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Can the Spinal Implant Problem be Fixed?

By Joe Paduda

Friday, June 18, 2010 | 0

By Joe Paduda
Health Strategy Associates

According to Bill Kidd's piece in WorkCompCentral June 10, 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 New York, Texas and California [working on a change] and Florida) 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 (Calif.) or a percentage of the invoice amount (Fla). 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
  • "Three-for-the-price-of-two" 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. (Health Strategy Associates client) FairPay Solutions provides this service; if there are others out there that can assist, let me know.

Joe Paduda is principal of Health Strategy Associates, a consulting firm in Connecticut. This column was reprinted with his permission from his blog, http://www.joepaduda.com

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