Senate Bill S7655

                                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.