Becker's Spine Review

40 Executive Briefing: The Future of Spine Surgery Back in October 2013, The Washington Post published an article lambasting spinal fusion procedures. In their hotly contested article, authors Whoriskey and Keating reveal how the Justice department is prosecuting a landmark case in what could turn out to be the largest Stark Law violation in U.S. history. There, a reputable spine surgeon at Halifax Hospital is accused of performing spinal fusion procedures that were not medically necessary. In addition, the DOJ who joined the case in 2011 is contending that the hospital improperly incentivized their physicians. In total, the DOJ is seeking $750 million to $1 billion for 74,838 claims made between 2000 and at least 2010, totaling up to $823.2 million in penalties. The Post article said that the Halifax case will serve as a case study on the many financial incentives that come into play when a surgeon is deciding whether or not to operate. Almost all of them push in the direction of operating, even when more conservative treatment is now deemed to be in the patient's best interest, reported the Post article. Attempts by insurers and Medicare to curb excessive surgeries have been squelched by negative publicity and heavy lobbying by the American Medical Association and the medical device industry reports the Post, although increasingly higher levels of scrutiny have abounded in recent years. • Single level lumbar fusion in 2013 was $9,843 • Two-level lumbar fusion was at $12,893 • Three-level lumbar fusion was $15,840 • Three-plus level lumbar fusion was $18,333 Of the roughly 791,000 spine inpatient procedures reported in 2013 Spinal Surgery Update, 50 percent were identified as lumbar or thoracolumbar fusions, 37 percent were cervical fusions and 7 percent were vertebral compression fracture repair. The remaining 6 percent of cases were disc replacements and interspinous process inserts. According to the update, the majority of patients undergoing lumbar fusions procedures are females having increased from 54 percent in 2012 to 58 percent in 2013, while the number of Medicare beneficiaries is on the rise. The update revealed that in 2008 only 30 percent of spine cases were of Medicare age (over 64) and now, based on their 2013 update, 43 percent of spine surgeries are being paid for by Uncle Sam. In response to the Washington Post article, the North American Spine Society Executive Committee fired back with a press release response on 10/30/13 stating that "fusion of the spine is an invaluable tool in a surgeon's armamentarium to alleviate intractable pain and return patients to healthy, productive lives. As in all surgical procedures, the key is the surgical indication for the individual patient. Underuse and overuse are both bad medicine and do the patient a disservice." "In today's more health conscious society there's often not much difference between a healthy 72-year-old compared to someone in their mid-60s. Consequently, you will see more and more spinal procedures performed on Medicare beneficiaries," says Zeman. This is evidently why spinal fusion procedures have received so much recent attention from CMS in recent years. Not only have the amounts of Medicare beneficiaries receiving spinal fusion procedures increased, the costs of these (often elective procedures) are among the highest around. The release further stated, "NASS is collaborating with Medicare and private insurance carriers to develop evidence based guidelines for surgical intervention and to define conditions that are best treated without surgery. Spinal fusion is currently undergoing rigorous scrutiny; the indications for spinal fusion are being evaluated and re-evaluated constantly in an effort to develop optimal indications to serve the best interest of the patient." Transparent spine reimbursement numbers "As a former hospital CEO, I concur with the opinion of the North American Spine Society that for millions of people suffering from intractable back pain, spinal fusion procedures are an incredibly important option to relieve suffering," says Zeman. "Based on our experience of our staff, in most cases the procedure is certainly indicated and medical necessity documentation, the proof as to why the procedure was performed, is there. However, either busy surgeons don't pay as much attention to the details of adequate documentation, or they have a real lack of understanding of what is required. Either way, the need for improved documentation exists. In the absence of significant improvements in the capture of all pertinent documentation, a high percentage of pre-payment denials and post procedure recovery audits will continue to prevail." Inside the spine numbers The number of spinal procedures in the United States has somewhat flatlined in recent years, yet there are still more spine surgeries performed in the U.S. than in any other country in the world. According to data recently released in the October 2013 Spinal Surgery Update published by the Orthopedic Network News, inpatient spine procedures likely eclipsed 791,000 in 2013 (up 4 percent over 760,000 cases in 2012) excluding roughly 500,000 (less invasive) outpatient decompression procedures. According to their figures, the U.S. spine industry is estimated to have grown only 2 percent between 2012 and 2013 with an estimated $6.8 billion in spine-related revenue generated for U.S. hospitals in 2013. While the overall spine market has basically remained the same since 2010, it's up almost 30fold since 1994, when Orthopedic Research Network first estimated the U.S. market to be $225 million. The 2013 Spinal Surgery Update also revealed the fact that fusing the lumbar vertebrae remains the preferred approach using a combination of pedicle screws and interbody fusion devices which accounted for 49 percent of the lumbar fusions in 2013. The update indicated that the overall average cost of a lumbar fusion was $12,968 (up just $49 dollars from 2012) although the costs will vary, based on the number of levels being fused. Listed below are the average costs for 2013: For the first time this past May, in a bold act of relatively unprecedented transparency, CMS revealed their highly controversial inpatient dataset report, listing hospital-specific charges and payments for the top 100 most frequently performed procedures based on Diagnostic Related Groups. The data was for 3,400 hospitals and represented 92 percent of all hospital inpatient charges for 2011. Of no surprise, spinal fusion procedure DRG 460 was among the top 100 procedures. As expected, the charges levied by hospitals varied significantly. "Like most charges issued by doctors and hospitals, the amounts billed are quite different from what actually gets paid. Although there are reasons for higher payments based on extenuating factors like residency program status, rural outlier standing and disproportionate share of indigent patients. Still, it was quite surprising to see such drastic disparity in the actual payment amounts listed in the dataset," says Neumann. Of the top 1,133 hospitals who performed the most spinal fusion (DRG-460) procedures (list excluded any hospital performing less than 10 spinal fusions per year) the amounts billed to Medicare ranged from a high of $417,121 to a low of $19,186 with an average billed amount of $95,568. With regards to actual payments made to hospitals there was a tighter, yet still awkwardly ranging scale from a high payment of $131,187 to a low of $16,772 for a spinal fusion procedures. "When you look at what hospitals were actually paid you are forced to wonder, extenuating circumstances aside, how is it that one hospital could receive say $30,000 while a very similar hospital nearby collected $50,000 for the exact same procedure?" added Neumann. Health and Human Services Department Secretary Kathleen Sebelius terms "a key piece of the [healthcare] cost puzzle," is the latest federal effort to "bring more transparency" to the healthcare market as well as "empower consumers, create competition, and help hold down costs. When consumers can easily compare the price of goods and services, producers have strong incentives to keep those prices low. That's how markets work," stated Sebelius according to Media Health Leaders article published in May 2013. For patients looking inside the spinal fusion amounts paid to hospitals, they may become a bit confused with how and why there are such huge variations. Below is a list of the highest and lowest paid hospitals based on the actual amount of total payment received along with the charges levied by the hospital:

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