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Tuesday, May 24, 2022

Workers’ Comp Shift Puts Heat on Burn Units

Recent reforms of the state workers’ compensation system were supposed to slash runaway medical costs while improving care for truly injured workers but they’ve also had the unintended effect of endangering the financial health of the state’s comprehensive burn centers.


The Grossman Burn Center at Sherman Oaks Hospital is reporting a 40 percent drop this year in the amount it’s being paid to treat burned workers, who make up a quarter of the case load at the world-renowned facility.


Hospital industry officials say Grossman is not unique, with several of the state’s 15 other major burn centers also reporting revenue losses since an overall reduction in hospital in-patient fees went into effect last January.


“We are tracking that information down (from other burn units), but I think it’s pretty serious,” said Dietman Grellman, vice president of managed care for the California Healthcare Association, a hospital trade group. “You can have cases that cost $500,000.”


At issue is a new hospital inpatient fee schedule that was adopted as part of Senate Bill 228, sponsored by state Sen. Richard Alarcon, D-Van Nuys, and passed by the Legislature last year. (A package of additional reforms backed by Gov. Arnold Schwarzenegger was passed this year.)


The Alarcon bill was supposed to curb the rise in medical costs that have helped push premiums in the troubled workers compensation system to more than $20 billion statewide. But industry officials say that the new fee schedule has hit burn centers particularly hard and they are pushing for a “cleanup” bill next year that would hike reimbursements to the centers.


Besides Grossman’s 30-bed unit, there are two other burn units in the county, at Torrance Memorial Hospital and at Los Angeles County/USC Medical Center.


A spokeswoman for Torrance Memorial’s eight-bed unit, Kelly Curtis, said officials there were not aware of the problem. County officials did not return calls.


Two local business groups that backed the original reforms, the Valley Industry and Commerce Association and the San Fernando Valley United Chambers of Commerce, support the idea of a cleanup bill, even if it raises overall workers’ comp costs.


“I don’t think there was a clear intention (to harm burn units),” said David Phelps, VICA’s director of government relations. “I think it fell through the cracks.”



Special case


The new fee schedule was opposed by a group of health care providers, including pharmacists and medical device suppliers, who felt it inadequately reimbursed them.


Hospitals contend that comprehensive burn centers, which treat the most severely burned patients, have been hit particularly hard because the new fee schedule was based on the Medicare payment schedule, which is an estimate of the costs to treat burned retirees.


The problem is that elderly burn patients have a high mortality rate and are treated less aggressively than younger patients, whose mortality rate has dropped as they are treated for long periods of time with new, costly treatments.


For example, a special dressing used on burn victims called a transcyte costs $1,350 per cassette and up to 10 of them can be needed on large burns. Previously, burn centers generally negotiated their reimbursement rates with individual workers’ compensation carriers.


David Levinsohn, chief executive of the Grossman center, was on vacation last week and could not be reached, while other officials at the hospital declined to comment.


According to information provided by the hospital, Grossman noticed the drop in reimbursements in the first quarter of the year, and it totaled about 40 percent for each workers’ compensation case.


The burn unit’s troubles have had an impact on the finances of Sherman Oaks Hospital, where Grossman is located. Financial data from the California Office of Statewide Health Planning show that Sherman Oaks Hospital swung to a loss of $284,080 for the first nine months of 2004. By comparison, the hospital reported net income of $1.1 million in the like year-ago period.


Rick Miller, vice president of business development at West Hills Hospital and chair of VICA’s Health Committee, said he’s convinced the new rules are hurting burn centers. “Seniors don’t survive serious burn cases, but young ones do. That significantly impacts their costs,” he said.


The California Healthcare Association is surveying the state’s comprehensive burn centers to gather better financial data before it pushes for a bill that would change reimbursement for the centers.


Meantime, VICA is looking for a legislator to carry a clean up bill that would once exempt burn centers from the current fee schedule. Assemblyman Keith Richman, R-Granada Hills, a doctor with a bipartisan reputation, is considered a possible carrier. Richman said he has talked to Levinsohn and is sympathetic but needs to further evaluate the issue.

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