Workers’ compensation in California is expensive enough without the system paying twice for the same treatment. The Assembly should approve a bill that would end duplicative payments for some types of spinal surgery on injured workers.
The Senate last month passed SB 959, by Sen. Ted Lieu, D-Torrance, and sent the bill on to the Assembly. The measure would end an extra reimbursement to medical providers for implantable devices used in spinal surgery. The state’s workers’ comp law sets reimbursement for spinal surgeries at 120 percent of what Medicare pays for the same procedures. The law allows an additional payment when the surgery includes implants that aid in treating back injury. But Medicare’s reimbursement rate already factors in the cost of those devices, so workers’ comp effectively pays twice for the implants.
Workers’ compensation is California’s system that covers workplace injuries. State law requires employers to buy insurance to pay for treating workers hurt on the job. Legislators wrote the extra payments for spinal implants into law in 2003, when the state reformed workers’ compensation to shrink ballooning costs. But there is no reason to continue with a reimbursement scheme that adds unnecessary payouts to an already costly system.
A study this month by the California Workers’ Compensation Institute found that the extra payments boosted the system’s cost by $67.5 million in 2010. The dual reimbursement for such devices added an average of $20,137 in fees to spinal procedures for 3,350 injured workers that year. The institute is an insurance industry organization, but is hardly alone in objecting to the double payments. A RAND Corp. study last year said the dual payment policy provides no incentive to control costs and “creates the potential for abuse.”
The state’s economic climate does not benefit from rules that arbitrarily inflate a sizable business expenditure. Workers’ compensation cost California employers a total of $14.8 billion in 2010, to cover nearly 14.4 million workers. Businesses already complain about the high cost of operating in California, and the state should not carelessly add to that burden. Granted, $67 million or so is a tiny fraction of the total system amount, but that fact does not justify overpayments. And workers’ compensation insurance rates have been climbing since 2008, while the state’s economy continues to struggle.
Medical providers, including hospitals, say that eliminating the add-on payment for spinal implants would block access to these treatments for injured workers. But that contention is weak. Medicare rates, for example, already consider implant costs, and workers’ comp pays more than Medicare. Nor is patient access a rationale for maintaining a reimbursement setup that lacks any incentive for controlling treatment expenses.
SB 959 offers a sensible step that can save money in a system where cost has long been a political flash point. Even small savings matter. Workers injured on the job should receive essential care, but that need should not be an excuse to pad profits at the expense of the state’s economy.