The objective was to evaluate medical comorbidities and surgical variables as independent risk factors for increased health care costs in Medicare patients undergoing lumbar fusion. Care episodes limited to lumbar fusions were retrospectively reviewed on the Centers of Medicare and Medicaid Innovation (CMMI) Bundled Payment for Care Improvement (BPCI) reimbursement database at a single academic institution. Total episode of care cost was also collected. A multivariable linear regression model was developed to identify independent risk factors for increased total episode of care cost, and logistic models for surgical complications and readmission. A total of 500 Medicare patients were included. Risk factors associated with increased total episode of care cost included transforaminal interbody fusion (TLIF) and anterior lumbar interbody fusion (ALIF) (β = $5,399, P < 0.001) and ALIF+PLF (AP) fusions (β = $24,488, P < 0.001), levels fused (β = $3,989, P < 0.001), congestive heart failure (β = $6,161, P = 0.022), hypertension with end-organ damage (β = $10,138, P < 0.001), liver disease (β = $16,682, P < 0.001), inpatient complications (β = $4,548, P = 0.001), 90-day complications (β = $10,012, P = 0.001), and 90-day readmissions (β = $15,677, P < 0.001). The most common surgical complication was postoperative anemia, which was associated with significantly increased costs (β = $18,478, P < 0.001). Female sex (OR = 2.27, P = 0.001), AP fusion (OR = 2.59, P = 0.002), levels fused (OR = 1.45, P = 0.005), cerebrovascular disease (OR = 4.19, P = 0.003), cardiac arrhythmias (OR = 2.32, P = 0.002), and fluid electrolyte disorders (OR = 4.24, P = 0.002) were independent predictors of surgical complications. Body mass index (OR = 1.07, P = 0.029) and AP fusions (OR = 2.87, P = 0.049) were independent predictors of surgical readmission. Among medical comorbidities, congestive heart failure, hypertension with end-organ damage, and liver disease were independently associated with a significant increase in total episode of care cost. Interbody devices were associated with increased admission cost.