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.
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.
- 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:
- 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.
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