Without proper reimbursement and support, plastic surgeons are finding it hard to accept reconstructive patients and remain profitable

Years ago, it was not difficult for plastic surgeons to focus on performing reimbursed reconstructive plastic surgery because they received adequate support from the government and from consumers. Many soldiers required reconstructive plastic surgery after World War II, and community advocacy for veterans ensured that they would receive appropriate medical services.

By the Vietnam War and thereafter, it appeared that stronger initiatives were required to help plastic surgeons afford to offer reconstructive surgeries. Since then, several interested parties stepped up to the plate to overcome the lack of support from third-party administrators that resulted in reduced access to care.

• In 1991, Henry K. Kawamoto, Jr, MD, DDS, of the University of California, Los Angeles, and members of the California Society of Plastic Surgeons worked to approve Senate Bill 761 by California Sen Liz Figueroa (D-Fremont), which stated in summary that insurance companies cannot deny treatment for the correction of deformities due to birth defects, accidents, and disease.

• In 1997, Kenneth E. Salyer, MD, FACS, FAAP, of Dallas, the American Society of Plastic Surgery (ASPS) Government Relations committee, and other members of the ASPS introduced a bill stating that, “A health benefit plan that provides benefits to a child who is younger than 18 years of age must define reconstructive surgery for craniofacial abnormalities under the plan to mean surgery to improve the function of, or attempt to create a normal appearance of, an abnormal structure caused by congenital defects, developmental deformities, trauma, tumors, infections, or disease.” In 1999, then Texas Gov George W. Bush signed the bill into law.1

• In 1998, the Federal Breast Reconstruction Law, which required insurance providers to pay for breast reconstruction following mastectomy, was introduced. However, only 15% of American women receive breast-reconstruction procedures following mastectomy. This number appeared to be influenced by the patient’s geographic location, race, and disease level.2 

• By 2003, a report from the US General Accounting Office in Washington, DC, noted that there was a concern that physicians would be forced to limit their services due to increasing malpractice insurance rates and the number of insurance companies that are limiting their offers of malpractice insurance.3

The Present-Day Stalemate
However, despite the number of soldiers injured during the war in Iraq, the efforts from interested parties did not produce the same support that was exemplified by insurance companies, state or local governments, or the public at large in years past. Instead, the cost of physician’s supplies has increased, the cost of delivery has increased, and the cost of living has increased—but the amount of reimbursement has decreased.

As David G. Genecov, MD, of Dallas and the International Craniofacial Institute explains, “Two factors that the government and insurance companies don’t seem to understand are that it is financially difficult for surgeons to accept reconstructive patients with the average insurance premiums going up 17% per year. Furthermore, the recent 4.5% decrease in Medicare reimbursement is indicative that financial support is not rising from either Medicare or the benchmark it creates for third-party administrators.” This has made it less feasible for physicians to operate at a profit when they accept reconstructive patients, despite the best efforts by many of them to try.

Reconstruction Reimbursement Rates
• Primary cheiloplasty and nasal reconstruction: Medicaid, $600 to $700; in-network insurance, ~$1,200

• Palatoplasty: Medicaid, $600; in-network insurance, $1,000

• Cancellous bone graft to the alveolus: Medicaid, $1,000; in-network insurance, $1,500

• Cranial vault (intracranial): Medicaid, $6,000; in-network insurance, $2,500

• Lefort I/BSSO/HMO (upper and lower jaw surgery): Medicaid, $4,400; in-network insurance, $3,000

• Orbital reconstruction: Medicaid, $2,700; in-network insurance, $5,000

Efficiency is another cause for concern. As Kawamoto explains, “It is tough for the average plastic surgeon to be efficient without additional aid to deal with insurance companies.” Kawamoto’s practice, which is 65% to 70% reconstructive, is not contracted with any insurance plan.

The information box below shows the average reimbursement rates of some of the most common reconstructive procedures, as provided by the International Craniofacial Institute. Some of these are much lower than Medicaid, and they are reflective of tough times when compared to operating costs as well.

It is unfortunate that initiatives such as the proposed national adoption of a bill similar to Senate Bill 761 have sat on the legislative table for more than 5 years. At the same time, there is a catch-22: Why should physicians support bills that will ultimately result in declining reimbursement, as happened with initiatives like the Federal Breast Reconstruction Law? When they are caught between no federal control over the definition for functional improvement and the declining rate of reimbursement, physicians and patients both suffer.

As Michael McGuire, MD, FACS, of Santa Monica, Calif, explains, “The enthusiasm to drive legislative change has waned. Federal legislation for breast surgery was driven by strong lobbying efforts from women’s groups, state legislators, general surgeons, and plastic surgeons. Yet, we don’t see the same strong lobbying efforts from the public at large or a shift in the cooperation of insurance companies. We need to find ways to engage the public to drive the change. Nothing will change unless the public demands change.”

