Newsline No. 46-12  
October 18, 2012  

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Division of Workers’ Compensation issues first 15-day notice of modifications to text of proposed inpatient hospital fee schedule regulations and notice of additional documents added to the rulemaking file

The Division of Workers’ Compensation (DWC) has modified the text of proposed inpatient hospital fee schedule regulations. DWC has electronically distributed first 15-day notice of modification to interested parties and has posted the modified regulations on the DWC website. Members of the public may comment on the modifications until 5 p.m., November 2, 2012.

The proposed modifications to the text of the inpatient hospital fee schedule regulations are authorized by Labor Code sections 59, 133, 4603.5, 5307.1, and 5307.3.

The modifications in this draft of the regulations include the following:

SB 863 adds section (m) to Labor Code section 5307.1, which requires the administrative director to adopt, on or before July 1, 2013, “a regulation specifying an additional reimbursement for MS-DRGs Medicare Severity Diagnostic Related Groups (MS-DRGs) 028, 029, 030, 453, 454, 455, and 456 to ensure that the aggregate reimbursement is sufficient to cover costs, including the implantable medical device, hardware, and instrumentation. This regulation shall be repealed as of January 1, 2014, unless extended by the administrative director.”

Effective January 1, 2013, SB 863 also repeals Labor Code section 5318, which provided for a separate reimbursement for spinal implantable medical hardware or instrumentation used in specific complex spinal surgeries. Section 5318 was to be operative only until the administrative director adopts a regulation specifying separate reimbursement, if any, for spinal devices used in complex spinal surgeries.

When the administrative director amended the inpatient hospital fee schedule, in 2004, in accordance with the Medicare payment system, the pass-through payment methodology provided for in Labor Code 5318 (and regulation 9792.1) was adopted as part of California Code of Regulations, Title 8, section 9789.22(f) of the inpatient hospital fee schedule.

In accordance with SB 863, the modifications to the proposed inpatient hospital fee schedule regulations pertaining to the payment methodology for specific complex spinal surgeries, are as follows:

For discharges occurring on or after January 1, 2013 and before January 1, 2014, seven specific complex spinal surgery MS-DRGs shall receive the standard hospital-specific MS-DRG reimbursement (1.2 x MS-DRG weight x hospital specific composite factor) plus an additional allowance for spinal devices used in the complex spinal surgery. In particular, an additional allowance of $2,925 shall be made for spinal devices used during complex spinal surgery MS-DRGs 453, 454, 455, and 456; and an additional allowance of $625 shall be made for spinal devices used during complex spinal surgery MS-DRGs 028, 029, and 030.

For discharges occurring on or after January 1, 2014, complex spinal surgery DRGs shall not receive any additional or separate reimbursement for spinal devices, unless the administrative director provides for additional reimbursement in accordance with Labor Code section 5307.1(m) through a later enacted regulation.

A list of additional documents added to the rulemaking file is provided, and the documents are available for public review at DWC’s office located at 1515 Clay Street, 17th Floor, Oakland, California, during normal business days and hours.

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