By Joe Paduda
CompPharma and Health Strategy Associates

WorkCompCentral's Greg Griggs reported the California Division of Workers' Comp's public hearing last week was dominated by providers complaining about moves to reduce reimbursement for Ambulatory Surgery Centers (ASCs) and spinal implant hardware.

I have a [very] tough time ginning up much sympathy for the ASCs.

First, a quick review. Back in 2004, California's Division of Workers Compensation (DWC) set payment for ASCs at 120% of Medicare identical to hospital outpatient departments. The new recommendation is to pay the ASCS at 100% of the Medicare rate.

According to WorkCompCentral, several of the provider groups attending the hearing stated they would suggest/encourage their physicians not treat workers comp patients because WC is a hassle and the reimbursement cut would be too deep. There's no question WC is more of an administrative burden than your typical WC case; dealing with UR, complaints from adjusters, employers, and injured workers, documentation requirements and potential for involvement in litigation as well as addressing return to work are all present in comp and not in Medicare.

And that's precisely why physician reimbursement in comp, is higher than for Medicare the docs, and their staffs, are the ones dealing with those issues. They should be paid more and in California, as in most other states, they are.

For facilities, it is hard to see why they should be paid more for WC cases than for Medicare the bricks-and-mortar, tools, staff, supplies and other operating expenses are what their reimbursement covers.

To listen to the ASC owners, any reduction in comp will be catastrophic: here are a couple of their comments as quoted in WCC, with my observations interspersed:

"The reason I built the Pleasanton surgery center is because hospitals are so inefficient"... under the new fee schedule this physician's three surgery centers "will have some procedures where it just broke even "and many where there would be a significant loss."

 If hospitals are "so inefficient", how can an ASC not be more profitable at the same reimbursement as those 'inefficient' hospitals? There's a logical fallacy here that refutes the physician's own argument.

Another CEO said "we need to select those parts of the business where we could make a profit, but the reality is a 20% cut is big for any business. The brutal reality is that will impact jobs."

With all due respect to the CEO, your profits are employers' costs. The "brutal reality" is high workers comp costs do impact jobs especially for employers forced to pay for your profits.

What does this mean for you?

A helpful reminder that workers comp is a zero sum game excessive reimbursement profits providers and penalizes employers.

Joe Paduda is owner of Health Strategy Associates, a Connecticut employer consulting firm, and co-owner of CompPharma, a consortium of pharmacy benefit managers. This column was reprinted with his permission from his Managed Care Matters blog, at http://www.joepaduda.com.