Duplicate payments to hospitals allowed by the California Workers’ Compensation Official Medical Fee Schedule for implantable hardware used in spinal surgery added an average of $20,137 in fees to 3,350 work injury claims in 2010, boosting workers’ compensation medical costs by nearly $67.5 million according to new estimates from the California Workers’ Compensation Institute (CWCI).
CWCI conducted the analysis at the request of the Senate Committee on Labor and Industrial Relations which wanted to quantify the potential impact of a bill (SB 959) to repeal the so-called “pass-through payments” for spinal hardware. Under the current workers’ compensation inpatient hospital fee schedule, hospitals are paid 120% of the Medicare rate for specific types of back surgeries performed on injured workers, plus additional fees for the hardware, even though Medicare already includes surgical instrumentation costs in setting its rates.
Updating an analysis from two years ago, CWCI researchers reviewed 2010 hospital discharge data from the Office of Statewide Health Planning and Development and identified 4,718 workers’ compensation back surgeries in which spinal hardware could have been used. Applying the 71% surgical implant rate calculated in the earlier study, they estimated that 3,350 of the 2010 back surgeries involved hardware that made them eligible for the duplicate payments. The researchers also calculated that in 2010, duplicate spinal hardware payments for the 14 back surgery diagnostic categories that are eligible for pass-through fees averaged between $13,044 and $30,574, and after accounting for the mix of these surgeries performed on injured workers, estimated that duplicate payments on all pass-through procedures averaged $20,137. Multiplying that figure by the estimated 3,350 workers’ compensation back surgeries that used implantable hardware, the authors estimated that in 2010, pass-through payments added almost $67.5 million to the basic inpatient hospital facility fees paid for workers’ compensation back surgeries, up 22% from $55 million in 2008.
The findings of the Institute analysis have been forwarded to the state legislature and last week the Senate voted to send SB 959 to the Assembly for consideration. CWCI has published the latest analysis in a CWCI Research Note, “Preliminary Estimate of California Workers’ Compensation System-Wide Costs for Surgical Instrumentation Pass-Through Payments for Back Surgeries,” which is in the Research section of the Institute’s website (www.cwci.org). CWCI Research subscribers and members may log on to the website to view a summary Bulletin as well.