OBJECTIVES: Concerns regarding the budget impact of lumbar total disc replacement (TDR) surgery for patients with lumbar degenerative disk disease (LDDD) may underlie delayed coverage by US Private health insurers, despite mounting evidence on the favorable efficacy, safety and cost-effectiveness of TDR relative to lumbar fusion (LF). The objective of this study was to estimate the budget impact of single-level lumbar TDR coverage for LDDD for a typical US private health plan. METHODS:   An economic model (one-year time horizon) was developed for an insurance plan of one million privately insured patients, evaluating LDDD prevalence, failure rates to conservative care, current fusion adoption rates and probable TDR substitution patterns. Cost components include surgical costs (device costs, operating room time, hospitalization and surgeon’s fees), reoperations and community-based care. Published U.S. epidemiological data underlies the prevalence of LDDD, conservative care failure rate and number of current lumbar fusions performed. Procedure costs of TDR and fusion were informed by Medicare 2016 DRG payment rates. RESULTS: In the absence of TDR coverage, the model predicts that the target insurance plan to incur annual costs of $18.56 million for LDDD patients who fail conservative care. If TDR is restricted to on-label use, and the patients who access TDR are those who would have fusion had TDR not been available, then the budget impact is predicted to fall to $18.39 million, leading to a cost savings of $170,000 with coverage of TDR. In a separate threshold analysis, TDR is predicted to remain budget neutral as long as 57% or more of TDR-treated patients are those who would have had a fusion surgery in the absence of TDR coverage. CONCLUSIONS:

Based on the available evidence, TDR is expected to be less costly than surgical fusion and result in minimal to no budget impact when coverage is aligned with well-studied patient populations.