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Operator of El Centro Clinic Sentenced to 30 Months

North Hollywood resident Gevorg “George” Kupelian was sentenced to 30 months in custody for his role in a $1 million fraud scheme and was ordered to repay $964,011 in restitution.

According to court documents, Gevorg Kupelian and others operated the El Centro Clinic, located at 485 Broadway Street, Suites C and D, in El Centro, California, as a Medicare-billing mill. Kupelian admitted that he set up the clinic and found a doctor to act as the official physician of record. But, as Kupelian acknowledged, the doctor served primarily as a “front” so that Kupelian could use his Medicare billing number to submit Medicare claims.

Kupelian has further admitted that he recruited and paid “cappers,” individuals whose sole task was to find senior citizens in El Centro and convince them to go to the Clinic. In exchange for providing their Medicare beneficiary numbers, the senior citizens received a free pair of shoes and/or a free buffet lunch. Once they arrived at the Clinic, the beneficiaries were subject to a pre-determined gauntlet of tests, which were not based on the patient’s medical needs and were provided without proper supervision by a physician. In some cases, the clinic billed Medicare despite the fact that the tests were not provided at all.

Kupelian also arranged for a so-called Physician Assistant (“PA”) to see patients (in lieu of the “front” doctor, who was often absent), write progress notes, and order tests. As detailed in today’s court proceedings, the so-called PA hired by Kupelian was, in fact, unlicensed to practice medicine in any capacity in California.

Many of the tests that the Clinic claimed to have administered to beneficiaries required either that a physician administer the test or that a physician be within the Clinic during testing. On over 800 occasions, the Clinic billed Medicare for these tests despite cell phone location records showing that the doctor was not in Imperial County at all during the times these tests were allegedly administered. The Clinic also submitted reimbursement from Medicare for allergy tests despite evidence showing that these tests were never performed in the Clinic by a doctor or anyone else.

The co-conspirators operated the El Centro Clinic in a manner designed to maximize Medicare reimbursements without regard to the medical needs of its patients. For example, they staffed the clinic, either by being personally present or arranging for others to be, in order to give the impression to the recruited Medicare beneficiaries and outside observers that the beneficiaries were being seen by qualified medical professionals. In fact, oftentimes the recruited beneficiaries would never see a doctor or other qualified medical professional during a particular visit to the El Centro Clinic. They also caused tests to be performed on recruited Medicare beneficiaries without regard to their medical necessity, including breathing tests, bladder tests, EKGs, and ultrasounds, for the primary purpose of generating billings to Medicare.

Kupelian also admitted creating “sample” lab sheets and billing forms with certain tests and diagnoses checked. He instructed the clinic’s employees to duplicate the checked boxes from the sample forms on patients’ actual forms, without regard to the patients’ actual medical conditions or what tests they actually needed or received. Moreover, Kupelian instructed the clinic’s employees that all patients were to undergo all of the tests offered by the clinic, without regard to the patients’ actual diagnoses or what tests they actually needed. After the unnecessary tests were conducted, Kupelian inserted false test results into patient files to make it appear that tests had been done and results were appropriately generated, when in fact they had not.

Using these tactics, the El Centro Clinic generated over $2.7 million in claims to Medicare, which resulted in payments of approximately $1.3 million to the doctor, 75% of which the doctor immediately transferred into Kupelian’s bank account. Out of his proceeds, Kupelian paid the other co-conspirators, including the cappers and the fake PA.

Kupelian was ordered to surrender on July 8, 2015.

Manager of Garment Factory Indicted for Bribing Labor Investigator

A federal grand jury indicted the general manager of a La Puente garment factory on charges of offering to pay bribes to an investigator with the United States Department of Labor in exchange for the investigator closing an investigation into wage violations. Howard Quoc Trinh, 41, of Arcadia, the manager of Seven-Bros Enterprises, is accused in the indictment of bribery of a public official.

The indictment charges Trinh with offering to pay $10,000 in bribes to a Department of Labor Wage and Hour investigator. The indictment also alleges that Trinh offered the bribe last month to secure the release of a hold known as a “Hot Goods” objection that had been placed on a shipment by the investigator. As part of the bribery scheme, Trinh actually paid the investigator $3,000, according to a criminal complaint previously filed in this case.

