Objective: The use of cervical disc arthroplasty (CDA) continues to increase in the Medicare population. As healthcare costs continue to rise, payors have begun to implement bundled payment structures for spine surgery. While Medicare has steadily decreased reimbursements for cervical fusions, Medicare reimbursements for CDA have not been studied. The purpose of this study was to assess trends in 1) hospital costs and reimbursement, 2) physician reimbursement, and 3) potential cost drivers for CDA in a Medicare population.

Methods: This is a retrospective longitudinal study of CDA in Medicare patients. The Medicare Provider Analysis and Review Limited Data Sets for 2009, 2014, and 2019 were used for this study. Patients undergoing elective CDA were included. Corresponding Inpatient Prospective Payment System files were used to calculate cost through cost-to-charge ratios. Physician fees were obtained from the Medicare Physician Fee Schedule Look-Up Tool. All financial data were adjusted for inflation to 2019 values based on the Consumer Price Index for All Urban Consumers. Demographic, comorbidity, surgical, and hospital trends were assessed. Trends in revenue center-level charges were also assessed.

Results: Adjusted for inflation, from 2009 to 2019, mean total hospital charges for elective CDA increased from $64,609 ± $45,787 to $111,874 ± $78,611 (73% increase, p < 0.001) and the mean total cost for index hospital admission increased from $19,665 ± $13,414 to $24,682 ± $13,818 (26% increase, p < 0.001). Over the same period, Medicare reimbursement increased from a mean of $11,154 ± $11,684 to $12,879 ± $13,613 (15% increase, p = 0.003), while total reimbursement increased from a mean of $15,005 ± $15,684 to $15,547 ± $15,829 (4% increase, p = 0.040). The mean hospital profit decreased from -$4076 ± $14,041 to -$9023 ± $16,084 (-121%, p < 0.001). Surgeon reimbursement for CDA decreased from a mean of $1850 ± $165 (2009) to $1722 ± $138 (2019) (7% decrease, p < 0.001). On multivariate analysis, increasing year of surgery (p < 0.001), increasing age (p = 0.001), increasing length of stay (p < 0.001), rural hospital setting (p = 0.027), and hospital geography (p < 0.001) were independently associated with cost of care. Medical/surgical supplies and operating room charges increased 71.6% (p < 0.001) and 98.5% (p < 0.001) and accounted for 41.1%-42.5% and 30.6%-35.1% of total charges, respectively.

Conclusions: From 2009 to 2019, costs of care for elective inpatient CDA increased disproportionately to reimbursement. Hospitals operated at increasing losses and surgeon reimbursement decreased. Cost of care was independently associated with year of surgery, increasing age, length of stay, hospital setting, and hospital geography. The main charge drivers were medical/surgical supplies and operating room charges. These results may have implications for the future financial feasibility of inpatient CDA for Medicare patients and targets to improve the value of CDA. Further study is necessary to provide fair reimbursement for CDA in Medicare patients and prevent financially based bias against use of CDA in Medicare patients.