by Jennifer M. Smith, Esq.

When an injured employee requires surgery, the employer and insurer know the cost of the workers’ compensation claim is going to increase dramatically. Some of the exposure can be predicted, such as the cost of the surgical procedure itself and much of the follow up care. Even estimations of the employee’s time out of work and subsequent income (TTD) benefits can be made within a reasonable degree of accuracy. What is not very predictable is the cost of any implant or hardware device which may be needed for certain surgeries.

According to the director of a large ambulatory surgery center in Georgia, many hospitals and outpatient surgery centers simply bill their cost of the implant to the insurance carriers or their cost plus a small mark up. The problem for insurance carriers in evaluating surgical claims and predicting amounts needed for reserves is that the cost to the healthcare provider (and therefore amount billed to the insurance carrier) for the implants vary widely, even for the same type of implant. The reason for the variation is because vendors will negotiate different deals with different providers for the same implants. Additionally, hospitals are generally able to obtain a better deal with the implant vendors than ambulatory surgery centers due to their negotiating power. The result is a wide range for the amounts billed on the same implants to the insurance carriers.

According to the Georgia Workers’ Compensation Fee Schedule, Section IV, instrumentation used in surgeries is to be reimbursed to the healthcare provider at cost when the wholesale vendor invoice is included with the bill. This means that cost containment is difficult and expenses are hard to predict because the wholesale amount can vary by vendor. In addition, healthcare providers may submit their invoice versus the wholesale invoice, which may be higher or lower, depending on the negotiated deal, unaware that the wholesale vendor invoice is what is required. The result is fluctuating and unpredictable costs.

Some states are attempting to gain control of surgical implant costs in workers’ compensation claims. One such state is South Carolina. According to the South Carolina Workers’ Compensation Commission website, the Commission created an Ad Hoc Advisory Committee in 2011 to develop the maximum allowable payments for surgical implant devices. As of this time, we are not aware of a similar initiative in Georgia.