According to the affidavit in support of that complaint, the investigator was investigating Seven-Bros for violating the Fair Labor Standards Act (FLSA), which sets standards for minimum wage and overtime pay. The Labor Department Wage and Hour investigator led a team that conducted an unannounced visit to Seven-Bros on March 10. The investigation into wage violations covered a period from May 2012 through March 10, 2015, and found that Seven-Bros owed approximately $100,000 to compensate employees for FLSA violations over that period. According to the affidavit, the investigator returned to Seven-Bros on March 18, at which time Trinh said he did not owe his employees any back wages and that he wanted to “take care” of the investigator.

In response to Trinh’s statements, the Labor Department’s Office of Investigator General (OIG) initiated an investigation and outfitted the investigator with recording equipment. On the evening of March 18, during a recorded meeting, Trinh allegedly offered the investigator $10,000 to close out the investigation without finding any violations and to life the Hot Goods objection. The next day, during another recorded meeting, Trinh gave the investigator an initial payment of $3,000 in a manila envelope, according to the affidavit.

The criminal complaint was filed and Trinh was arrested by OIG special agents. At his initial court appearance, Trinh was ordered released on a $200,000 bond and was ordered to appear for an arraignment on April 17. If he is convicted of the bribery count in the indictment, Trinh would face a statutory maximum sentence of 15 years in federal prison.

The investigation in this case was conducted by the United States Department of Labor, Office of Investigator General, Office of Labor Racketeering and Fraud Investigations.

Study Says Physical Therapy as Effective as Lumbar Surgery

Physical therapy may work as well as surgery for easing symptoms of lumbar spinal stenosis, a common cause of nerve damage and lower back pain among older people, according to a new study summarized by Reuters Health. Lumbar spinal stenosis, a compression of open spaces in the lower spinal column, can lead to pinched nerves, tingling, weakness and numbness in the back and the lower extremities. The condition becomes more common with age, and an estimated 2.4 million Americans may have it by 2021, according to the American Academy of Orthopedic Surgeons.

“Surgery is a riskier procedure, with about a 15 percent complication rate, and half of those are life-threatening,” said Dr. Anthony Delitto, chair of physical therapy at the School of Health and Rehabilitation Sciences at the University of Pittsburgh. “It isn’t a life-risking procedure to do physical therapy.” Delitto and colleagues set out to see if they could show that physical therapy, long known to be safer than surgery, could work as well as at easing symptoms. Between 2000 and 2005, they asked 481 patients who consented to surgery if they would be willing to join a study where they would be randomly chosen to proceed with the operation or receive physical therapy. Most declined, to avoid being assigned to the non surgical group, but 169 patients agreed to participate in the experiment. Ultimately, 87 patients had surgery and 82 were assigned physical therapy.

At the start of the study, patients were at least 50 years old. They had to be able to walk at least a quarter mile without difficulty and have no underlying medical conditions such as dementia, severe vascular disease, cancer, or a prior heart attack. Most of them were sedentary or only mildly active, and they were typically obese. Patients in the surgery group were slightly younger, about 67 on average, compared with an average age of about 70 for patients receiving physical therapy.

The physical therapy regimen consisted of twice-weekly rehabilitation sessions for six weeks. Participants were allowed to opt out of this regimen in favor of surgery at any point during the study, and over an average two years of follow-up 47 of them, or 57 percent, did just that.

No matter what group they started in, participants achieved similar reduction of pain and other symptoms at two years. “The study demonstrates that both surgery and physical therapy are reasonable choices; the person who goes down either path ends up in the same place a year or two later,” said Dr. Jeffrey Katz, director of the Orthopedic and Arthritis Center for Outcomes Research at Brigham and Women’s Hospital in Boston. Katz, who wrote an editorial accompanying the study in Annals of Internal Medicine, noted that there’s still a role for surgery in treating lumbar spinal stenosis. But there’s no harm in trying physical therapy first, he said.

Because so many eligible patients opted not to participate in the study, and so many randomly selected for physical therapy abandoned it to get surgery, more research may still be needed in a larger group of patients to get a complete picture of the relative benefits of each option, said Dr. James Weinstein, chief executive of Dartmouth-Hitchcock health system, who wasn’t involved in the study. Still, “surgery should be the last option,” said Weinstein, lead author of a 2008 paper in the New England Journal of Medicine that found surgery more effective at curbing symptoms than non surgical alternatives.

