Monthly Archives: December 2013

A View from the Bench: Medical Tourism and its Implementation into Workers’ Compensation


Last week, in response to my post, Knee Surgery in Costa Rica — A Less Expensive Alternative, I received a comment from David Langham, Deputy Chief Judge of Compensation Claims for the Florida Office of Judges of Compensation Claims and Division of Administrative Hearings.

Judge Langham stated that: “Medical Tourism is a reality. How far will it go?” and then referred me to an article he wrote in the December issue of Lex and Verum, published by the National Association of Workers’ Compensation Judiciary. Judge Langham serves as a Board Member of NAWCJ.

In his article entitled, On Fee Schedules, Medicare, and Medical Tourism, Judge Langham discusses two studies that I previously mentioned in earlier posts this year. The first post, published on February 1st, was called Outpatient Facility Costs Rising Could Benefit Medical Tourism Industry and discussed a study by the Workers’ Compensation Research Institute (WCRI) that analyzed the outpatient facility costs, cost drivers, regulatory mechanisms, and trends in 20 states.

The second post, published on May 23rd, was called If You Have to Ask…Fuggedaboutit!, in which I mentioned that the Centers for Medicare and Medicaid Services (CMS) had studied various inpatient surgical procedures performed in the US and found that inpatient hospital charges varied considerably from state to state, within the same state, and within the same city, which was noted by Judge Langham in his article. He even went on to cite a Washington Post report that said a hospital in Dallas charged an average of $160,832 for a lower joint replacement, while a hospital five miles away charged an average of $42,632, a difference of $118,200.

But what fascinated me about Judge Langham’s article was not the discussion about fee schedules, Medicare and payments; it was that he mentions medical tourism as a possible solution to high cost surgeries. However, the form of medical tourism Judge Langham refers to in his article, is domestic medical tourism.

Citing the two studies above, and describing the disparities in costs from states that have a fee schedule and those that don’t, Judge Langham suggests that sending patients from high cost states such as Illinois to a low cost state like Massachusetts, will save insurance companies money.

“With the vast disparity in reimbursements demonstrated in the WCRI study released last January and the Medicare data released last May, payors such as insurance companies may find savings in sending injured workers to states or localities with greater cost control for outpatient surgery. Such travel may represent a cost in itself, if not within the same city (see Medicare examples above), but may pale in comparison with the savings gained. Taking the example above, with a cost of $10,000 in the average state, and sending the injured worker to Massachusetts First Class ($1,000) and putting her or him up in a nice hotel for a few days ($1,000) to prepare and recuperate would add only $2,000.00 to the $3,900.00 cost of the procedure there. The $10,000 procedure in the average state might be performed in Massachusetts for an overall cost, including travel and lodging, of $5,900.00. This still represents a significant savings compared to the $10,000.00 cost. More persuasive, this same procedure would cost $15,100 in Illinois. An Illinois employer sending their patient to Massachusetts would potentially save over $9,000.00 on the procedure.”

Judge Langham also stated that there are those who dismiss this potential out of hand, and cites data from a medical tourism facilitator company called New World Medical Tourism. Judge Langham explains that medical tourism is a relatively new industry, and that there are a multitude of firms that arrange healthcare in countries like India, Costa Rica, Mexico, the Philippines and others. They advertise, he states, that medical care in foreign countries can cost 70% to 80% less than in the US.

Judge Langham goes on to say that New World Medical states on their website that a spine surgery in the US might cost $80,000 to $100,000, and the same procedure in India would cost as little as $8,000 to $14,000, a savings of 82% to 92%. New World Medical concedes he adds, that travel and lodging costs must be deducted, but that these costs are generally around $2,500. As for knee replacement surgery, New World Medical says, according to Judge Langham, is estimated at $50,000 in the US, compared to $8,000 in India.

According to Judge Langham, medical tourism has an established foothold in the medical industry, but states that physicians in the US recommend against medical tourism. They caution, he adds, that treatments, implants, and medications provided outside of the US may not be approved of by the Food and Drug Administration (FDA), and that follow-up care after surgery may be substandard. Also, verification of the foreign surgeon’s qualifications may also be difficult.

The Judge says that these are all valid concerns, and as many of us already know, these issues are paramount in solving if medical tourism is to be a viable alternative to high-cost surgery. Judge Langham also states that any patient considering surgery would be interested in reassurance on such questions before agreeing to undergo surgery.

