By  Al Brander, VP of Clinical Services

The MDWT solution offers two significant financial benefits to hospitals and health systems:

  • Cost Avoidance

Non-compliance with the Prudent Buyer Standard, as mandated by CMS and enforced by the OIG, can result in severe fines and penalties. To avoid such issues, hospitals must pursue and report warranty credits equal to or exceeding 50% of the replacement device’s cost. Failure to comply may lead to Medicare fraud and the following penalties imposed by the OIG:

  • Repayment of 3 times the warranty credit amount, regardless of whether the hospital received the credit.
  • Additional fines on a per-instance basis ranging from $11,463 to $22,927.
  • The explanting hospital bears full legal and financial responsibility, and non-compliance could lead to becoming an excluded provider or facing legal consequences for gross negligence.

The financial impact of a single missed explanted medical device warranty credit:

  • Average AICD warranty credit: $12,000
  • Failure to return and report leads to a 3x penalty: $36,000.
  • Per-instance fines: $11,000 to $23,000.
  • Total potential loss from one mistake: $47,463 to $59,972.
  • Maximizing Warranty Credits

The MDWT solution helps hospitals increase revenue by optimizing the retention of warranty credits through the following benefits:

  • Hospitals can retain 25% more warranty credit dollars. This figure can rise even further if the hospital currently does not pursue devices explanted in the surgical procedural areas.
  • Approximately 80% of all warranty credits fall below the 50% overpayment reporting threshold, meaning hospitals can retain this revenue to enhance their bottom line.
  • OIG Mock Audit results indicate that hospitals with manual processes typically miss out on $50,000 to $200,000 in lost revenue due to inconsistent returns of explants eligible for warranty or recall.
  • The MDWT solution results in a 20% decrease in labor expenses as SpendMend’s audit team manages the process, allowing the hospital staff to focus on patient care and other duties.
  • No integration costs are involved, making the implementation smoother and cost-effective.

Your Results

With the MDWT solution, hospitals can expect a positive annual ROI as the retained credits are greater than the cost of the annual hospital subscription. For example, a 250-bed community hospital using the MDWT dashboard has experienced these positive outcomes:

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