The Divergence Between Hospital Charges and Reimbursements For Primary 1-2-level Lumbar Fusion Has Increased Over Time: A Medicare Administrative Claims Analysis

June 28, 2022

Study design:

A retrospective cohort study was performed for patients undergoing 1-2-level lumbar fusion (1-2LF) from 2005 to 2014 using an administrative claims database.

Objective:

The objective of this study was to determine changes in: (1) annual charges; (2) annual reimbursement rates; and (3) annual difference (charges minus reimbursements) in patients undergoing 1-2LF.

Summary of background data:

With implementation of value-based care in orthopaedics, coupled with the rise in number of patients undergoing 1-2LF, understanding the discordance in hospital charges and reimbursements is needed. The difference in hospital charges to reimbursements specifically for 1-2LF for degenerative disc disease has not been studied.

Materials and methods:

A Medicare administrative claims database was queried for patients undergoing primary lumbar fusion using ICD-9 procedural code 81.04-81.08. Patients specifically undergoing 1-2LF were filtered from this cohort using ICD-9 procedural code 81.62. The query yielded 547,067 patients who underwent primary 1-2LF. Primary outcomes analyzed included trends in charges, reimbursement rates, and net difference in cost over time and per annual basis. Linear regression evaluated the change in costs over time with a P-value less than 0.05 considered significant.

Results:

From 2005 to 2014, total charges increased from $6,085,838,407 to $19,621,979,956 and total reimbursements increased from $1,677,764,831 to $4,656,702,685 (all P<0.001). Per patient charges increased 92.10% from 2005 to 2014 for patients undergoing primary 1-2LF from $129,992 to $249,697 (P<0.001). Similarly, an increase in reimbursement per patient of 65.35% from $35,836 to $59,258 (P<0.001) was noted. The annual difference in charges to reimbursements increased 102.26% during the study interval from $94,155 to $190,439 (P<0.001).

Conclusions:

Per patient charges and reimbursements both increased over the study period; however, charges increased 30% more than reimbursements. Further breakdown of hospital, surgeon, and anesthesiologist reimbursements for 1-2LF is needed.

Level of evidence:

Level III.