California: 'Pass-through' payments create incentive for back surgery

A study on the impact of the duplicate payments allowed in California's workers' compensation system for implantable hardware and instrumentation used in spinal surgery shows that the so-called "spinal hardware pass-through" payments appear to have created an incentive to perform back surgery on injured workers.

According to the California Workers' Compensation Institute, the additional fees were paid on nearly 3,600 workers' comp claims in 2008, boosting payments to hospitals on these claims by an estimated $55 million.

The organization's study was based on 2008 hospital discharge data from California's Office of Statewide Health Planning and Development. Researchers found that out of 5,070 workers' comp back surgeries in which spinal hardware could have been used, 3,599 had at least one procedure code indicating that hardware or instrumentation actually was used. That represents, according to the study, more than one out of every six spinal surgeries in which hardware was used in California during that year and translates to a 71 percent spinal implant utilization rate for workers' comp.

Sub-subcontractor's employee not entitled to coverage from contractor (02/25/13)
NFL seeks to seal the deal against players filing in California (04/19/12)
Company's failure to pay premium results in liability for worker's injury (12/19/11)
Medicaid's payment, write-off erase employer's liability to worker (03/12/12)
Insurer's de facto denial of symptom doesn't trigger penalties, fees (02/06/12)

After controlling for the different mix of spinal surgeries found in the workers' comp system, the study found that the spinal implant utilization rate was higher than the rate noted for Medicare, Medi-Cal, other government programs, and private insurance, and that the injured worker cases had the highest average number of implant procedures.

The study also generated estimates of the average spinal hardware pass-through payments for each of the 14 back surgery diagnostic categories that are eligible for the duplicate reimbursements. Researchers found that, depending on the diagnostic group, the average additional payments ranged between $10,870 and $25,478, with the overall average of $15,409 for all pass-through payments. Multiplying that average by the 3,599 workers' comp back surgeries that used implantable hardware in 2008, the institute estimated that in that year alone, the pass-through payments added $55 million to the basic inpatient hospital facility fees paid for workers' comp spinal surgeries.

Read more at the WorkersComp Forum homepage.

September 7, 2010

Newsletter Sign-up