A new RAND study reports California’s employers are paying $60 million more than they should for surgical implants. Not the surgery, or the follow up care, or the facility costs – just the devices themselves.
According to Jim Sams’ piece in today’s WorkCompCentral,
“the state’s fee schedules allow hospitals to bill separately for the hardware that is used in spinal fusion surgeries plus an administrative fee. [lead researcher for the cost-savings project Barbara] Wynn said the resource-based relative value scale that Medicare uses to calculate the appropriate fee for spinal surgery hardware procedures already includes the cost of the hardware, and California’s fee schedule pays 120% of the Medicare rate.
“Passing through WC device costs on top of 120% of the Medicare payment results in paying for the spinal hardware twice, creates incentives for unnecessary device usage, and imposes unnecessary administrative burden,” she said in her report.
Wynn said repealing the rules that allow pass-through charges would save $60 million annually.”
There’s a lot more to the RAND study, but this highlights a big problem area – one much larger than $60 million.
First, why is work comp paying 20% more than Medicare?
Second, surgical implants are not “one and done”. It is fairly common for patients to have to undergo surgery to replace defective or incorrectly used devices.
Third, the cost of the implant can often push total expense for inpatient care past the outlier limit, making the stay substantially more expensive.
Fourth, the cost of implants is growing much faster than overall medical inflation – one projection has the spinal implant market increasing 16% per year.
What does this mean for you?
California hasn’t fixed this problem yet, despite knowing about it for eight years. And don’t think this is unique to the Golden State (a term likely coined by implant manufacturer Stryker); the use of implants is up all over the country.
