THE FINANCING OF TRAUMA CARE

In 1966, the National Academy of Sciences and the National Research Council published a landmark report, Accidental Death and Disability: The Neglected Disease of Modern Society.³ This report created the recognition that trauma is a disease and that improvements in care of the injured could make a difference in the survival rates of trauma victims. It also prompted the development of organized trauma systems.

The emerging trauma system concept involved the tenets of treating the patient within the “golden hour”⁴ and getting the “right patient to the right place at the right time.”⁵ Federal funding for the development of trauma systems was made available by the Highway Safety Act of 1966⁶ and the Emergency Medical Services Act of 1973.⁷ Supported by guidelines developed by the American College of Surgeons (ACS) Committee on Trauma, the American College of Emergency Physicians, and the American Association for the Surgery of Trauma, trauma centers and systems began to develop.

In 1979, West et al.⁸ produced the seminal study comparing preventable deaths in a trauma system with those in a geographic area without trauma centers. Despite the evidence that a systematic approach to care was best, the monies to support such systems were not forthcoming. A follow-up report by the National Academy of Sciences in 1985 concluded that insufficient progress had been made in injury control since the original study 20 years earlier.⁹ The legislative response was the Trauma Care Systems Planning and Development Act of 1990, which awarded state grants for the implementation of statewide trauma systems.¹⁰ This act directed the U.S. Department of Health and Human Services Resources and Services Administration (HRSA) to develop the 1992 Model Trauma Care System Plan. This plan focused on an inclusive system of trauma care involving not only the trauma centers but all health care facilities based on availability of trauma resources.¹¹ In 1995, Bazzoli et al.¹² released the second national assessment of trauma care systems, which revealed very little progress in states’ ability to meet all criteria for successful implementation of trauma systems. This study was replicated in 1998 by Bass et al.¹³ and again in 2003 by the HRSA,¹⁴ indicating that states are making improvements toward this goal. This latter assessment by the HRSA indicated that the more comprehensive a state’s trauma system development is, the more prepared the state was to provide medical care in the face of all kinds of incidents. The tragic events of September 11, 2001, and the aftermath of Hurricane Katrina prompted great attention and reassessment of the strengths and weaknesses of emergency medical systems and trauma care systems. These events have also led to additional public funding under the auspices of Homeland Security to shore up necessary education and resources to states for response to disaster and multicasualty events.

Although funding to states for the development of trauma systems is key to future success, little attention has been paid to the economic burden to the trauma centers, which form the nuclei of the trauma systems. Trauma centers are under intense financial pressure. Unfortunately, an understanding of the importance of trauma centers has not been widely adopted by the general public or our elected officials. No direct federal funding support to trauma centers or physicians performing trauma care exists despite the extraordinary costs involved in providing this vital care. The United States faces increased risk of terrorist attacks and natural disasters, yet we continue to fail in providing this necessary infusion of dollars to support the cost of care. In 2004, 32 trauma centers were reportedly threatening closure or actually closed.¹⁵

According to Daily et al.,¹⁶ in 1992 one of the most important factors in prompting closure of trauma centers was unfavorable payer mix because of the provision of uncompensated care and underreimbursement by public programs (commonly Medicare). Subsequent studies by the National Foundation for Trauma Care in 2004 and 2006 indicate that trauma center closures were not only due to uninsured/underinsured patients but more important to lack of physician commitment, negative effect on physicians’ private practice, physician malpractice costs, physician call pay, availability of specialists, and extra operating costs.¹⁵ Hospital-physician relationship is a primary contributing factor in the decision to close or downgrade trauma service coverage. The primary services affected are general surgery, neurosurgery, orthopedics, and plastic surgery. Contributing services were cited as hand, ear-nose-throat, and maxillofacial surgery. When asked if the impact of closure of trauma services was positive, the response from chief operating officers (COOs) was that it improved the “bottom line” and contributed to happier physicians and specialists. When asked about negative outcomes, the same COOs reported adverse publicity, loss of prestige within a community, public opposition, loss of administrative and physician leadership, and increased risk of exposure and litigation.¹⁵

