately cover their costs in order to continue offering optimal care for patients.Recognizing that hospitals need to adequately cover their costs in order to continue offering optimal care for patients, hospitals rely on Medicare DRG-based reimbursements to facilitate financial stability. Reimbursement based on Medicare DRG coding differs based on type of surgery, length of stay, medical comorbidity, geographic location, and institution type. However, Dr. Anand explained, the DRG reimbursement is not well understood for MIS spine deformity procedures. Towards that end, this study was undertaken to investigate the effect of Medicare DRG on reimbursement based on length of stay and medical comorbidity in MIS deformity surgery.

Study Design and Methods
The study used the inpatient Prospective Payment System (PPS) PC Pricer (CMS.gov) to collect reimbursement data from 2015 on all MIS anterior, posterior and circumferential single-level and multi-level fusions for listhesis and deformity cases, categorized by the presence or absence of comorbidity and by the surgical approach. Twelve centers from the International Spine Study Group (ISSG) participated in the collection of DRG’s for qualifying surgeries. The three most common MIS procedures were analyzed to compare reimbursement based on DRG coding:

  1. Anterior or posterior only fusion (Case type 1)
  2. Anterior fusion with posterior percutaneous fixation, no dorsal fusion (Case type 2)
  3. Combined anterior and posterior fixation and fusion (Case type 3)

Table. Design/MethodsDr. Anand reported the number of levels fused did not affect reimbursement across all three cases.Study Results
Dr. Anand reported the number of levels fused did not affect reimbursement across all three cases. Reimbursement for case types 1 and 2 were similar for a 3-day ($41,404) versus an 8-day ($42,808) inpatient stay without comorbidity, as well as for patients with comorbidity ($54,576 vs $55,881, respectively).

Case type 3 without comorbidity was reimbursed at $47,992 for 3-day stay and $59,497 for 8-day stay. Case type 3 reimbursements for patients with comorbidity were $61,806 (3-day stay) and $63,212 (8-day stay). However, performing the same surgery but not coding it as a deformity led to substantially lower rates of reimbursement.

Case types 1 and 2 that were coded not as deformity but rather as degenerative were reimbursed at only $31,635 (3-day stay) and $33,040 (8-day stay)—a decrease in payment of nearly $9,800 (24% loss) for a patient without comorbidity, and $22,841 lower (42% loss) for a patient with medical comorbidity. Across all case types, Dr. Anand reported the additional cost for an 8-day versus 3-day stay was approximately $1,400, or $281/day.

The study also found:

  • Regardless of the direct costs, single- and multi-level MIS deformity cases had the same Medicare DRG-based reimbursement rates (excluding outliers).
  • However, the addition of posterior fixation without dorsal fusion led to a 13% to 16% lower reimbursement compared with addition of a posterior arthrodesis.
  • Inclusion of a comorbidity code increased reimbursement by at least $10,000 for the same case type (1 or 2).
  • Greatest reimbursement was for case type 3 (both anterior and posterior fusion).

Importance of Correct Coding
Dr. Anand concluded this study highlights the importance of correct coding to achieve optimal reimbursement. Not including a deformity code (case type 1 or 2) was associated with an approximately $10,000 loss, and including a comorbidity substantially increased reimbursement. Finally, he noted that hospitals are not receiving much for an extended hospital stay—only an average of $280/day after day 3.

Updated on: 02/08/18
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