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, which 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 are referred to as "pass-through" payments.

The payments initially were intended to ensure that hospitals would treat injured workers who required expensive spinal procedures.

Key Findings

The study found that hospitals were paid a total of $67.5 million for spinal surgeries in 2010.

It estimated that the 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 the 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) said the 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 eliminate pass-through payments.

Meanwhile, the state Department of Industrial Relations -- which oversees workers' compensation -- has proposed a substantial reduction in the 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." Ott added that "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).