JL_risklogo.png

Workers Comp Audit Stress Reducer
Use It For Your Next Premium Audit

Work Comp Outpatient Hospital Charges – WCRI Exposes Myth

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

States Vary Greatly in Work Comp Outpatient Hospital Charges – WCRI

The Work Comp outpatient hospital charges for even a minor procedure have become very expensive over the last 10 years. The Workers Compensation Research Institute (WCRI) released a study today which indicates great variability between states and with the Medicare reimbursement schedules.

Picture Of Work Comp Outpatient Hospital Charges Building
Wikimedia – Tinton5

The new study, Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 5th Edition, compares  hospital outpatient payments across states and monitors the impact of fee schedule reforms.   The study was very thorough as it covered 33 states.

Dr. Olesya Fomenko,  economist for WCRI co-authored the study.    I have talked with her each year on different subjects at the WCRI Annual Conference in Boston.  “According to Dr. Fomenko,  “This report found that hospital outpatient payments per surgical episode varied significantly across states, ranging from 69 percent below the study-state median in New York to 142 percent above the study-state median in Alabama in 2014,”

One of the surprising areas was Alabama coming in at such a high rate in what I had thought was a  lower-cost state for Workers Compensation premiums.

The 33 state study agreed with NCCI and what I have been saying for many years.   Strictly fee schedule states are the lowest cost states for medical services including work comp outpatient hospital charges.   Even the old stalwart, Virginia will now have a fee schedule in 2018.

The following are some major findings from the study:

  • States with no workers’ compensation fee schedules for hospital outpatient reimbursement had higher hospital outpatient payments per episode compared with states with fixed-amount fee schedules—63 to 150 percent higher than the median of the study states with fixed-amount fee schedules. Also, in non-fee schedule states, workers’ compensation paid between $4,262 (or 166 percent) and $8,107 (or 378 percent) more than Medicare for similar hospital outpatient services.

    Wallet With Money Work Comp Outpatient Hospital Charges Concept
    StockUnlimited
  • States with percent-of-charge-based fee regulations had substantially higher hospital outpatient payments per surgical episode than states with fixed-amount fee schedules—32 to 211 percent higher than the median of the study states with fixed-amount fee schedules. Similar to non-fee schedule states, workers’ compensation payments in states with percent-of-change based fee regulations for common surgical procedures were at least $3,792 (or 190 percent) and as much as $8,244 (or 430 percent) higher than Medicare hospital outpatient rates.
  • Most states with fixed-amount fee schedules and states with cost-to-charge ratio fee regulations had relatively lower payments per episode among the study states. In particular, for states with fixed-amount fee schedules, the difference between workers’ compensation payments and Medicare rates ranged between negative 27 percent (or -$631) and 144 percent (or $2,916).

The study covered the years 2005  to 2014.

The analysis excludes:

Medical Personnel Work Comp Outpatient Hospital Charges Showing Hand Gesture
StockUnlimited
  • professional services billed by non-hospital medical providers
  • transactions for durable medical equipment and pharmaceuticals billed by providers other than hospitals.
  • payments made to ambulatory surgery centers.

The 33 states included in this study represent 87 percent of the workers’ compensation benefits paid in the United States. The states are Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.

To purchase this study, visit http://www.wcrinet.org/studies/public/books/hci_5_book.html.

©J&L Risk Management Inc Copyright Notice

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Table of Contents

Related...

James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

Subscribe

Get the latest workers' comp news FREE!

Name
This field is for validation purposes and should be left unchanged.