the evolution of surgical implants in workers compensation...•implants will be coded under rev...

ORCHIDmedical.com

Brandon Olson Director of Business Development

David Anderson, ATPVice President, Operations

Prepared for:

The Evolution of Surgical Implants

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1780 WWII Era 1950 1960

First ortho

institute opens

Traction &

Splinting

Itermedullary

rodding

First

uncemented

hip using

titanium

Bicycle parts

to create

spatial frames

3 Column

spine model

History of Implants design, materials & philosophies

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1965 1970’s 1980’s

Spinal cord

stimulatorsTotal knees Joint

replacements

(shoulders,

knees, etc)

Arthroscopy

surgery

techniques

MRI & CT scans

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1980 1990 2000

Minimally

invasive

surgery

Disc

replacement

Instrumentation


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1. Spine

Top Five Claims Injuries

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2. Shoulder


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3. Sports Medicine


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4. Hip/Knee


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5. Trauma/Reconstructive


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Honorable Mention

Spinal Cord Stimulators



“…hospitals routinely seem to charge

2½ times what these expensive implantable devices cost them, which

produces that 150% profit margin”1

The IssueExtraordinarily high reimbursement rates for implantable devices

1 Brill, S. (2013, March 4). The Bitter Pill: Why Medical Bills Are Killing Us. TIMES Magazine.


Billed Charges (U&C) - There basically is no fee schedule and the facilities can charge whatever they want and expect to get paid that amount.

Cost Plus- The cost plus model dictates that the facility report their respective cost for the implants and are then allowed a specific mark up. Some states allow a zero % markup (GA), while others allow a 60% markup (FL). Some also cap the maximum markup (TX).

Weighted Rates- This reimbursement for implants is these states is based on a formula that takes into account the weighted rate value of the facility. Rates in these states are similar to a low percentage cost-plus model.

DRG- The key term for these states is ‘bundled.’ Basically, the implants cannot be charged for separately in these states and are bundled into the procedure price.

Combination- Some states have a hybrid model that uses a mixture of the types listed above. For example, Michigan is a DRG state, yet it allows certain implants such as Spinal Cord Stimulators to be separately reimbursed on a capped cost-plus model.

Fee Schedules


Cost vs. Price

MARK

UP Payer Cost

Manufacture Price List Price

Hospital Cost (ASP)


Implant costs increased 3 to10times by hospital and/or 3rd party biller

Cost vs. Price


Cost of an Implantcomponents of $6,000 orthopedic implant

Tax 3% R&D

6% Net

Income

6%

COGS

30%

SG&A

43%

Selling, General & Administrative (SG&A) $2,598

Manufacturing (COGS) $1,788

Net Income $372

Research & Development (R&D) $348

Tax $172


• Injured Workers’ Claims are targeted because

of the ability to charge high implant fees

• Puts severe financial strain on WC carriers to pay

for implants – high loss ratios

• Takes away dollars that could be better spent on improved patient

management

• Dominates claim reserves

The High Cost of Implants how it affects claims


• Implants will be coded under REV Code 278 on a UB04 (hospital) billing form.

• General Orthopedic and Spine implants do not have specific HCPCS codes, but fall under miscellaneous code L8699.

• Spinal Cord Stimulators and Infusion/Pain Pumps do have specific HCPCS codes.

• BILL REVIEW CHALLENGE.

Implant Coding


• Manufacturers market physicians in medical school

• Manufacturers have well trained sales force

• Doctors select implants based on patient need

• Doctors have surgery schedulers

• Implants and instruments delivered 48 hours in advance

• Manufacturer representative in OR room

Implants Workflow how implants get from the physician to hospital


• Use of quality implants

• Physician competency

• Return to work time

• No inducement to use certain implants

Implant Use what an adjuster should expect

• Fair pricing

• Transparency

• No overutilization

• Consistent results

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Questions?


Thank You & Questions

Orchid specializes in delivering customized, medical cost containment services specifically developed for the workers’ compensation market. We offer a broad range of medical management services including DME and supplies, orthotics and prosthetics, home healthcare, home and vehicle modifications, diagnostic imaging, physical medicine, transportation and translation, and urine drug monitoring services. From complex care coordination to surgical implant cost management, we deliver services that expedite successful outcomes for injured workers and produce leading savings for our clients.

About Us

Brandon OlsonDirector of Business DevelopmentC: [email protected]

David Anderson, ATPVice President, OperationsC: [email protected]

the evolution of surgical implants in workers compensation...•implants will be coded under rev...

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