BPCI Advanced Reduced Outpatient Spine Surgery Spending

CMS’ Bundled Payment for Care Improvement (BPCI) Advanced model successfully reduced overall spending for patients receiving outpatient spine-related surgery, treatments, and/or procedures, according to a recent study from JAMA Health Forum.

"The shift from inpatient to outpatient surgery has increased value by reducing overall spending on procedures,” the authors explained. “However, total payments for outpatient surgery have substantially increased over time and improvement in quality measurement has lagged.”

Participating hospitals in the Bundled Payment for Care Improvement Advanced model saw a reduction in spending for patients receiving back and neck (except final fusion) treatment or procedures. | Image Credit: Natali_Mis - stock.adobe.com.jpg

The first cohort of participants started on October 1, 2018, for outpatient back and neck except spinal fusion procedures (BNESF). The surgeries included lumbar laminectomy, lumbar discectomy, and anterior cervical decompression. Incentives for the advanced model were a 120% increase in ambulatory spine procedures between 2008 and 2014. Despite the low complication rates for spine surgery, the high spending and variable quality suggested that bundled payments may improve value.¹ CMS also recently announced plans for a new bundled pay model called the Transforming Episode Accountability Model (TEAM), which will make participating in bundled payments for outpatient surgery episodes mandatory for some hospitals. Assessing the impact of bundled payments for outpatient care spending will provide important insights ahead of the TEAM model starting in 2026.

The model works by bundling the cost of all care following a specific treatment or procedure, like spine surgery, for example. CMS gives hospitals a target price of budget adjusted for patient comorbidities, regional cost trends, national benchmarks, and the specific treatment or procedure. It is then up to the hospitals and physicians to provide quality care within this target price.

All expenditures are still billed to CMS under fee-for-service (FFS); however, all post-procedure spending is tracked for 90 days, and if a hospital's spending for that patient is less than the target price, it receives an incentive bonus (the difference between their actual spending cost and the target price). If not, the hospital owes CMS the difference. This places the responsibility on hospitals and primary care providers to coordinate their care efforts more efficiently to reduce complications and readmission and avoid unnecessary services.²

Despite the trend in outpatient procedures appealing to patient and physician flexibility, at-home recovery, and payment policies, incurred spending for outpatient procedures increased while quality measurement and improvements remained the same.¹ The study aimed to determine whether hospital participation in the first year of BCPI Advanced for outpatient BNESF was associated with lower spending and improved quality across episodes of care.

Researchers used Medicare claims from patients who received BNESF procedures from January 2013 to September 2019, including cervical, thoracic, and lumbar decompression procedures without fusion. Of the 14,280 participants who received outpatient BNESF between January 2013 and September 2019, 3748 were at a participating BPCI hospital, and 10,532 received BNESF at a matched nonparticipant hospital. Of participants who had outpatient procedures, the mean age was 71.8 years, 43.9% were women, 3.9% were Black, and 3.2% were Hispanic.

The study observed a differential reduction for patients who received outpatient BNESF procedures with hospital participation in BPCI Advanced, which was associated with a reduction in total episode spending (−$1201; 95% CI, −2184 to −219) and return inpatient admissions (−2.2 percentage points; 95% CI, −4.2 to −0.1). However, there was no differential reduction observed for patients who received inpatient BNESF at participating BPCI hospitals. Overall, the BPCI Advanced model was associated with 10% lower spending for outpatient BNESF-receiving patients.

The unadjusted total episode spending decreased slightly from the baseline and intervention period for BPCI Advanced hospitals from $13,100 to $13,086, compared with treatment at a non–BCPI-participating hospital, where spending increased from $11,677 to $12,946. For outpatient episodes, BPCI Advanced was associated with a decrease in spending for professional services (−$245; 95% CI, −$466 to −$24) and inpatient spending (−$675; 95% CI, −$1133 to −$217).

“This study has important implications for policymakers as they consider the future of value-based payment,” the study authors wrote. “Our findings suggest that including outpatient surgery in bundled payment programs might have advantages, with the potential to generate savings independent of reductions in post-acute care.”

References

1. Kilaru AS, Ng GY, Wang E, et al. Savings associated with bundled payments for outpatient spine surgery among Medicare beneficiaries. JAMA Health Forum. 2025;6(7):e251907. doi:10.1001/jamahealthforum.2025.1907

2. BPCI Advanced. CMS.gov. Accessed July 15, 2025. https://www.cms.gov/priorities/innovation/innovation-models/bpci-advanced