• Jeffrey L Gum, Richard Hostin, Chessie Robinson, Michael P Kelly, Leah Yacat Carreon, David W Polly, R Shay Bess, Douglas C Burton, Christopher I Shaffrey, Justin S Smith, Virginie LaFage, Frank J Schwab, Christopher P Ames, Steven D Glassman, and International Spine Study Group.
• Norton Leatherman Spine Center, 210 East Gray St, Suite 900, Louisville, KY 40202, USA.
• Spine J. 2017 Jan 1; 17 (1): 96-101.

Background ContextOver the past decade, the number of adult spinal deformity (ASD) surgeries has more than doubled in the United States. The complex surgeries needed to manage ASD are associated with significant resource utilization and high cost, making them a primary target for increased scrutiny. Accordingly, it is important to not only demonstrate value in ASD surgery as clinical effectiveness but also to translate outcome assessment to cost-effectiveness.PurposeTo compare the difference between Medicare allowable rates and the actual, direct hospital costs for ASD surgeries.Study DesignLongitudinal cohort.Patient SampleConsecutive patients enrolled in an ASD database from a single institution.Outcome MeasuresShort Form (SF)-6D.MethodsConsecutive patients enrolled in an ASD database from a single institution from 2008 to 2013 were identified. Direct hospital costs were collected from hospital administrative records for the entire inpatient episode of surgical care. Medicare allowable rates were calculated for the same inpatient stays using the year-appropriate Center for Medicare-Medicaid Services Inpatient Pricer Payment System Tool. The SF-6D, a utility index derived from the SF-36v1, was used to determine quality-adjusted life years (QALY). Costs and QALYs were discounted at 3.5% annually.ResultsOf 580 surgical ASD patients eligible for 2-year follow up, 346 (60%) had complete baseline and 2-year data, and 60 were Medicare beneficiaries comprising the cohort for the present study. Mean SF-6D gained is 0.10 during year 1 after surgery and 0.02 at year 2, resulting in a cumulative SF-6D gain of 0.12 over 2 years. Mean Medicare allowable rate over the 2 years is $82,050 (range $42,383 to $220,749) and mean direct cost is $99,114 (range $28,447 to $217,717). Mean cost per QALY over 2 years is $683,750 using Medicare allowable rates and $825,950 using direct costs. This difference of $17,181 between the 2 cost calculation represents a 17% difference, which was statistically significant (p<.001).ConclusionsThere is a significant difference in direct hospital costs versus Medicare allowable rates in ASD surgery and in turn, there is a similar difference in the cost per QALY calculation. Utilizing Medicare allowable rates not only underestimates (17%) the cost of ASD surgery, but it also creates inaccurate and unrealistic expectations for researchers and policymakers.Copyright © 2016 Elsevier Inc. All rights reserved.

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