Relates to reimbursement for hip and knee replacement cases at certain hospitals

BILL NUMBER:S7655

Title of bill

An act to amend the public health law, in relation to reimbursement for hip and knee replacement cases at certain hospitals

Purpose

To make financially viable an important Orthopedic/Sports Medicine program at a small rural hospital that treats mainly patients enrolled in commercial insurance plans.

Summary of provisions

Section 1 of the bill would require that on and after January 1, 2010, the hip and knee replacement cases at certain hospitals be reimbursed based on the diagnosis-related groups and weights in place on December 31, 2007 in accordance with subdivision .3 of section 2807-c of the Public Health Law.

Justification

In 2008, the Department of Health began implementing revised service intensity weights. Service intensity weights recognize the typical resource consumption of a particular type of case, and thus impact reimbursement for the case. Concerns were expressed that the new weights did not properly include the cost of orthopedics and prosthetics for hip and knee replacements, and that there may have been a problem in the manner in which implants were reported on the hospital cost reports. For most hospitals, orthopedics is not the majority of their surgeries, and therefore this reporting problem was not a major concern. However, Community Memorial Hospital in Hamilton has developed orthopedics as a specialty service and this service represents approximately 75% of its surgery cases.

In addition, most of such surgeries performed at Community Memorial are paid for by commercial insurers, not Medicaid. While the weights are set by the State for the specific purpose of Medicaid reimbursement, many of the commercial insurers use the weights and the diagnosis related groups established by the State for Medicaid reimbursement. As a small rural hospital, Community Memorial is not able to negotiate higher rates with these commercial insurers for these cases, while the impact from Medicaid is approximately $120,000 per year.

A safety net for the people of Central New York, Community Memorial Hospital is dedicated to treating all patients regardless of ability to pay. It has operated its Orthopedic Medicine program for more than 25 years and the program has won numerous national awards for quality, serves as regional referral center. However, the financial jeopardy of the hospital is threatened by the losses in this program. In order to increase efficiency and reduce costs, Community Memorial is entering into a passive parent relationship

with Crouse Hospital, which will produce more streamlined, cost-efficient care in Central New York. Restoring the weights for these cases to their 2007 level will help Community Memorial survive financially and help support its relationship with Crouse Hospital.

LEGISLATIVE HISTORY None.

Fiscal implications

Minimal impact on State Medicaid. Estimated at approximately $60,000 a year.

Effective date

Retroactive to January 1, 2010.