I posted on the growing problem of hospital costs in California a few days ago, and since then I’ve been working on a project to identify facilities to include – and exclude – from its MPN (California’s version of a certified work comp provider network)
It’s sometimes tough to tell which facilities are the ones to steer injured workers away from, and it’s even tougher to convince the treating physician to make a change.
Fortunately, some providers in California have decided it’s time to fess up, providing payers not only their names, but clear evidence on why they shouldn’t be treating work comp patients.
The list, available here (thanks to WorkCompCentral for the head’s up), identifies the hospital outpatient and ambulatory surgery centers that have opted to be paid as ‘outliers’. That is, these facilities don’t want to be paid based on the fee schedule’s standard 1.22 times the Medicare rate on all cases. Instead, they have notified payers that they are to be paid 1.20 times the Medicare rate on all cases plus an additional payment for specific outlier cases.
Fortunately, there aren’t that many providers on the list – probably less than fifty.
Even more fortunate, the good folks at California’s Division of Workers Comp have published each facility’s cost-to-charge ratio. Simply put, this is a comparison of what it costs the facility to deliver the service to what it charges payers for that service (on average). So, the lower the cost to charge ratio, the higher the charge in relation to what it actually costs to deliver the care.
There are some rather stunning revelations on the thankfully-brief list of ‘outliers’.
For example. The Long Beach Pain Center Medical Clinic, Inc. has a cost to charge ratio of .20. That means they charge payers five times what it costs to deliver the service. And they aren’t the…most ambitious.
There are seven (7) providers that charge more than five times costs, with two charging more than nine times costs. (Midway Hospital Medical Center and John F. Kennedy Memorial)
More information
This isn’t the only resource for payers trying to find out which providers charge ‘reasonably’ and which ones less so. For more background, CDC is an excellent resource with lots of information written in laymen’s terms; they also publish the average state cost to charge data here.
Our friends at HHS publish a variety of reports that help payers determine provider efficiency, here’s one for inpatient admissions (covers all states and all providers). Many states publish similar data; here’s Kentucky‘s,
Before I get flamed by providers telling me how their costs charges are justified because they only treat really sick patients or the cost evaluation isn’t fair or their treatment is just soooo much better, I’ll freely admit that cost is only part of the cost-benefit equation, and reasonable folks would argue it’s unfair to look at one without the other.
True. And as soon as these providers show exactly why they’re worth the added cost, we’ll consider their evidence.
Apr
23
Joe, Along these same lines, I sat in on a very good webinar put on by Ingenix highlighting some new software they had developed to track the variation in treatments from one provider to the next. The session was put on by Dr. Michael VanDuren at Sutter Physicians in CA. It was very interesting to see that physicians in the same group, doing the exact same procedures, were vastly different in treatment (and costs). So I think you are dead on with this analysis, but there is more to be done to really get at those over-utilizing, and those overcharging. Both are problems needing to be addressed. The trick is how to address this without the physicians feeling like they are having treatment dictated to them.
Joe,
Despite their appearing on the Outlier list, in terms of outcomes, I’d still rather send a patient to Kerlan-Jobe if I needed a speedy recovery for a person in a physically intensive occupation…so in my opinion, not everyone on those lists should be avoided.
Are you able to provide a list of non-recommended providers for New Jersey also?
Brianna – Certainly; this is one of the things HSA does for customers.
Paduda
Are these providers still part of many MPN’s in CA? If so, are they accepting discounts on the outlier cases?
Value has two components, cost and clinical outcome, which decrease indemnity costs and improve worker productivity. The lower the cost and the faster and better the clinical outcome, the better the value. We can’t buy value if the only information we have is cost. Some of the high cost and some of the low cost will be high value, and low value.