Spine Surgery Reimbursement Examples

Physician documentation & coding

DRG assignment is based on the ICD-9-CM code designated as principal diagnosis (i.e., the condition determined after study to have occasioned the admission of the patient to the hospital), other secondary diagnoses referred to as co-morbid conditions and complications (CCs) (i.e., those proven to show higher resource utilization in 75% of the patients reported with these conditions), and procedures with designated operative and/or major procedure value. Examples of diagnoses that possess DRG "CC" value include but are not limited to, blood loss anemia, urinary tract infection, atelectasis, pneumonia, congestive heart failure, atrial fibrillation, and post-operative urinary retention. The reporting of "CCs" markedly affects hospital payment in 12 of the 14 spine related DRGs listed in Table 1. One can see that emphasis on comprehensive documentation and coding of secondary diagnosis is critical.

For example, a female patient with severe lumbar stenosis is admitted to the hospital for a PLIF of L3-L4. After surgery, the patient's hemoglobin and hematocrit readings drop to 7/26 and she receives a transfusion of two units of packed red blood cells. The physician documents "anemia" as a secondary diagnosis. If the anemia is related to blood loss from surgery and the physician documents it as such, then the DRG payment increases by $5,000. Please see how the difference in ICD-9-CM secondary diagnosis code assignment based on physician documentation affects payment in this case.

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Case management and billing data

In designated instances, CMS adjusts DRG payment based on the disposition of the patient i.e., patient discharged to home versus transferred to skilled nursing facility, rehabilitation facility, or Home Health services. The transferring hospital is paid a per diem rate for each day of the stay not to exceed the full DRG payment had the patient been discharged home. CMS also developed a "Special Pay" methodology that accounts for a high percentage of the hospital's costs occur early in the inpatient stay of certain DRGs. For these cases, hospitals are paid 50% of the full DRG payment plus the single per diem rate for the first day of the stay and 50% of the per diem for the remaining days of the stay, not to exceed the full DRG payment. Because DRGs 497 and 498 are subject to Medicare's "Special Pay" status, special attention to case management issues involving length of stay as well as patient discharge disposition are key. (See Example 2)


Charge description master and billing data

Terms of some commercial payer contracts identify the importance of accurate Charge Description Master (CDM) and billing protocols. Additional payment for designated medical devices and implants may be made separately from per diem or DRG reimbursement using "carve-out" "add-on new technology", or "pass-through" payer contract terms. In order to receive additional payment, many payers, including Medicare, require that hospitals bill the charges for spinal implants in revenue code 278. The impact of proper revenue code assignment is illustrated in Example 3.


Spine surgery reimbursement conclusions

One can see that maintaining and achieving financial viability while delivering high quality inpatient spinal care services is a complicated task for healthcare providers. As the cost of spinal surgical services continues to rise, hospitals and physicians need to pay increased attention to the nuances that physician documentation, coding, utilization management, and billing practices have on accurate and optimal spinal reimbursement. As outlined in this article, the variances in payment when procedures are correctly documented are often times large sums, sums that would cover or facilitate coverage of new technologies utilized during spine procedures. As physicians and hospitals seek to provide a better quality of care in this rapidly evolving ambiance, it is imperative that care be given to correct documentation and the billing and reimbursement process.

To be a competitive physician or hospital in the market of spine care, you must understand and take heed of the importance of correct documentation, reporting and reimbursement as these are vital components in the systems required to provide and continue to provide quality healthcare.