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.
“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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