It appears that legislators are not interested in mandates for care despite goodwill efforts from surgeons. To make matters worse, their policies show strong support for hospital services and the cost of drugs, but not for surgeons’ fees. In addition, it appears that reimbursement cuts have affected physicians more than any other health care provider.

The Access Issue
All things considered, it is no wonder that many plastic surgeons have been forced to focus on aesthetic plastic surgery more than ever. Even surgeons who choose to demonstrate goodwill by offering reconstructive surgeries must perform them regularly to keep their skills fresh, due to the procedures’ complexity. There are no shortcuts in reconstructive surgery, and containing costs can be hard without an alternative way to offset them.

As Walter Erhardt, MD, of Albany, Ga, summarizes, “Net revenue has gone down. Third-party administrators and government aid programs need to provide fair and equitable distribution of funds between providers.

“At the same time, all doctors owe it to the community to become involved,” Erhardt continues. “For example, a plastic surgeon focusing on breast surgery must offer a full spectrum of procedures to meet the needs of breast patients.”  Erhardt’s practice is located in a geographic area where the number of plastic surgeons available to treat breast-reconstruction patients is limited.

It may be difficult to determine the total number of people who are affected by birth defects, deformities, or diseases in your geographic market, but the worldwide numbers indicate that this is a substantial problem. These people suffer from not only the impairment itself but also the difficulties in diagnosis and treatment.

For example, “Colleen” of Santa Monica found treatment for skin cancer problematic at best. After finding a nodule on her shoulder, she visited three internal medicine physicians, and each one  told her that she should not be concerned about it. She then went to a dermatologist’s office, but she received conflicting biopsy reports: two noted the nodule was malignant, one noted it was benign.

Dissatisfied with the biopsy results, Colleen then proceeded to a plastic surgeon, who elected to remove the entire nodule and biopsy it again during general surgery at a hospital. The hospital returned conclusive results: the diagnosis of dermatofibrosarcoma protuberans, a malignant shoulder tumor. She was then referred to another dermatologist and underwent Mohs microsurgery to remove the cancer.

Soon afterward, she saw Andrew Cohen, MD, FACS, a Beverly Hills, Calif, plastic surgeon (see cover story), who repaired the defects that resulted from the biopsies and the Mohs surgery. As Colleen explains, “The benefits of proceeding to the right doctors far outweighed the guessing game that was presented to me by others. Furthermore, my reconstructive results were superior in comparison to the previous repairs to my biopsies—for the best aesthetic outcome. In fact, I do not have the permanent disfigurement that was suggested to me by the other doctors.”

Deformity Statistics
• The probability that a child will be born with a cleft lip or palate: 1 in 700

• The probability that a girl will suffer a disabling fire-related burn in developing countries: 1 in 200; in industrialized countries: 1 in 2,000

• The percentage of Interplast’s work related to burns: 33%

• The percentage of disabled children in developing countries who attend school: 3%

• The number of women who suffer a traumatic acid burn in Bangladesh each week: 7

• The percentage of Ecuadorian children living in poverty: 70%

• The percentage of the population living on less than a $1 per day in Zambia: 64%

• The proportion of children suffering chronic malnutrition in Nicaragua: 1 in 3

• The life expectancy in Zambia: 36 years

• The number of hand surgeons in Bolivia: 1

• The number of plastic surgeons in Sri Lanka: 6; in Zambia: 1; in Bangladesh: 15

• The number of physicians in Vietnam per capita: 1 for every 2,000 people

Colleen emerged with positive results after months of investigation and significant expense. However, the reimbursement rates for skin-cancer treatment can be very low. Cohen says, “We’ve seen reimbursements as little as $150 to $200 for skin-cancer removal and flap-closure rates of $500 to $3,500, depending upon the complexity of the procedure.”

The statistics in the information box below, provided by Interplast, show that the tide has not turned for sufferers from deformity worldwide. Interplast is a nonprofit international humanitarian organization that serves 16 countries through 700 volunteers, nine medical outreach surgical centers, 78 visiting educator workshops, and 100 surgical-team trips. Since 1991, it has helped more than 64,000 patients.5

How can plastic surgeons create more profit from reconstructive surgeries? First, it appears wise to empower the patient. Being out of network with no third-party contracts provides an opportunity to contain costs and help the public grow more interested in creating a movement to solve the reimbursement problem. Costs can also be contained by asking patients to secure preauthorization, to write a letter to their insurance companies about the lack of functionality from their disabilities, and to secure a preapproval letter.

Plastic surgeons can also help empower patients by providing the insurance codes for their procedures in advance. Verifying insurance may also thwart off unnecessary losses, and balance billing enhances the prospect of avoiding financial loss.