Despite the small size of the current study and the number of patients who stopped physical therapy early, it still makes sense to try it before surgery, said Dr. Richard Deyo, a researcher in back pain at Oregon Health and Science University, in email to Reuters Health. “If they elect to have surgery at a later time, the results appear to be as good as for patients who choose earlier surgery,” said Deyo, who wasn’t involved in the study. “Some patients are inclined toward surgery because the high tech approach seems more definitive, attractive, and quicker. However, patients should realize they are likely to need physical therapy even after successful surgery, and recovery can be slow.”

DIR Publishes Status Report On Refinery Regulatory Oversight

Christine Baker, Director of the Department of Industrial Relations has submitted a legislatively-mandated status report on DIR and Cal/OSHA’s Process Safety Management (PSM) Regulatory Oversight. The report is required pursuant to the Budget Act of 2014 (Provisions 1 and 2 of item 7350-001-3121, Chapter 25, Statutes of 2014).

“This report gives a description of appropriate funding allotted to our PSM Unit, which has allowed us to design and implement a new approach for regulating the petroleum refining industry,” said Christine Baker, DIR Director.

In 2014, DIR convened or participated in over 20 stakeholder meetings with the petroleum refining industry, refinery workers, community-based organizations, and the public. At each of these meetings, DIR presented the findings and recommendations of the Governor’s report and described DIR’s proposed revisions to the PSM standard for refineries for discussion and feedback. Three of these meetings consisted of DIR’s PSM Advisory Committee, made up of representatives of labor and industry. All twenty meetings were open to members of the public.

All of these meetings served as an important vehicle for accessing the technical expertise of refinery managers and workers, representatives of labor unions and community-based organizations, members of professional associations, and members of the public. Many of the recommendations generated in these meetings were incorporated into the PSM revisions organized into seven elements. Currently refineries in California are complying, to varying degrees, with six of the seven elements. The exception is Hierarchy of Hazard Controls Analysis which is a relatively new concept, with which only refineries in Contra Costa County are fully familiar.

The Status Report outlines some of the next steps. In 2015, DIR is coordinating an Interagency Enforcement Working Group to discuss the coordination of enforcement activities, including cross-referrals, cross-training, and joint or coordinated inspections and auditing. The working group will also identify the refineries to be targeted for inspection. Lastly, the group will discuss the facilitation and development of an electronic information and data sharing system among federal, state, and local agencies. This system will include information about inspections, compliance, and enforcement activity, as well as the means to collect information identified in reports and a process for timely flow of information between regulatory agencies.Cal/OSHA’s PSM Unit is responsible for inspecting refineries and chemical plants that handle large quantities of toxic and flammable materials. Health and safety standards enforced by the PSM Unit, including adequate employee training, are intended to prevent catastrophic explosions, fires, and releases of dangerous chemicals.

Accusation Against Sacramento Psyche QME Clarifies Standard of Care

Janak K. Mehtani M.D. is listed as a QME in psychiatry with an office on Fulton Avenue in Sacramento. He practices psychiatry under the business name Fair Oaks Psychiatric Associates. Recently the California Medical Board filed an Accusation against him complaining about his treatment of industrially injured patients and patients with chronic pain, anxiety, sleep disturbance and other problems.

The First Cause for Discipline alleges that his treatment was “grossly negligent.” The Second Cause alleges that he “he committed repeated negligent acts in his care and treatment” of the Patients described in the Accusation. In the Third Cause that he “prescribed controlled substances and dangerous drugs” to these patients without an appropriate medical examination or medical indication. In the Fourth Cause that he “failed to maintain adequate and accurate medical records in the care and treatment” of these patients. And in the Fifth Cause for Discipline “that he has engaged in conduct which breaches the rules or ethical code of the medical profession, or conduct which is unbecoming a member in good standing of the medical profession, and which demonstrates an unfitness to practice medicine.

These charges are allegations only, and should not be considered to be true or accurate until there has been a trial on the merits and Dr. Mehtani be afforded an opportunity to be heard and present evidence on his behalf.

