Spine surgery reimbursement issues

Healthcare financial analysts estimate the annual cost of back care in the U.S. is over $85 billion. Advances in medical technology as well as emerging surgical and minimally invasive techniques continue to broaden the scope of spine care services. The need for comprehensive physician documentation and accurate coding, charge capture, and billing practices increases as physicians and hospitals struggle to provide quality care and maintain financial viability. The following information identifies opportunities to address ever-challenging hospital-based inpatient spine care reimbursement challenges.

The cost of healthcare grows exponentially each year, with costs of spine care projected to exceed $100 billion in 2007. Payers, both federal and commercial, work to contain healthcare costs while maintaining open access for quality patient care. Costs of new spinal technology alone often come close to hospital payment for an entire spine related inpatient stay. What can physicians and hospitals do to meet the challenges faced in providing inpatient spine care?

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Hospital reimbursement models

The Centers for Medicare and Medicaid Services (CMS) reimburses hospitals for inpatient services using a Prospective Payment System known as Diagnosis Related Groups (DRGs). Current DRG version 24 used for Fiscal Year 2007 Medicare inpatient hospital payment contains 546 DRGs that attempt to classify clinically similar patients with expected correlated resource utilization. Many commercial payers have adopted the DRG model, some including device, implant, and new technology carve-out payment features. Medicare Version 24 DRG payment is calculated based on the following components:

  • Hospital specific base-rate (i.e., Hospital A base rate = $6,000);
  • Direct and indirect payment factors such as teaching versus non-teaching status, disproportionate share, and geographic wage-indexing;
  • DRG relative weight (R.W.);
  • Length of hospital stay (LOS);
  • Patient discharge disposition;
  • Patient age and gender;
  • Billed charges; and
  • ICD-9-CM diagnosis and procedure codes.

Regardless of payer, the onus of appropriate DRG payment lies in comprehensive physician documentation that supports the accurate reporting of these demographic, financial, and coded data elements.