Costs racking up for California hospitals in worker’s compensation claims

Costs racking up for California hospitals in worker’s compensation claims

A study by the California Workers’ Compensation Institute shows that California hospitals collected twice as many payments in 2010 from workers compensation patients that undergo spinal surgery.

While hospitals typically pay 120 percent for medical services to injured workers, in comparison to Medicare patients, they pay even more additional costs for spinal surgeries.

These supplementary costs are known as “pass-through” payments. The costs stem from the reimbursement for hardware and devices implanted in patients during surgery. However, the costs of these instruments are typically already factored into the initial reimbursement.

According to data from the Office of Statewide Health Planning and Development, 5,193 injured workers were eligible for these pass-through payments in 2010.

The study, based on 3,350 surgeries, shows that these pass-through payments add $20,000 to each procedure.

Hospitals are “getting a double payment and nowhere else (in the workers’ compensation program) is this done,” said Sen. Ted Lieu, D-Torrance, who introduced a state bill that would eliminate the pass-through payment.

These dual payments increase costs for employers and taxpayers, as well as insurers, who are responsible for these injured workers’ medical bills. These payments add approximately $11.4 million to taxpayers’ costs.

The California Hospital Association opposes this legislation getting rid of the pass-through payments.

“California Hospital Association’s concern is that the Medicare population is different from the workers’ compensation population…and payments are based on a population of elderly and disabled patients,” said Amber Ott, the vice president of finance for the Association. “The clinical approach is different than if it were a young person trying to re-enter the workforce. You are trying to achieve full mobility versus comfort.”

The initial intention of these pass-through payments was to guarantee that hospitals would treat injured workers who needed costly spinal surgery. However, new analysis by the California Workers’ Compensation Institute shows that these reimbursements allow room for cost inflation.

The state Department of Industrial Relations, which oversees workers’ compensation, has plans to significantly lower these payments. The California Hospital Association, on the other hand, said that these payments for the hardware and medical devices are vital for sufficient procedures.

“These procedures put a significant number of hospitals in the red,” the California Hospital Association’s Ott said. “If the goal is to get people back into a working environment sooner and 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.”