However the Accusation does set forth what the California Medical Board considers to be the standard of care for industrially injured patients in a psychiatric setting. The standards set forth in this Accusation should be read and understood by claims administrators and other workers’ compensation professionals since this document sets forth standards that are seldom articulated in one document, with illustrative examples. This document should serve as a benchmark or checklist by which quality of treatment should be evaluated. Here are examples of the standards set forth in this Accusation by the California Medical Board.

First and foremost the Accusation reiterates the requirement that medical records clearly document medical findings, histories, complaints, and rationale for treatment decisions. Often this is not seen when reviewing subpoenaed records of treating physicians. For example, one of the patients complained of weight gain, yet the Accusation alleges that “there has been no documentation of Respondent’s discussion of her weight gain. There was no documentation of her diet, exercise, weight or anything that addresses the risk of weight gain associated with psychotropic medications.” Another concern was “Respondent failed to document the reason for prescribing Abilify, Ambien, and Cymbalta. Respondent failed to document and/or identify any concern about the risks of chronic use of a benzodiazepine Xanax and Ambien, which are not recommended for use greater than 60 days.” The Accusation goes on to say “Respondent’s charting is vague and suggests that the dose of Abilify was increased because the patient was having thoughts about cutting. Respondent failed to document what is being treated other than reducing anxiety and his concern about cutting. There is no description or identification of target symptoms, no identified measurable signs or symptoms to assess the progress or lack of progress in treatment. Respondent’s clinical descriptions are vague and difficult to interpret.” Later the Accusation states “Respondent also documented a global statement without providing any clinical justification or explanation. Respondent noted that “She remains disabled from gainful employment” without explaining and documenting exactly what was Patient GC’s disability, how the disability affects her life and what are the barriers for progress”.

The Accusation summarizes another case where the Respondent allegedly did not respond to letters sent by the State Compensation Insurance Fund, and “Respondent failed to document treatment goals and target symptoms so that the progress of treatment could be objectively evaluated. Respondent failed to document clinical reasons when there is a change in treatment,including change of medication as well as the dose.” These factors among others are according to the Board allegedly “gross negligence” and reason to bring disciplinary action against the QME.

The Accusation alleges concern about the lack of an interpreter. The Board alleges that a “medical assistant” was at times used as an interpreter, and during one follow up visit the “interpreter was not notified of the appointment so she was seen without one.” The Accusation alleges that “Respondent failed to provide an interpreter in order for Patient GC to freely share her feelings and be open to psychotherapeutic interventions.” This patient was seen for about 40 visits of “Medical Psychoanalysis.”

While these allegations may or may not be proven against this particular psychiatrist, they nonetheless set forth examples of what the California Medical Board considers to be appropriate care for industrially injured workers with psychiatric complaints, and what the Medical Board consider to be “gross negligence.” This Accusation should serve as a guideline for appropriate record keeping, and care. All too often this is not the case reflected in typical subpoenaed records that are reviewed.

DWC Proposes to Issue QME Panels Immediately Online

The Division of Workers’ Compensation has issued a notice of public hearing on proposed changes to the Qualified Medical Evaluator regulations. The proposed rulemaking is to amend existing regulations and forms to implement an online panel process for represented initial panel requests.

A public hearing on the proposed regulations has been scheduled at 10 a.m., Friday, May 22, 2015, in the auditorium of the Elihu Harris Building, 1515 Clay Street, Oakland, CA, 94612. Members of the public may also submit written comment on the regulations until 5 p.m. that day.

The QME regulations amend existing regulations to require parties in a represented case to submit initial QME panel requests online and immediately receive a QME panel. The requesting party will then serve the panel request form, any required documentation, and the QME panel on all parties with a proof of service. The proposed rulemaking will also simplify QME Form 105 for unrepresented injured workers. The proposed regulations also makes non-substantive changes to the QME appointment from, reappointment form, and the QME unavailability form.

DWC will consider all public comments, and may modify the proposed regulations for consideration during an additional 15-day public comment period. The notices of rulemaking, text of the regulations, and the initial statements of reasons can be found at on the DWC rulemaking page. More information.

