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Thursday, Mar 28, 2024

Bill Would Help Save Burn Centers

By Gregory N. Lippe On January 1, 2004 SB 228 (Alarcon-D), containing a number of substantive changes to California’s workers compensation system, was implemented. One of those changes affected the method of reimbursements for DRGs (“Diagnosis-Related Groups,” a Medicare developed system classifying hospital cases into groups expected to have similar hospital resource use) related to burn cases. Since the implementation of SB 228, burn DRGs have been included in the inpatient hospital fee schedule (“IHFS”). This schedule provides reimbursement that is below the cost of providing hospital treatment for the most serious inpatient burn cases. Prior to SB 228, burn DRGs were reimbursed based on negotiated contracts, now payers are utilizing the IHFS as their maximum contract rate schedule for reimbursement of burn cases thereby creating a financial hardship for burn facilities (aka “burn centers”) throughout California. As a result burn centers have been forced to close. There are only 13 burn centers remaining in California. Of these 13 facilities, approximately half are expected to incur significant losses in 2007. The most substantial loss is estimated for the University of California’s San Diego Medical Center where reimbursements for burn cases are expected to be approximately 23% less than treatment costs resulting in a loss of approximately $200,000. If this condition is allowed to continue, more burn centers will be forced to close resulting in a lack of facilities to provide quality in-time care to those individuals with serious burn injuries, many of whom are firefighters, employees of public power companies and others who provide vital public safety services. Serious burn injuries require immediate and long-term care by highly qualified doctors and medical support personnel in specialized facilities. If these services are unavailable when needed, many of these victims, who are frequently young and in the most productive period of their lives, will either die or never be able to return to work. Business impact In addition to the huge humanitarian and security factors involved in the loss of burn centers, there are potential significant impacts on our business community and the economy of California. First, the healthcare industry is one of California’s most significant economic engines. Our hospitals are already suffering financially from lower-than-cost reimbursements from Medi-cal and Medicare and from the frequent use of emergency rooms by the uninsured and indigent for routine medical care. Additionally, they are facing un-funded mandates for seismic retrofitting (based on arguably unrealistic standards) and lower nurse-to-patient ratios at a time when California is experiencing a severe shortage of available nurses. A number of hospitals have already been forced to close their emergency rooms and trauma centers and at least one hospital has closed entirely. Additionally, according to an article in the September 23, 2007 edition of the Los Angeles Times, nearly two dozen private hospitals in Los Angeles and Orange counties (accounting for up to 15% of beds in the region) are in dire financial straits and in danger of bankruptcy or closure. Forced closure of their burn facilities would add one more reason for private hospital owners to close their hospitals and utilize their real estate for purposes with greater potential for profit. Second, many businesses depend on hospitals to purchase their goods and services. These businesses could be forced to close. Additionally, all businesses depend on quality healthcare for their employees and, in times of emergency, on emergency service personnel. How many new firefighters and utility workers do you think we will be able to attract if potential candidates know that quality in-time treatment will not be available when they need it? These are very important high-risk jobs. We need to do everything possible to minimize the consequences of the risks. Pending legislation Currently there is legislation pending that could be crucial to the continuity of our burn centers. AB 1269, co-authored by Assembly Members’ Ed Hernandez and Mike Feuer, if passed, will allow the Division of Workers’ Compensation to set higher reimbursement rates for the treatment of serious burn victims. By allowing the higher reimbursement rates, AB 1269 will help keep our burn facilities operational, provide predictable reimbursement based on the costs incurred for treating workers’ compensation patients, and most importantly, will help maintain a high standard of care for workers with serious burns. AB 1269 passed both houses of the legislature and is currently awaiting the governor’s approval. Although it seems that this bill should be approved with ease, nothing is guaranteed. I believe it is important for all of us to urge the governor to pass this bill. Gregory N. Lippe, CPA, is managing partner of the Woodland Hills-based CPA firm of Lippe, Hellie, Hoffer & Allison, LLP and Vice-chair of the Valley Industry and Commerce Assoc. (VICA).

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