Variation in payments for spine surgery episodes of care: implications for episode-based bundled payment.

OBJECTIVE Spine surgery is expensive and marked by high variation across regions and providers. Bundled payments have potential to reduce unwarranted spending associated with spine surgery. This study is a cross-sectional analysis of commercial and Medicare claims data from January 2012 through March 2015 in the state of Michigan. The objective was to quantify variation in payments for spine surgery in adult patients, document sources of variation, and determine influence of patient-level, surgeon-level, and hospital-level factors. METHODS Hierarchical regression models were used to analyze contributions of patient-level covariates and influence of individual surgeons and hospitals. The primary outcome was price-standardized 90-day episode payments. Intraclass correlation coefficients-measures of variability accounted for by each level of a hierarchical model-were used to quantify sources of spending variation. RESULTS The authors analyzed 17,436 spine surgery episodes performed by 195 surgeons at 50 hospitals. Mean price-standardized 90-day episode payments in the highest spending quintile exceeded mean payments for episodes in the lowest cost quintile by $42,953 (p < 0.001). Facility payments for index admission and post-discharge payments were the greatest contributors to overall variation: 39.4% and 32.5%, respectively. After accounting for patient-level covariates, the remaining hospital-level and surgeon-level effects accounted for 2.0% (95% CI 1.1%-3.8%) and 4.0% (95% CI 2.9%-5.6%) of total variation, respectively. CONCLUSIONS Significant variation exists in total episode payments for spine surgery, driven mostly by variation in post-discharge and facility payments. Hospital and surgeon effects account for relatively little of the observed variation.