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State Senate passes bill to prevent overpayment for spinal surgery devices

In workers' compensation defense news, the California State Senate recently passed a new law that is expressly designed to cut work comp costs and reduce duplicative payments associated with spinal surgery.

Specifically, lawmakers passed Senate Bill 959 by a margin of 34-2. The legislation, sponsored by Senator Ted Lieu (D-Torrance) would address what many people see as a major flaw in California's work comp system.

Currently, California law and the Medicare fee schedule adopted back in 2004 permit a 120 percent payment for the medical costs associated with surgery to implant spinal devices plus separate payment for the costs of the material and hardware of the spinal devices.

According to the critics, however, this system results in a double payment or a "pass-through" as it is otherwise known. Essentially, a hospital receives payment for the spinal device/hardware/instrumentation even though these costs are already technically accounted for when the reimbursement level is set.

Here, SB 959 would put an end to these double payments, reduce overall costs and help prevent the unnecessary implantation of spinal surgery devices in injured workers.

"By lowering the pass-through, we will save between $40 and $60 million per year," said Sen. Lieu.

Interestingly, the bill has the support of labor groups and business interests, both of which are seeking to end the growing trend of some hospitals viewing spinal surgery as a sort of business opportunity.

"A small number of hospitals in Southern California have identified spinal surgery as a business opportunity," said Mark Sektnan, president of the Association of California Insurance Companies. "This bill is also fundamentally important to the injured worker. What was found is that requirement to pay twice is providing an incentive for some physicians to provide more spinal surgeries than appropriate."

SB 959 will now head to the Assembly, where its prospects of passing appear are still uncertain.

Stay tuned for updates from our workers' compensation defense blog ...

This post was provided for informational purposes only and is not to be construed as legal advice.

Source:

Insurance Journal, "Bill addressing spinal surgery devices passes California Senate," Don Jergler, May 30, 2012

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