Another point Judge Langham makes is the following:

“These quality of care concerns are not as persuasive in the argument for medical tourism to Massachusetts. Certainly, the quality of care concerns are also a more difficult argument in the distinction between the two Dallas hospitals cited above. The savings may not be as persuasive either, but the Medicare data cited by the Washington Post and others may drive payors to analyze the selection of provider facilities and perhaps even the benefits of medical tourism in or outside the United States.

In the conclusion of his article, Judge Langham says that both the WCRI data and the Medicare data support the idea that medical tourism within the US may become increasingly attractive to payors in coming years. States like MA, MD, and CA that have lower outpatient costs may attracts workers’ compensation medical tourists from IL, VA, or FL. There are some states, the Judge says, that have statutory or regulatory restrictions that confine any attempt to force an insurance carrier to provide medical services outside the state in which the injured workers lives or was injured in, but that these restrictions are generally limited to the injured worker, and does not preclude the insurance carrier from voluntarily providing such care and the travel costs associated with it.

In my blog post, Medical Tourism and Workers’ Compensation: What are the barriers? and in three other posts that summarize, or link to my White Paper, or are the paper itself, I highlighted many of these and other barriers to implementing medical tourism into workers’ compensation as Judge Langham points out. My paper’s conclusion stated that “the courts are willing to allow some measure of medical tourism in workers’ compensation; how future courts will decide is unclear, but there is at least some precedent for ruling in favor of medical tourism.” It is clear by his article that Judge Langham is concurring with my conclusion. Having someone of his stature in the workers’ comp judiciary sharing my idea is very encouraging, to say the least. It is a sign that there are others who share my thoughts on the subject.

It is also a sign that the “crowd” is beginning to catch up to my idea for medical tourism in workers’ comp, which was why I titled my blog post Far In Front of the Crowd back in August, when Joe Paduda commented on a prior post that I was ‘far in front of the crowd’ on medical tourism and workers’ comp.

In a recent article posted on Insurance Thought by Kevin Bingham, et al., called Workers’ Compensation Comes of Age, the authors wrote that:

“Medical tourism continues to grow as an option for patients all across America. An airline magazine recently had advertisements from hospitals outside the United States showing savings of 50% to 80% on procedures such as knee and hip replacements that are common in workers’ compensation. The general cost in the United States for a knee replacement was shown at $34,000, versus the overseas cost of just $10,000. A hip replacement was listed as $35,000 versus the overseas cost of just $11,000. Even with the cost of airfare, transportation, and hotel accommodations, the potential savings are significant (acknowledging that we aren’t attempting to control for quality or safety differences). With several companies and health insurers investigating offering medical tourism options to their employees and insureds, there could come a day when workers’ compensation insurers could leverage these tremendous savings to help drive down severity for certain procedures. While businesses may welcome the cost savings, we recognize that persuading state legislatures and injured workers to agree to these practices could be difficult.

Mr. Bingham is a principal with Deloitte Consulting’s Advanced Analytics & Modeling practice, and his fellow authors have a diverse background, ranging from Actuaries to a Registered Nurse. The last statement by the authors was another point I raised in my White Paper, but in the case of injured workers, could be handled by offering them a financial incentive of between $2,000 and $2,500 from the savings realized by medical tourism, provided the savings was greater than $5,000, as was pointed out to me some months ago by the president of a health care company that negotiates lower costs for their clients’ workers’ compensation claims.

But despite the difficulties involved at this time getting medical tourism accepted, the medical tourism industry itself needs to do a whole lot of work before they can expand into the workers’ compensation market. As Judge Langham noted, the treatments, implants and medications provided outside the US must be approved by the FDA. It is true that many patients go abroad because certain treatments and procedures are not currently approved by the FDA, such as experimental treatments and procedures for cancer and heart disease, etc. But, for those more routine treatments and procedures that are either too expensive, or for which the patient does not have adequate insurance, complying with the FDA or even surpassing them, should be another goal of the industry.

Also, the industry must find a way to guarantee superior aftercare and follow-up care, which is crucial for the patient’s speedy and successful recovery. This will go a long way in making medical tourism a reliable and safe alternative to medical care at home. And finally, the qualifications and credentials of the surgeons must be known well in advance of surgery and verified. But above all, transparency on cost, on quality of care, on travel arrangements and on the reputation of the medical personnel and facility must be provided to the patient before any decision is made to leave the country. It is the duty and the job of the medical facilitator to guarantee this both verbally and in writing, and to make all necessary arrangements and preparations for the patient.

