Cost Variation Within Spinal Fusion Payment Groups

STUDY DESIGN.Retrospective, large administrative database OBJECTIVE.To investigate cost variation within current spinal fusion diagnosis related groups (DRGs). SUMMARY OF BACKGROUND DATA.Medicare reimbursement to hospitals for spinal fusion surgery is provided as a fixed payment for each admission based on DRG. This assumes that patients can be grouped into homogenous units of resource use such that a single payment will cover the costs of hospitalization for most patients within a given DRG. However, major differences in costs exist for different methods of spinal fusion surgery. A previous study in total joint arthroplasty (TJA) showed that variation within DRGs can lead to differences between hospital costs and Medicare reimbursement, resulting in predictable financial losses to hospitals and hindering access to care for some patients. No study to our knowledge has investigated cost variation within current spinal fusion DRGs. METHODS.Direct hospital costs were obtained from the 2011 Nationwide Inpatient Sample (NIS) for patients in spinal fusion DRGs 453–460 and TJA DRGs 466–470. Our primary outcome was the coefficient of variation (CV), defined as the ratio of the standard deviation (SD) to the mean (CV=SD/mean x 100), for all costs within a given DRG. CVs were compared to an established TJA benchmark for within-DRG cost variation. RESULTS.CV for costs within spinal fusion DRGs ranged from 44.16 to 52.6 and were significantly higher than the CV of 38.2 found in the TJA benchmark group (p