Study: California Hospitals Collect Extra Spinal Surgery Payments
In 2010, California hospitals were paid twice for spinal surgeries performed on workers' compensation patients, according to a study from the California Workers' Compensation Institute, California Watch reports.
The study, whichÂ was based on 3,350 surgeries, was conducted at the request of the state Senate Committee on Labor and Industrial Relations.
Details of Duplicate Payments
Hospitals usually are paid 120% for care provided to injured workers, compared with reimbursements for treating Medicare beneficiaries.
However, spinal surgeries performed on workers' compensation patients trigger additional payments. In these cases, hospitals are reimbursed a second time for hardware or devices implanted during the surgeries, which often areÂ referred to as "pass-through" payments.
The payments initially were intended to ensure that hospitals would treat injured workers who required expensive spinal procedures.
The study found that hospitals were paid a total of $67.5 million for spinal surgeries in 2010.
It estimated that theÂ pass-through payments for spinal instruments added $20,000 to the cost of each spinal surgery.
However, researchers said that the cost of the instruments already is factored into the initial reimbursement.
According to the study, "[I]t is clear that the system for reimbursement for spinal implants under the current workers' compensation ... does allow for cost inflation beyond the reasonable level associated with cost recovery that was intended by the state regulations."
Effect of Duplicate Payments
Critics say that theÂ pass-through payments increase costs for employers and taxpayers.
Lachlan Taylor -- acting executive officer of the state Commission on Health & Safety and Workers' Compensation -- estimated that the payments resulted in $11.4 million in additional costs to taxpayers.
Sen. Ted Lieu (D-Torrance)Â said theÂ pass-through payments are the result of a "loophole" that has "unfortunately led to a cottage industry where you have some hospitals that do a huge proportion of workers' compensation spinal injury surgeries, and they take advantage of the double payment."
Lieu has introduced a bill (SB 959) that would eliminateÂ pass-through payments.
Meanwhile, the state Department of Industrial Relations -- which oversees workers' compensation -- has proposed a substantial reduction in theÂ pass-through payments.
CHA Defends Payments
Amber Ott -- vice president of finance for the California Hospital Association -- said that pass-through payments are necessary to ensure that injured workers have access to complex and costly spinal surgeries.
She said, "These procedures put a significant number of hospitals in the red."Â Ott added thatÂ "if our hospitals stop doing these types of procedures (due to cost), the wait time for these injured workers to get these procedures performed is going to be a lot longer" (Yeung, California Watch, 6/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.