Secondly, plastic surgeons may seek out partners with whom to build and share a surgery center. In addition, referral relationships with experts in every facet of reconstructive plastic surgery may be lucrative. Surgeons may seek support from anesthesia groups, surgical centers, or hospitals that will offset costs by introducing a complex case that would be appealing to such parties.

Perhaps it would be wise to support hospitals that pay for on-call services through your affiliation. Better yet, focus on patient referrals and conversion to an additional procedure that is elective.

The Nonprofit Contribution
Volunteer options are also available:
• Volunteer for a nonprofit.
• Seek out charitable organizations and nonprofits that allocate dollars for surgeons’ fees.
• Request donations to reconstructive nonprofits from aesthetic surgery patients.

Some nonprofits have had to get creative by asking surgical centers to donate one reconstructive procedure per day in return for the surgeon’s commitment to bring a certain number of aesthetic patients to the center.

Profitable Reconstructive Practices
On the upside, there are practices that are 100% reconstructive and operate with sufficient profitability. These practices may operate efficiently by examining expenses in the following ways:
• Operating with only necessary employees

• Selecting a demographic in a less competitive reconstructive market

• Selecting office space with low leasing costs

• Decorating conservatively

• Quantifying the average time spent for all attending staff members in the operating room and for postoperative treatment

• Being selective about the choice of procedures that are offered in the practice

• Limiting the procedures that are not cost effective by infrequently performing surgeries that are not time dependent

• Evaluating the loss costs associated with the cancellation of necessary immediate surgery due to delayed or denied authorization, including the reservation of the operating room, administrative staff, and nursing staff

Austin Smiles is a nonprofit organization that provides reconstructive plastic surgery and cleft lip and palate repairs to children in Austin, Tex; in the 10-county surrounding area; and in various locations in Latin America. The organization, which celebrated its 20th anniversary this year, has been very resourceful in its fund-raising efforts. Patrick Beckham, MD, one of Austin Smiles’ founders, has contributed tens of thousands of dollars over the course of several years by embarking on extensive mission bike trips in the United States and abroad three times per year.

As Kendyl Richards, executive director of Austin Smiles, explains, “Instead of reinventing the wheel with a new nonprofit, which can very taxing, it is better to volunteer at approved credentialed mission groups who have contributed many wonderful initiatives but are still deeply in need of volunteers, particularly to serve those in America.”

It can be just as difficult for nonprofits to obtain funding as for plastic surgeons to receive reimbursement. As Munish Batra, MD, founder of DOCS (Doctors Offering Charitable Services), explains, “Obtaining 501(c) nonprofit status was the first part of the equation. Yet, we have learned that funding can be an ongoing challenge. We have found that the public in local communities donate to national programs such as the Red Cross, not local nonprofits.”

Batra and his partner have invested $200,000 to date and have secured commitments from other surgeons to contribute a portion of their earnings each year. They have recruited donations from their aesthetic plastic surgery patients, and they have reached out to solicit support from other experts so that they can provide comprehensive appropriate care that meets every facet of reconstructive plastic surgery. DOCS has also brought special complex cases to the attention of local hospitals and engaged their support to provide supplemental services.

In the end, volunteer work with a nonprofit may be the best alternative. Criteria for mission work are also an avenue for exploration. For example, plastic surgeons who participate in an Operation Smile international medical mission must be board certified, must be licensed in their home state, must have completed a fellowship in their fields, and must have experience performing reconstructive surgery for cleft lips and cleft palates. In addition, they need three recommendation letters (one of which must come from an Operation Smile medical volunteer), must be able to speak English, and must submit a curriculum vitae.

Final Thoughts
If all plastic surgeons took one step to provide care for reconstructive patients, the public might be more interested in fighting for their causes. A true movement cannot be achieved without support from policy-makers, insurance companies, the public, the media, and plastic surgeons. Combining efforts can lead to great achievements by acting as one.

Lesley Ranft is a contributing writer for Plastic Surgery Products. For additional information, please contact [email protected]

1. Take political action about coverage. Available at: www.craniofacial.net/costs.htm# action. Accessed September 26, 2006.

2. American Society of Plastic Surgeons. Race, age, geography significantly decrease odds of breast reconstruction after mastectomy, says ASPS. Available at: [removed]www.plasticsurgery.org/news_room/press_releases/race-age-geography-significantly-decrease-odds-of-breast-reconstruction-after-mastectomy.cfm[/removed]. Accessed September 26, 2006.

3. US General Accounting Office. Medical Malpractice Insurance: Multiple Factors Have Contributed to Increased Premium Rates. Washington, DC. US General Accounting Office; June 2003. Publication GAO-03-702. Available at: www.gao.gov/new.items/d03702.pdf. Accessed September 26, 2006.

On The Web
PSP covered a different aspect of insurance for plastic surgeons in the June 2006 issue. Go to www.PlasticSurgeryProductsOnline.com and click on “Archives.”