As surgical implant technology grows more complex, managing surgical implant spend becomes increasingly difficult. A surgical implant review centered 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.  This is because these clinical reviewers often don’t have the necessary resources and/or the specific expertise needed to identify major cost drivers.

To be effective, an in-depth surgical implant review 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 address some of these items, but potential savings cannot be achieved without implant-specific, data-driven analysis. An in-depth surgical implant review should address reductions objectively and in a defensible manner to minimize provider disputes. Here is why each of the above categories is critical to the bill review process.

Interpreting state regulations
Surgical implant bill review procedures need to be able to account for and interpret the high degree of variance among state workers’ compensation regulations. Although no two state programs are exactly the same, there are four primary types of reimbursement models for surgical implants in workers’ compensation cases. An effective surgical implant review should be able to identify and respond to each of the following regulation categories:

1. All-inclusive states—In these states, reimbursement is a specific dollar amount, based on the full procedure, including medical services as well as the implants. The surgical implants are not separately reimbursable, and therefore implant review may not provide any savings value.
2. No-guideline states—In these states, usual and customary (UCR) or fair and reasonable reimbursement must be established. This is typically accomplished through an external database. Unfortunately, an external database can be flawed because data is commonly based on a broader geographical region. (It is not facility-specific data.) Although payers can obtain savings through the application of UCR, significant additional savings may be found from using implant data at the facility level.
3. Percentage of charge states—In these states, there must be an assumption the facility has billed appropriately using facility-mandated rules. Because facilities make mistakes, an in-depth review based on actual facility data can help identify surgical implant billing errors.
4. Cost-plus states—In these states, the methodology is to reimburse the facility for the cost, plus a markup, which is typically a percentage of the cost. This method can open the door for what is sometimes referred to as “creative billing.” A facility should include invoices with their bill in cost-plus states, but these invoices are often retail cost invoices—not the facility’s true cost, as outlined in most state statutes. A retail invoice would not include rebates or purchasing discounts that would lower a facility’s true acquisition cost.

Accurately matching invoices to the procedure
It is imperative to match the implants billed to the procedure. 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. 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. An example of an “in-and-out” would be when the surgeon does not feel comfortable with the size or fit of the implant. In this situation, the surgeon would remove the implant.

Additionally, a nurse or medical professional may conduct a clinical review, but there is a much higher chance of miscalculation without specific implant manufacturer expertise. For example, it can be notoriously difficult to know exactly how many screws were used or needed for a specific device.

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 supply items should have been billed using the revenue code for sterile supply. Again, an in-depth surgical implant review requires the expertise to identify these types of situations to maximize carrier and payer savings.

Accurately assessing a facility’s true acquisition cost
Establishing the true acquisition cost of implants is arguably the most difficult, but most important, category of an accurate surgical implant review. The three previous categories of review primarily address how the facility uses implants. This category 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.

The value of an optimal implant review solution
Although surgical implants represent a small portion of total workers’ compensation bill volume, the total medical spend on implants can be extremely high. In fact, for many payers, implant costs can account for more than 50% of the cost of a surgical episode. A single surgical implant review could lead to thousands and potentially tens of thousands of dollars in savings. It is not unusual to see a facility bill eight to 10 times the true acquisition cost.

Every payer should be asking a few important questions about their current medical bill review process:

• Does the current program have a clinical review process and if so, do the clinical reviewers have the surgical implant expertise to maximize savings?
• Does the clinical review have a database capable of calculating true acquisition costs at the facility level, or do reviewers calculate reimbursement based solely on invoices supplied by the provider?

Implementing a surgical implant review is far less costly and resource-intensive than many organizations believe it is. Most carriers and payers use bill repricing software easily configured for clinical-level reviews, so adding a surgical implant review can often be a low-impact addition that does not place a burden on the current bill repricing workflow. Substantial savings with minimal implementation effort makes a surgical implant review process a “must have” for cost-conscious payers.

Looking to cut costs? Look to the experts
The proprietary implant cost containment platform, Fusion by Paradigm℠, delivers class-leading savings across every implant-related category. In fact, this solution reduces 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 paying the true acquisition cost, not retail cost, for every implant on every bill.

Request a demo to learn more.
For additional information on how Surgical Implant Cost Management by Paradigm delivers value and significant cost savings for payers, fill out a brief form.