CWCI Estimates Workers’ Comp Spinal Implant Pass-Through Payments Cost $55 Million in 2008

A new CWCI study on the impact of the duplicate payments allowed in California workers’ compensation 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, as the additional fees were paid on nearly 3,600 workers’ compensation claims in 2008, boosting payments to hospitals on these claims by an estimated $55 million.

The Institute’s study, based on 2008 hospital discharge data from California’s Office of Statewide Health Planning and Development, found that out of 5,070 workers’ compensation 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 more than 1 out of every 6 spinal surgeries in which hardware was used in California during that year, and translates to a 71 percent spinal implant utilization rate for workers’ compensation. After controlling for the different mix of spinal surgeries found in the workers’ compensation system, the study found that the spinal implant utilization rate in workers’ compensation 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 and 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’ compensation 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’ compensation spinal surgeries.

The Institute study has been released in a CWCI Research Update report, “Surgical Instrumentation Pass-Through Payments for Back Surgeries in the California Workers’ Compensation System.” The full report is available to the public in the Research section of the Institute’s website (www.cwci.org), and CWCI Research subscribers and members may log on to the website to view a summary Bulletin as well.