But the industry itself must work with each and every country that seeks medical tourist dollars to bring about standards and regulations and legal frameworks that will make medical tourism more attractive to patients, employers and insurance carriers in both general health care and workers’ compensation. To do anything less imperils the entire industry.

So, it would seem that medical tourism in workers’ comp is not so far-fetched an idea now as it once was over a year ago when I first started writing my blog. As I said above, the crowd is catching up to me, and I welcome the company, especially when it comes from the second highest workers’ comp judge in the State of Florida and a principal from a major consulting firm. HAPPY NEW YEAR!


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Knee Surgery in Costa Rica — A Less Expensive Alternative


Richard’s Note: This is probably the last blog post I will write in 2013, so let me take this opportunity to wish all of my readers a very Happy Holiday, and a very Happy New Year. Let’s hope that 2014 will be a year in which medical tourism takes its rightful place as an alternative to high cost, low quality health care. One more thing, 2014 will be the centennial year of the beginning of the First World War, a war in which the leading nations of the world at that time, blundered into, and which ultimately led to an even greater disaster, the Second World War. As globalization brings us closer together, let us remember that one hundred years ago, much of the world was backward and underdeveloped, and being exploited by all major powers; yes, even the ‘good ole USA’, so my hope is that one day, travelling to another country for health care will be as commonplace as going to another city here at home.

Last week, I had a meeting with the C.E.O. of Costa Rica Med Connect, Russell Cuciak. Russell connected with me on LinkedIn in response to my last blog posting. As we are both in South Florida and live in Palm Beach County, we had the chance to talk by phone on a few occasions before arranging a meeting in his office in Boca Raton.

Russell told me that he has been sending patients to Costa Rica for about two years now, and has been very active in taking a hands-on approach towards his clients’ care, which was in evidence during our meeting when he called a former potential client who had weight loss surgery in Florida, instead of in Costa Rica. The client had lost a significant amount of weight from the surgery, but since Russell followed up with him even though the client did not seek his care in Costa Rica, it proved to me that Russell stands by those who come to him for his services, whether they use them or not.

His patients are sent to the CIMA Hospital in Escazú, or its more formal name, San Miguel de Escazú, the capital city of the canton of Escazú in the province of San José in Costa Rica. It is also the name of the district that includes the city, a subnational entity with 14,815 inhabitants. Escazú is 9 kilometers from the national capital of San Jose, which is in the center of the country between the Caribbean Sea and the Pacific Ocean.

Over the past couple of decades Escazú has become an expatriate enclave: several embassies have their residences located here, including the residence of the US Ambassador and the British Ambassador. The past few years have seen a significant influx of newly arrived foreigners from North America, South America and Europe. It is home to many bars and restaurants, especially those of the more chic (and expensive) variety. Rents and prices reflect this and Escazú is the most well-known upscale location in Costa Rica. Here, one can find English movie theaters and even a luxurious country club. There are also many fine restaurants and dining areas in this part of town, with an excellent nightlife. Banks, pharmacies, shops, grocery stores and even an 18-hole championship golf course can be found here, along with one of the biggest and most modern shopping malls in Central America, Multiplaza.

For those of you who have read my blog article, No Back Alleys Here: Medical Tourism Hospitals, Clinics and Networks in Latin America and the Caribbean, you will remember that CIMA — Centro Internacional de Medicina, was one of the hospitals I listed in Mexico, particularly the one in Chihuahua.

I asked Russell to give me a ballpark figure of what the cost of knee replacement surgery would be in Costa Rica, and he quoted me a figure of $13,000, which includes everything except the airfare and hotel. He told me that several of the resorts in the area cater to specific patients having surgery at CIMA, so that there is a resort for patients recovering from plastic surgery, a resort for patients recovering from orthopedic surgeries, etc. It was explained to me that these resorts allow his patients to be around other individuals like them so that they do not feel uncomfortable. One particular hotel, the Holiday Inn, which is next to the CIMA hospital, takes all patients, and has special medical rooms for them.

The cost for a room in some of these resorts are anywhere from $25 a night to $250 a night, so with the cost of surgery for a knee replacement of $13,000, adding the airfare and accommodation would add another $2,000 or $3,000 to the total cost, which when compared to costs in the US of the same procedure, could be double or triple that, depending on the hospital’s bill, the surgeon’s bill, the anesthesiologist’s bill, etc.

Russell told me that in 2012, 40,000 Americans went to Costa Rica for medical tourism. As I said in my No Back Alleys Here piece, Costa Rica is one of the “rising stars” of medical tourism, and Russell’s company is one of at least a half a dozen that I know of, if not more, that are capitalizing on those 40,000 medical tourists.