Transportation Network Companies Targeted by Lawsuits and Regulators

Transportation Network Companies (TNCs) provide for pre-arranged transportation services for compensation through online-enabled applications or platforms (such as smart phone apps) that connect passengers with drivers who provide the services in their personal vehicles. The three most widely used TNCs are UberX (available in 53 countries and more than 140 U.S. cities), Lyft (available in at least 60 locations) and Sidecar (available in Boston; Charlotte, NC; Chicago; Long Beach, Los Angeles, Oakland, Marin and other San Francisco Bay Area cities; San Diego; Seattle; and Washington, DC).

Regulation of TNCs is in its infancy. The first step in regulating TNCs is to determine which state or local entity has authority over TNCs. Regulatory authority varies from state to state. California was the first state to regulate this new industry. Legislation is now pending in at least 35 other states. In California, TNCs are regulated on a statewide level by the California Public Utilities Commission (CPUC), while taxis are regulated by municipalities. The CPUC asserted jurisdiction over TNCs by classifying them as charter-party carriers, or transportation providers that provide pre-arranged services for a fee and are subject to regulation by the CPUC. Limousines and many shuttle services are examples of charter-party carriers. State law delegates authority for regulation of taxis to cities or counties since taxis are not classified as charter-party carriers since their services can be pre-arranged or on demand such as hailing a cab on the street.

The insurance issues associated with TNC activities arise because TNC drivers use personal cars for that commercial activity but do not have commercial auto insurance. The California Department of Insurance held an investigatory hearing March 21, 2014, relating to insurance issues for TNCs. As a result of the hearing, Insurance Commissioner Dave Jones recommended TNCs provide $1 million in primary liability insurance that begins the moment the driver switches on the app. The issue of Worker’s Compensation benefits and insurance has yet to be considered by regulatory bodies.

So now the issue of workers’ compensation coverage must be resolved in the courts. According to an article in Business Insurance, drivers for ride-sharing services Uber Technologies Inc. and Lyft Inc.,argue in two cases that they are employees and not independent contractors. This could put the tech upstarts on the hook for workers compensation costs if court challenges succeed. In separate lawsuits filed in U.S. District Court in San Francisco, plaintiffs seeking to represent Uber and Lyft drivers nationwide base their allegations on California’s labor law, since both Uber and Lyft reference the state’s law in their driver contracts, said Shannon Liss-Riordan, a plaintiff attorney in both cases and a partner at Lichten and Liss-Riordan P.C. in Boston. Judges in both cases have limited the potential classes to drivers in California, but Ms. Liss-Riordan said those decisions likely will be appealed.

If Uber and Lyft drivers are deemed employees, the companies would need to evaluate providing workers comp coverage, said officials at the National Council on Compensation Insurance Inc. Court transcripts are sealed, but, according to wire service reports, in a January hearing in the Lyft case, U.S. District Judge Vince Chhabria said rulings in other California cases typically have found that “people who do the kinds of things that Lyft drivers do here are employees.”  U.S. District Judge Edward Chen reportedly said “I don’t find that a very persuasive argument,”in a separate January hearing in the Uber case, in which the company argues it is a software platform, not an employer. Final rulings have not yet been made in either suit, both of which have been pending since 2013

The insurance industry is watching the cases closely. For example, NCCI identified ride-sharing services as one of the top emerging comp issues for 2015. The National Association of Insurance Commissioners (NAIC) adopted a white paper addressing the insurance coverage gaps associated with ridesharing services offered by Transportation Network Companies. The white paper was issued to assist state insurance regulators and state legislators throughout the United States who are considering how best to address insurance coverage gaps associated with TNCs and ridesharing. The paper recommends a range of potential state based regulatory solutions. Issues including insurance coverage gaps, coverage amounts and types of coverage are discussed, as well as the need for consumer outreach and education regarding these new transportation services.

Academy of Orthopedic Surgeons Discusses Low Back Pain Risk Factors

New research presented at the 2015 Annual Meeting of the American Academy of Orthopaedic Surgeons (AAOS) identifies nicotine dependence, obesity, alcohol abuse and depressive disorders as risk factors for low back pain, a common condition causing disability, missed work, high medical costs and diminished life quality.

