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Can the surgical implant problem be fixed?

According to Bill Kidd’s piece [sub req] in WorkCompCentral this morning, several states are attempting to address the rapidly growing problem of surgical implant device fees via regulation or legislation – by basing reimbursement on the manufacturer’s invoice. While it is great to see authorities paying attention to what has been a big problem for comp payers for several years, this solution may not be much of a…solution.
As I noted in a post a couple weeks ago;
“In several jurisdictions (including NY TX CA (working on a change) and FL) the basis for reimbursement is some version of the “documented paid amount” plus a handling fee of 10% or so up to a cap of a few hundred dollars (CA) or a percentage of the invoice amount (FL). Illinois is also contemplating a similar arrangement. [Bill notes that Minnesota is also looking into a fix]
The problem lies in the documentation of the paid amount. Most payers ask for a copy of the invoice, which, on the surface, makes sense – this is what was paid.
Not exactly. What the invoice doesn’t show can include:
– volume purchase discounts
– rebates
– “3 for the price of 2″ deals
– waste (some surgeons use the cage from one kit and screws from another, so the payer is paying for more hardward than is actually being used)
– internally developed invoices (documents prepared not by the supplier but by the provider)
This last point is the crux of the issue. Hospital systems often buy in bulk, with several implant kits shipped and billed; this obviously makes it impossible for the provider to produce the invoice for the device used in a specific surgery, as they never got one. Thus, many providers develop the invoice for a specific implant kit themselves.”
So, what to do?
I don’t see a legislatively-simple solution, or rather one that only requires a revision to existing fee schedule language. Requiring providers to disclose the ‘price’ is only practicable if they know what that ‘price’ is; as noted above, that often is difficult if not impossible to establish.
What states can do is require reimbursement at ‘cost’ plus something, allowing payers to work with specialty bill review vendors to determine what that ‘cost’ is. (HSA Client) FairPay Solutions provides this service; if there are others out there that can assist, let me know.
predictive modeling
artificial intelligence

2 thoughts on “Can the surgical implant problem be fixed?”

  1. Medical Cost Remedy (MCR) has a comprehensive database of implant costs and average payor reimbursements for same within a provider’s geographic region. The data is obtained and updated on a quarterly basis to insure accurate and appropriate payment recommendations. Data sources include a large national GPO vendor, electronic billing clearinghouse data, and a proprietary cache of authentic manufacturer’s invoices. Fair and reasonable hospital claim and implant reimbursement recommendations must be equitable and acceptable to both payor and provider. With average savings results significantly greater than PPO discounts and appeal rates less than 5% – I’d say MCR is doing just that.

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Joe Paduda is the principal of Health Strategy Associates



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