During our conversation, I discussed what I found in my research paper about the barriers to implementing medical tourism into workers’ compensation, and with medical tourism in general, was the issue of legal liability. Russell told me that he carries $1 million in liability insurance, and I gave him some names of insurance companies that provide medical tourism insurance that I found on my smartphone while talking to him.

I told him of my difficulty in getting the workers’ compensation industry interested in my idea for medical tourism, and he asked me why I thought that the insurance companies had not jumped on this. I told him that there are many people in medical tourism who are asking the same question, and the most logical answer was that it is not on their radar.

We spent more than an hour and a half talking inside and outside his office, and we hope to be able to drum up more interest for medical tourism with individuals, employers, and insurance companies, both in health care and in workers’ compensation.

As uncertainty with the ACA continues, and as the cost of health care keeps rising, despite the drop in health care spending, traveling to a medical tourism destination such as Costa Rica, will become a viable option not only for health care patients, but for workers’ compensation as well. HAPPY NEW YEAR!


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Cross-border Workers’ Compensation a Reality in California

I received an email Friday from one of my LinkedIn connections, Joe Burgess, Senior Executive Vice President for CHSI in Las Vegas. Joe and I had connected back in January, and he mentioned at that time the name of a company called SIMNSA. He informed me that SIMNSA had started a project in regard to cross-border health care for workers’ comp into Mexico. This was in response to my inquiry into any work his company may have been doing with cross-border health care for workers’ comp, since his company is based in the Southwest.

So on Friday, Joe was kind enough to send me a link to a website called Workers’ Comp Executive. The link was a video on that website hosted by the publisher of Workers’ Comp Executive, Dale Debber. Joe told me that this was a program that his company was pushing for the WC self-insured group they used to manage.  He indicated that the self-insured group did not go with it at the time (and may have since) but a company called Insurance Company of the West (ICW) did, which is the subject of the video.

Without going into great length about what is on the video, since it is thirty minutes long, I will just give you a brief description of what came about from the first few minutes of the video, and I will let you decide if you want to watch the video in its entirety.

Dale, the publisher of Workers’ Comp Executive interviews Paul Zamora, Senior V.P. for Workers’ Comp for ICW, and as Paul explains, the idea to explore cross-border health care for the employees of ICW’s San Diego area insured clients came from an agent for Alliant Insurance, Larry Osborne. As Paul tells Dale, SIMNSA is providing many of the businesses in the San Diego area that have employees who live in Mexico, but commute to work in CA, as their HMO, since SIMNSA is the first and only Mexican HMO licensed in CA to offer an HMO product.

The employees are given the option of choosing SIMNSA or any other company for their employee health care plan. And it was Larry Osborne who said to Paul, why can’t they do that for workers’ comp. ICW was a little sceptical at first, but their legal team said that they did not give up their right to control medical, if they were using a non-CA domiciled company. They were told no, they do have the right to have their primary care doctor in CA, and outsource services elsewhere.

At this point, Dale interrupts Paul to ask a very good question. “Does that mean that the utilization review is being conducted here in CA under the control of ICW, but the treatment is on-going in Mexico for those who choose that?” Paul replies that that is correct, and then explains that if an employee is injured, first he will see a primary treating physician in CA who is familiar with SIMNSA, then all future treatment if there is any, is via SIMNSA, with follow-up visits on a routine basis with their primary care physician here.Paul goes on to say that it is the employee’s choice, and that at no time do they tell an insured that they have to have their employees treated by SIMNSA. It is always the employee’s choice to use SIMNSA.

Currently, this program is only in the San Diego/Imperial County area, as Paul tells Dale, because companies in other areas do not have employees that commute for work to CA from Mexico. Paul goes on to say that the quality of care is very good, and there are excellent doctors in Mexico, and that it is very convenient for the worker to be treated in Mexico.

Dale then asks Paul about the fee schedule and he wanted to know if it was an advantage for the employer, and as Paul explains, they were able to negotiate with SIMNSA a better fee schedule because their costs were lower.

I am going to stop here and let you watch the video yourself, so that you can decide if this is something your company would like to do, whether you are an insurance carrier, employer, self-insured employer, etc. But it appears to me that as the workforce in the US grows more Latino and Caribbean, these kinds of programs will be more common, and in many cases, for lower cost surgical care than what is available currently here in the US. It’s up to you…higher cost surgery with not so good outcomes here, or lower cost surgery with better outcomes in a medical tourism destination facility in the region.


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