A component of this physician problem is the physician reimbursement system, the Resource Based Relative Value Scale (RBRVS) implemented by the Health Care Financing Administration (now the Centers for Medicare and Medicaid Services [CMS]) in 1992. This system was developed in an attempt to reform Medicare’s physician reimbursement policy. The payment system lumps together fees paid to physicians. Despite the active participation of surgeons on the RBRVS review boards, the scales still undervalue their efforts expended on critically injured patients.¹⁷ The general surgeon is the surgeon most often in house 24 hours a day, yet only 12% to 13% of blunt trauma patients have a general surgery operation. Trauma surgeons frequently perform multiple procedures and services to the same patient on the same day, so their charges for many services are denied. Additionally, instead of overbilling by unbundling charges, which was a common fear by Medicare, surgeons typically underbill out of ignorance.¹⁷ Uniformly, surgeons have never received any education on billing and coding processes, nor do many practice plans provide these valuable resources to busy productive surgeons. It is unrealistic for surgeons to understand the complexity of Medicare regulations, and trauma centers may be wise to provide coder/biller specialists to surgeons to assist in maximizing reimbursement efforts. In a study from the Department of Surgery in Louisville, published in 2005, the authors demonstrated that the reimbursement to direct cost ratio was 2- and 35-fold greater for the trauma centers serving commercial and government insured patients than for the professional fees of the trauma/critical care surgeons. The addition of local and/or federal funding for uninsured patients paid to the institution allowed the trauma center to cover direct cost with no profit margin. In contrast, for every dollar in direct cost generated by the trauma/critical care surgeon caring for uninsured patients, the physicians were able to recover 55 cents or a loss of 45 cents per direct cost dollar spent.¹⁸ Trauma centers have been very successful over the years in negotiating contracts with commercial carriers, better than many physician practice plans. Additionally they have been very aggressive in charge capture and revenue cycle enhancements. Trauma/critical care surgeons should be encouraged to get involved with efforts to maximize reimbursement, such as properly coding interventions by capturing E and M codes on the floor and in the ED and appropriately billing for line insertions and other procedures at nights and on weekends. It is important for the trauma surgeon to understand the collection processes and champion reform in areas regarding reimbursement.

Although rural trauma centers have been affected by the same issues as urban centers, their financial outcomes appear to be better. The net reimbursement for rural trauma is higher because of injury patterns, lower severity of injury, and favorable payer mix. Rogers et al.¹⁹ reported that more fee-for-service patients were admitted to their rural center in 1995. Patients’ lower severity of injury demands less resource utilization. The authors stressed that specific policies and measures had been implemented to reduce the costs of caring for trauma patients.

The problems of reimbursement have increased with prospective payment plans, lower payments from the government (Medicare and Medicaid), and increasing numbers of uninsured patients. This inadequate reimbursement threatens the organization of trauma care. Although Level I facilities have enjoyed a high level of physician support because of their teaching resources, financial pressures are particularly acute for teaching hospitals as managed care plans become dominant players in evolving patient referral patterns. Additionally the impact of reduction of residency work hours to 80 per week compounded by a shortage of surgical residents and fellows has profoundly affected Level I centers. One of the consequences has been excessive work hours by faculty physicians and inability to focus on research and teaching missions. These same physicians are typically the ones expected to lead national, statewide, and regional trauma system development.

The impact of lower Medicare and Medicaid payments coupled with managed care has been profound at all trauma centers but disproportionately so at Level I centers.¹⁶ In the past, before statewide trauma systems, most critically injured patients were referred to the “university hospital” because it was believed that resources were available at the Level 1 center that were not reliably available in a community hospital. With the advent of statewide trauma systems and the proliferation of Level II and III centers in some areas of the country where reimbursement is favorable, Level I centers have been faced with a paradoxic loss of market share. Overdesignation of trauma centers is rarely addressed because it is a political problem. Many markets, such as San Diego, Denver, Salt Lake City, Portland, Phoenix, and Los Angeles, to name a few, have struggled with this phenomenon. Many of the urban Level I centers may be disadvantaged in competitive markets because it is often seen by patients and referring physicians as a repository for uninsured patients. This has threatened their teaching and research missions and their financial bottom line.¹⁶

This concern was further underscored by Selzer et al.²⁰ in a review of 553 trauma patients admitted to a public urban Level I center during a 6-month period. Data related to cost, payment, source of reimbursement, and profit and loss margins were compared with and without government funding. Without Disproportionate Share Hospital (DSH) funds, a net loss of more than $2.1 million was realized. The greatest gap was from Medicaid, self-pay, and prisoner groups. The addition of DSH funds provided a positive return of more than $600,000.

It is clear that trauma centers are in financial trouble for many reasons, the major ones being the cost of uncompensated care, the high operating cost of caring for the critically injured, and inadequate reimbursement from government medical assistance programs.