Procedures employing interbody devices and multi-level fusion require target price adjustment to build a sustainable lumbar fusion bundled payment model

Bundled payment models require risk adjustment to ensure appropriate targets are set. While this may be standardized for many services, spine fusions demonstrate significant variability in approach, invasiveness, and use of implants, that may require further risk adjustment.To evaluate variability in costs of spinal fusion episodes in a private insurer bundle payment program and identify whether current procedural terminology (CPT) code modifications are necessary for sustainable implementation.Retrospective single-institution cohort study.A total of 542 lumbar fusion episodes in a private insurer bundled payment program from October 2018 to December 2020.A total of 120-day episode of care net surplus/deficit, 90-day readmissions, discharge disposition, and length of hospital stay.A review was conducted of all lumbar fusions in a single institution's payer database. Surgical characteristics (approach [posterior lumbar decompression and fusion (PLDF), transforaminal lumbar interbody fusion (TLIF), and circumferential fusion], levels fused, and primary vs revision) were collected from manual chart review. Episode of care cost data were collected as net surplus or deficit with respect to target prices. A multivariate linear regression model was constructed to measure the independent effects of primary versus revision, levels fused, and approach on the net cost savings.Most procedures were PLDFs (N=312, 57.6%), single-level (N=416, 76.8%) and primary fusions (N=477, 88.0%). Overall, 197 (36.3%) resulted in a deficit, and were more likely to be three levels (7.11% vs 2.03%, p=.005), revisions (18.8% vs 8.12%, p<.001), and TLIF (47.7% vs 35.1%, p<.001) or circumferential fusions (p<.001). One-level PLDFs resulted in the greatest cost savings per episode ($6,883). Across both PLDFs and TLIFs, 3-level procedures resulted in significant deficit of -$23,040 and -$18,887, respectively. For circumferential fusions, 1-level fusions resulted in deficit of -$17,169 per case which rose to -$64,485 and -$49,222 for 2- and 3-level fusions. All 2- and 3-level circumferential spinal fusions resulted in a deficit. On multivariable regression, TLIF and circumferential fusions were independently associated with a deficit of -$7,378 (p=.004) and -$42,185 (p<.001), respectively. Three-level fusions were independently associated with an additional -$26,003 deficit compared to single-level fusions (p<.001).Interbody fusions, especially circumferential fusions, and multi-level procedures are not adequately risk adjusted by current bundled payment models. Health systems may not be able to financially support these alternative payment models with improved procedure-specific risk adjustment.