As surgical implant technology has grown more complex, managing surgical implant spend has become a bigger challenge and cost driver for payers. A surgical implant review based on intelligent, data-driven expertise can bring pricing objectivity, transparency, and significant savings to a workers’ compensation program.
Clinical reviews, conducted as part of a medical bill review process, are common in the workers’ comp industry—medical bills may be reviewed for many different reasons by high-level coders, nurses, and other medical professionals. But in many situations, these reviews are not able to maximize surgical implant savings due to a lack of specific resources and expertise needed to identify major cost drivers.
Effective surgical implant reviews must be able to accurately:
- Interpret state regulations
- Match invoices to the specific procedure
- Identify billing errors
- Assess the facility’s true acquisition cost
An industry standard clinical review might partially address these items, but maximizing savings requires implant-specific, data-driven analysis. Fusion by ParadigmSM is an innovative surgical implant cost management solution that addresses reductions objectively to minimize provider disputes and deliver successful results within these critical categories.
1. Interpreting state regulations
State regulations play a huge role in workers’ compensation, and this certainly applies to surgical implants. There is a very high degree of regulatory variation that must be accounted for when reviewing a surgical implant bill, and no two states are exactly the same. With that said, there are four basic types of reimbursement models with an implant review:
- No-guideline states — Usual and customary (UCR) or fair and reasonable reimbursement must be established, typically through an external database. Because external databases are commonly not facility-specific, significant savings can be obtained using implant cost data at the facility level.
- Percentage of charge states — There must be an assumption the facility has billed appropriately using facility-mandated rules. Because facilities can make mistakes, an in-depth review based on actual facility data can help identify surgical implant billing errors.
- Cost-plus states — Reimbursement to the facility is actual “true” cost plus a markup, typically a percentage. This can open the door for so-called “creative billing.” Although facilities include invoices with their bills, these invoices are often retail cost, and not the facility’s true cost, as outlined in most state statutes.
- All-inclusive states — Reimbursement is a specific dollar amount based on the full procedure, including medical services and implants. Because surgical implants are not separately reimbursable, implant review may not provide savings value.
General purchasing data is not industry-specific and provides no insight into reimbursement rules covered under state statutes. Fusion by Paradigm data is industry-specific, with state rules, facility-specific data, and manufacturer discounts/rebates built in.
2. Matching invoices to the specific procedure
It is imperative to match the implant invoices to the actual procedure performed. In many cases, when a facility submits invoices, they often include items the facility purchased from the manufacturer for other surgical procedures, not just items used for the billed procedure. An in-depth review requires the knowledge and expertise to match the items on the invoices to the specific items used in the billed procedure—including the quantity of each item.
Additionally, a facility often bills and includes invoices for implant items that were not left in the body. Most states clearly outline that an implant must be left in the body in order for it to be reimbursed. For example, it is common for an implant to be classified as an “in-and-out.” This means the implant was placed in the body, but before the procedure was completed, the implant was removed. This would be necessary if the surgeon does not feel comfortable with the size or fit of the implant and needs to remove it.
With a standard clinical review, there is a much higher chance of miscalculation due to a lack of specific implant manufacturer expertise. It can be difficult to know exactly how many screws were used or needed for a specific procedure. The Fusion by Paradigm database contains actual invoices cataloged from nearly 200,000 workers’ compensation medical bills and pricing lists from almost every implant manufacturer. This is combined with the implant-specific expertise and experience needed to accurately review and match invoices to procedures.
3. Identifying billing errors
Many facilities erroneously bill for items not classified as implants, or send invoices for implant items not statutorily reimbursable. For example, facilities may bill in error for supply items under the revenue code for implants when the items should have been billed using the revenue code for sterile supplies.
Again, an in-depth surgical implant review requires specific expertise to identify these types of situations to maximize carrier and payer savings. Paradigm’s Surgical Implant Cost Management was built from the ground up to detect not only good faith billing errors, but any wasteful and creative billing practices. The experts backing this review have extensive materials management experience on both the provider side and within the implant industry in addition to core bill coding competence.
4. Assessing the facility’s true acquisition cost
Establishing the actual acquisition cost of implants is arguably the most difficult, but most important, category of an accurate surgical implant review because it specifically addresses the cost. The two most common methods for measuring a facility’s acquisition cost are requesting invoices from the facility or leveraging an external source to obtain an estimated acquisition cost. Requesting invoices from the facility may result in a retail invoice, not an invoice that reflects the facility’s actual acquisition cost.
The most common external source for obtaining acquisition cost data is a group purchasing organization (GPO) database. Typically, the GPO acquisition cost data is based on average cost within a handful of geographical regions and includes data from all lines of business, such as workers’ comp, auto insurance, and group health. Therefore, this GPO cost data can be limited and segmented because the GPO data does not contain detail at the facility level. What’s more, this information is usually only updated on a quarterly basis.
In contrast, Fusion by Paradigm is a highly curated database that captures actual pricing data from a full range of facilities—including hospitals and surgery centers—and physician billing, lowering the risk of miscalculation due to averaging and other practices.
The value of an optimal implant review solution
Although surgical implants represent a small portion of total workers’ compensation billing volume, the total medical spend on implants can be extremely high. In fact, implant costs can account for more than 50% of the cost of a surgical procedure for many payers. Because facilities have been known to bill eight to 10 times their true acquisition cost, a single surgical implant review can result in tens of thousands of dollars in savings.
Paradigm’s streamlined implementation process makes integrating implant review far less costly and resource-intensive than many organizations believe. Fusion by Paradigm can be easily configured to work with the bill repricing software used by most carriers and payers for clinical-level reviews.
Looking to control implant costs? Look to the experts
Fusion by Paradigm delivers class-leading savings across every implant-related category. In fact, this Paradigm solution has been proven to reduce surgical implant costs by 25 percentage points more than other industry offerings, according to independent research. Using intelligent, data-driven systems and a dedicated, implant-specific adjudication process, Paradigm rigorously evaluates each case according to state regulations to give payers peace of mind that they are not paying more than they should for every implant on every bill.
Fusion’s superior performance is evident when comparing results across not only procedures, but also across states. Overall, Fusion consistently delivers average savings of 69%, compared to 43% from a standard non-specialized bill review.
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1 Boston Strategic Partners, Inc.
This is a sponsored post from WorkCompWire marketing partner Paradigm.