Monday, March 24, 2014

Fee Schedules, Reimbursements, and Medical Necessity

On February 26, 2014 David DePaolo blogged of “A Grand Opportunity.” He says that “The Drobot/Pacific Hospital/Calderon case is the single biggest opportunity to combat fraud in CA work comp ever.”

The first week of March on WorkersCompensation.com, Bob Wilson asked “In California BribeScandal, Where Were the Applicant’s Attorneys?


Both are interesting, as are a variety of other perspectives being presented out there in the worker’s compensation community. 

The news media is questioning the cost of medical care, and the necessity of medical procedures. Medical Fees Out of Whack highlights some of those questions. Last October, there was discussion in the Florida Press about spinal fusions at one hospital. Federico Vinas is a surgeon in Daytona Beach. TheWashington Post noted that he was performing a significant volume of spinal fusions. 

The hospital hired a company to review the medical necessity of his procedures in 2010.  This concluded that 9 of 10 fusions reviewed were not medically necessary. The Hospital then performed an internal evaluation and concluded that all of the surgeries were in fact medically necessary. There is a notable disparity between the conclusion that 90% were not necessary and the conclusion that all were in fact necessary. Why this disparity?

In March, the Orlando Sentinel reported that a whistle-blower case is underway in Federal Court regarding illegal kickbacks to physicians, and performance of unnecessary procedures. They say that this may involve almost a billion dollars, "the largest Medicare fraud case of its kind." The trial has been bifurcated, with the first segment focused on the hospital's payments to cancer physicians and neurosurgeons. 

While these allegations are not about workers' compensation care specifically, the overall implication of improper compensation for doctors performing care could impact cases beyond the Medicare arena. Just prior to jury selection, the hospital entered into a settlement with the U.S. Department of Justice, which had joined the whistle-blower in prosecuting this case. According to the Department of Justice, the Hospital will pay the government $85 Million. The DOJ noted "financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than  patient needs."

Currently, the Florida legislature is considering legislation to overhaul the way hospitals are reimbursed for workers' compensation care. Workers' compensation reimbursement for hospital care in Florida is significantly higher than Medicare reimbursement. Senate Bill 1580 would limit hospitals to 140% of Medicare charges for care provided in workers' compensation cases. 

Is legislative change in the hospital reimbursement arena necessary for Florida? Is the reimbursement schedule the problem, or should the question be is the reimbursement schedule the whole problem? Are their broader concerns about the delivery of medical care?

The coming weeks will reveal whether fee schedule reform has any momentum in the current legislative session. The outcome of the Orlando trial regarding Medicare may bring some clarity as to the practice of incentive pay for physicians in that market. 

Mr. DePaolo suggests in California that the Drobot case brings an opportunity for re-evaluation of medical care delivery there. Bob Wilson questions why questions were not asked sooner. Will Florida face similar questions in the months to come?


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