Researchers reviewed electronic records of more than 26 million patients from 13 health care systems across the U.S., including 1.2 million patients diagnosed with low back pain (approximately 4.54 percent of the patient records). The review found that 19.3 percent of the patients diagnosed with a depressive disorder reported lower back pain, as did 16.75 percent of patients diagnosed as obese (a body mass index, or BMI, greater than 30kg/m²), 16.53 percent of the patients diagnosed with nicotine dependence, and 14.66 percent with reported alcohol abuse. Patients with nicotine dependence, obesity, depressive disorders, and alcohol abuse were had “statistically significant” relative risks of 4.489, 6.007, 5.511 and 3.326 for low back pain, respectively, when compared to other patients

“This study used an electronic health care database to identify modifiable risk factors – obesity, depressive disorders, alcohol and tobacco use – in patients with low back pain,” said lead study author and orthopaedic surgeon Scott Shemory, MD. “The findings will allow physicians to better counsel and more closely follow their high-risk patients.”

According to the U.S. Centers for Disease Control and Prevention’s (CDC) 2012 National Health Survey, nearly one-third of U.S. adults reported that they had suffered from low back pain during the previous three months. For many adults, low back pain is debilitating and chronic. Determining modifiable risk factors for low back pain could help avoid or diminish the financial and emotional costs of this condition.

Apportionment of permanent disability in California workers’ compensation can be based upon causation. Perhaps this study, and other similar investigations may provide more opportunities to obtain apportionment in low back injury cases.

WCIRB Proposes 10.2% Premium Rate Reduction

Citing lower medical loss development, as well as indemnity and medical severities that continue to emerge below expectations, the insurer and public members of the WCIRB Governing Committee voted this week to authorize the WCIRB to submit a mid-year pure premium rate filing to the California Department of Insurance (CDI). The filing will propose a July 1, 2015 advisory pure premium rate of $2.46 per $100 of payroll which is 5.0% lower than the corresponding industry average filed pure premium rate of $2.59 as of January 1, 2015 and 10.2% less than the approved average January 1, 2015 advisory pure premium rate of $2.74.

The Governing Committee’s decision was based on the WCIRB Actuarial Committee’s analysis of insurer loss and loss adjustment experience as of December 31, 2014, which was reviewed at public meetings of the Actuarial Committee held on March 18, 2015 and March 30, 2015. While loss adjustment expenses continue to emerge at levels higher than expected, those higher costs are more than offset by better than projected loss experience. The primary drivers of the indicated reduction in advisory pure premium rates are:

1) Significant improvement in medical loss development since the WCIRB’s amended January 1, 2015 Pure Premium Rate Filing, which decreases the estimates of ultimate historical accident year loss ratios and the resultant future year medical cost projections.
2) Continued decline in the average cost of indemnity and medical on indemnity claims—particularly in the 2014 accident year. For the second consecutive year following the implementation of SB 863, medical severities declined by more than 4%.
3) Significant improvement in accident year 2014 experience, in large part driven by lower than expected severity growth.

The WCIRB anticipates submitting its filing to the CDI by April 6, 2015. The filing and all related documents will be available in the Publication and Filings section of the WCIRB website and the WCIRB will issue a Wire Story once the filing has been submitted. Documents related to the Governing Committee meeting, including the agenda and materials displayed or distributed at the meeting, are available on the Governing Committee page of the WCIRB website.

California joins other states that are announcing rate reductions this month. North Carolina Governor Pat McCrory announced that an average decrease in workers’ compensation insurance premium rates paid by North Carolina businesses will take effect in April 2015. The North Carolina Department of Insurance estimates that 95 percent of the state’s employers will see an average decrease of 3.4 percent in their 2015 premium rate. The remaining 5 percent, which constitutes businesses that purchase coverage through an “assigned risk pool,” will see an average decrease of 4.5 percent. These significant decreases are a welcome change from 2014 premium rates which were 4.2 percent higher than what most employers paid in 2013.

Workers compensation advisory rates will decrease 5.99% for Pennsylvania employers this month, according to Pennsylvania Gov. Tom Wolf. This is the fourth year in a row that Pennsylvania workers comp advisory rates have decreased, according to the governor’s statement.

