States With Fee Schedules Have Lower Workers Comp Outpatient Medical Costs – WCRI
Fee schedules have appeared in this blog many times due to the economic effects they have on medical bills. WCRI (Workers Comp Research Institute) published a study this week showing that fee schedules lower Workers Comp outpatient medical costs. The study specifically covered hospital outpatient costs.
The outpatient medical cost study is produced by WCRI yearly. We here at J&L watch for this study every year as a bellwether for fee schedules versus the other billing methods.
We liked the depth of the study – 13 years for you triskaidekaphobia sufferers.
The study, the latest in an annual series, compares hospital payments for a group of common outpatient surgeries in workers’ compensation across 36 states from 2005 to 2018.
Let us look at these numbers. The increased charges remain outstandingly high each year this study is published. The name of the study is the Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 9th Edition.
WCRI came to two astounding conclusions (are you ready for these numbers?). The two researchers Dr. Formenko and Dr. Yang. They split the numbers between % of charge-based states and states without any fee schedule.
- Percent-of-charge-based fee regulations were 74 to 168 percent higher than the median of the study states with fixed-amount fee schedules in 2018.
- No fee schedules, they were 51 to 131 percent higher.
- WCRI also found that hospital outpatient payments per episode in most states with percent-of-charge-based fee regulations or no fee schedules grew faster than in states with fixed-amount fee schedules.
Variation in the difference between average workers’ compensation payments and Medicare rates for a common group of procedures across states was even greater — reaching as low as 42 percent (or $2,574) below Medicare in Nevada and as high as 365 percent (or $17,713) above Medicare in Alabama.
This means that when using the most stable statistic among the states (Medicare rates), the statistic the hospitals have a workers comp outpatient medical cost variance of $20,287.
Overall, the figures show a 50% difference between fee schedules states and states without them.
Often Unmentioned Fee Schedule Benefit
Setting medical reserves can easily confound the most experienced claims adjuster or supervisor. States with fee schedules lessen the inaccuracy of setting medical reserves. Some adjusters use old fee scheduled bills to compare procedure costs. (secret shortcut).
After 10 years of experience, most adjusters and supervisors more easily develop a sixth sense of how much a medical procedure costs in states with fee schedules.
Workers Comp Outpatient Medical Excluded Data and States Covered
This study captures payments for services provided and billed by hospitals; it excludes professional services billed by nonhospital medical providers (such as physicians, physical therapists, and chiropractors) and transactions for durable medical equipment and pharmaceuticals billed by providers other than hospitals. The analysis also excludes payments made to ambulatory surgery centers.
Go here for more info and to download the study.
The 36 states included in this study are Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
Related: Third Party Administrator Adjusts Workers Comp Claims For Self Insureds
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