Inadequate hospital reimbursement for victims of motor vehicle crashes due to health reform legislation

Study objective: Effective for 1997, health reform legislation in New York resulted in a change in hospital reimbursement for victims of motor vehicle crashes. We evaluated the impact of this change from no-fault to Medicaid rates on the financial viability of a regional trauma center within an academic medical center. Methods: This study represents a retrospective review of the trauma registry for all motor vehicle-related injuries (meeting the statewide definition of trauma) admitted to a regional trauma center for a 9-month period just before the legislation implementation date. Charges, costs, and projected reimbursement were calculated by standard hospital accounting methods. Profit or loss (reimbursement minus costs) was calculated by standard hospital accounting methods for each admission using no-fault and Medicaid reimbursement rates. Results: One hundred seventy-three cases during the 9-month period generated total charges of $4,112,174, total costs of $3,447,110, and estimated total profit of $800,084 ($4,625 per case) using no-fault reimbursement and a total loss of $184,154 ($1,064 per case) using Medicaid reimbursement. For the 31 patients with diagnosis-related groups (DRGs) that were specifically created in New York to ensure adequate reimbursement for multiple significant trauma (730 through 734 and 792 through 794), no-fault reimbursement resulted in an average profit of $371 per case and Medicaid generated a loss of $6,118 per case. Actual payments for the study population were almost $500,000 less than estimated. Conclusion: Changes in rates of no-fault insurance payments to hospitals will result in inadequate reimbursement for motor vehicle crash victims admitted to a regional trauma center, undermining the viability of the regional trauma system.