Private employers in Ohio will see a 10.8% workers compensation rate decrease as of July 1, the Ohio Bureau of Workers’ Compensation said. The 10.8% rate cut, approved by the Ohio Bureau of Workers’ Compensation’s board of directors is expected to yield a $153 million decrease in projected annual premium, the bureau said in a statement.

The Medical Payment Reform Landscape: Bundled Payment

The dominant model for payment of medical services has been a “payment for procedure” model which financially encourages vendors to provide as many medical procedures as possible without a financial incentive for a good outcome. Escalating costs have triggered experiments with other payment models that focus on value. Earlier this decade, “pay for performance” took center stage as a tactic for realigning payment with value. Another model known as “bundled payments” is being studied at the state and national level. One or combinations of these newer models may at some point determine payment under California workers’ compensation.

Bundled payment is a single payment to providers or health care facilities (or jointly to both) for all services to treat a given condition or provide a given treatment. Bundled payment asks providers to assume financial risk for the cost of services for a particular treatment or condition, as well as costs associated with preventable complications. Just 1.6 percent of payments currently flowed through bundled payment models. However, use of bundled payments is growing in both the public and private sectors. The Centers for Medicare and Medicaid Services (CMS) Bundled Payments for Care Improvement (BPCI) Initiative will pilot bundled payments in almost 100 settings (ranging from hospitals to nursing homes) over the next three years, and the program is expanding further. Both Tennessee and Arkansas are working to implement multi-stakeholder episode-based payment initiatives.

Traditionally, Medicare makes separate payments to providers for each service they perform (pay for procedure model) for beneficiaries during a single illness or course of treatment. This approach can result in fragmented care with minimal coordination across providers and health care settings. It also rewards the quantity of services offered by providers rather than the quality of care furnished. Research has shown that bundled payments can align incentives for providers – hospitals, post-acute care providers, physicians, and other practitioners – allowing them to work closely together across all specialties and settings. The Bundled Payments for Care Improvement initiative was developed by the Center for Medicare and Medicaid Innovation (Innovation Center). The Innovation Center was created by the Affordable Care Act to test innovative payment and service delivery models that have the potential to reduce Medicare, Medicaid, or Children’s Health Insurance Program (CHIP) expenditures while preserving or enhancing the quality of care for beneficiaries.

The Bundled Payment model has now caused researchers to focus on the cause of costly “bad” medical and surgical outcomes, research that is desperately needed. A new study from researchers at NYU Langone’s Hospital for Joint Diseases identifies common causes of hospital readmissions following total hip and knee arthoplasty procedures. By finding these common causes, researchers believe quality can be increased and hospital costs decreased. The study was presented at the American Academy of Orthopaedic Surgeons Annual Meeting in Las Vegas.

The patients were part of the Bundled Payment for Care Initiative from the Centers for Medicare and Medicaid Services (CMS), a government pilot program where hospitals are paid for quality of procedures rather than quantity. One way to measure quality is by examining hospital readmission rates. Researchers studied 721 patients admitted to NYU Langone’s Hospital for Joint Diseases between January and December 2013 for a total hip arthoplasty (THA) or total knee arthoplasty (TKA). Of those cases, 80 patients, or 11 percent, had to be re-admitted within 90 days.

THA and TKA readmissions due to surgical complications accounted for 54% and 44% of the indications for readmissions, respectively. Surgical complications included infection (11), wound complications (8) bleeding (7), periprosthetic fracture (5), dislocations (4), and post-surgical pain (4). The average cost of readmission for surgical complications was $36,038 for THA and $61,049 for TKA. Medical complications included gastrointestinal disease (11), pulmonary disease (8), genitourinary/renal complications (6), hematologic (6), cardiovascular (3), endocrine disorders (2) syncope (2), rheumatologic (1), lumbago (1), and an open ankle wound (1). The average cost of medical complications was $22,775 for THA and $10,283 for TKA patients, respectively.

“While some complications are unavoidable, we are proud of our low readmission rates at the Hospital for Joint Diseases and by identifying the causes for readmission, we hope to reduce our rates even further,” says study co-author Joseph Bosco, MD, associate professor and Vice Chair for Clinical Affairs in the Department of Orthopaedic Surgery at NYU Langone. “As bundled payment programs are implemented more widely nationwide, other U.S. hospitals will follow our example and implement strategies to boost quality and reduce medical costs.”