Becker's Spine Review

Executive Briefing: The Future of Spine Surgery 41 Medicare MS-DRG IPPS Charges & Payment Summary 2011 MS-DRG 460 Lumbar Spinal Fusion - Highest Medicare Payments, 2011 MS-DRG 460 Lumbar Spinal Fusion - Lowest Medicare Payments, 2011 The movement toward minimally invasive spine procedures & impact of ACOs Two of the more significant healthcare trends that will certainly impact the future of inpatient spine procedures are the ever-pressing movement towards performing less invasive spine procedures in the outpatient or ambulatory surgery center setting and the downward pressure on elective spine procedures caused by evolving accountable care organizations. Not only will spinal fusion remain under the proverbial microscope from a pre-payment, recovery audit and restrictive reimbursement standpoint, there is also a clear and ever pressing movement towards performing what had long been considered inpatient-only spine cases in the outpatient ASC setting. There are several major healthcare motivators that will continue to advance the migration of inpatient spine procedures over to the ASC setting, explains Zeman. "First, the costs are much less for many spine procedures performed in the outpatient setting as compared to an inpatient overnight stay of up to three days. In addition, there is significantly less blood loss, less risk of infection, less disruption of surrounding musculature and quicker healing time. The movement toward minimally invasive spine surgery has been somewhat slower than the many who had predicted we would see upwards of 50 percent of spine surgeries being performed in outpatient ASC settings," says Zeman. However, there are multiple reasons why the movement to outpatient will continue, including a more cost-conscious society who are incurring much higher co-pays for elective procedures along with arguably better results in more comfortable surroundings. In order for the movement to take on significant momentum, Medicare will have to recognize the ambulatory surgery center setting as a viable and reimbursable site of service. Currently, most spine procedures are considered inpatient-only by Medicare and CMS only covers certain spine procedures performed in the hospital outpatient surgical setting. At this time, freestanding ASCs are not approved to receive reimbursement for these same procedures. and post-payment reviews are here to stay. Adding to the fever pitch scrutiny are the proposed changes of 2-Midnight regulations, the game changing ICD-10 implementation along with the continued increase in the number of ACOs and you have a significantly changed spinal surgery marketplace. "If and when Medicare does cover minimally invasive spine procedures in freestanding ASC settings, we can expect a big shift in this business. Another meaningful shift may occur as new technologies now available or in the pipeline for treatment of spinal conditions are more commonly performed in ASCs," added Zeman. 1. Based on the high percentages of medical necessity documentation errors found in previous pre-and post-payment reviews of spinal procedures, intensive probes of these procedures will likely continue and perhaps at a much more aggressive pace in 2014. ACOs are evolving organizations characterized by a payment and care delivery model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients. With the overall goal of most ACOs to reduce unnecessary hospital admissions and avoidable readmissions, elective spine surgeries are likely to experience additional approval difficulties from these entities as they grow. "The statistics are pretty high with respect to repeat back surgeries, including revisions, and you can bet that as ACOs continue to advance, pressure to reduce hospital admissions will have its impact on elective inpatient spine surgeries, especially if ambulatory alternatives exist," says Zeman. Spinal procedure medical necessity documentation, scrutiny here to stay With the heightened scrutiny caused by the spinal fusion PEPPER addition, the DOJ litigation of the kyphoplasty cases and the spinal fusion landmark case in Florida it appears likely that concentrated examination of the spine market consisting of pre- 7 likelihoods for spine in the new year 2. The movement toward minimally invasive spine procedures being performed in the ambulatory surgery center setting will continue to gain momentum. 3. As ACOs evolve, more restrictive policies and reimbursement methodologies will be imposed, strongly incentivizing outpatient procedures over inpatient hospitalizations with overnight stays. 4. Elective spine procedures will begin to more closely emulate step-care drug formularies where the use of less costly alternatives is mandated. 5. Bundled payments for outpatient procedures, though not as relevant for spine currently, as with other orthopedic procedures are likely to rise as spine cases move towards the outpatient setting. 6. Increased pressure from consumers causing greater levels of transparent pricing will lead to tougher conversations with respect to out-ofpocket costs for elective spine procedures. 7. Hospitals and surgeons will become more vigilant with ensuring that preventable mistakes regarding medical necessity documentation are avoided. n Specialty Healthcare Advisers, LLC ("SHA") www.sha-mcra.com is a subsidiary of leading Orthopedic Consulting Firm, Musculoskeletal Clinical Regulatory Advisers LLC, ("MCRA") www.mcra.com, and part of the VB Family of Orthopedic Companies. SHA provides specialized Orthopedic, Spine & Neurosurgery advisory services to Hospitals, Surgeons and Ambulatory Surgery Centers Nationwide. Based in Manchester, Conn., SHA has additional offices in New York City and Washington, DC. For more information contact: Todd Schuck – Senior Director, Business Development | Specialty Healthcare Advisers tschuck@sha-mcra.com | 860.904.4447

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