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No Wisconsin Medical Fee Schedule = Higher Medical Costs

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WCRI Report Shows That No Wisconsin Medical Fee Schedule = Higher Costs

Workers Comp fee schedules tend to keep costs down in most states.   A Wisconsin medical fee schedule for Workers Comp would assist Badger State employers in keeping their Workers Comp costs in control.

Picture of Cat Wisconsin medical fee schedule laying in the money coin
Wikimedia Commons – Continentaleurope

WCRI (Workers Comp Research Institute) recently published a study that showed the state’s Workers Comp medical costs as some of the higher ones in their recent study of 18 states – called CompScope.

Wisconsin Medical Fee Schedule Based On Average Regional Prices

Wisconsin Medical Fee Schedule is now based on the venerable yet more expensive Usual and Customary (U&C).   Using U&C means taking the average medical costs in an area based on a similar phone number prefix or zip code.  Dental insurance companies use this practice often to reprice and pay bills.

I was often brought in by Third Party Administrators (TPAs), Captives, and self-insured employers to negotiate the medical bills after, for instance, a collection attorney was pursuing multiple bills that were not paid up to U&C.  U&C is an opinion-type number.  There are no exact numbers to go by in these collection matters.

Hidden Benefit of Medical Fee Schedules

A hidden benefit of fee schedules is one that I have written about a few times.  Let us look at the steps in a workers comp adjuster setting medical reserves on a lost time file.   This example is very simplistic, but still a representative procedure.

  1. Investigate the claim
  2. Document the injuries to the employee in the file
  3. Examine what bills have been received
  4. At 60 days after the accident – set reserves for the lifetime of the file
  5. Adjust the reserves every 90 or 18o days as needed, usually for increases or file closure
Blue Stethoscope Wisconsin medical fee schedule on the floor
Wikimedia Commons – Tachypnoe

The date for major reserve setting (60 days) means the adjuster has to usually fill out some type of form that breaks down the indemnity reserves (TTD, TPD, PPD, and PTD) and medical reserves.

The medical reserve analysis may require 20 – 30 blanks to be filled in on an analysis sheet.  If the adjuster knows what the projected medical costs are going to be with a fee schedule, they can more accurately forecast the reserves.   #4 and #5 in the above list can be more accurate when projected medical costs are known ahead of time.

The more accurate the reserves, the more accurate the premium charged to employers.  For self-insured employers, the more accurate the budgeted cost projections over the next year are on the file. 

Virginia decided to institute medical fee schedules a few years ago. Notice how they moved to a lower-cost part of the chart after 2017.

Wisconsin Medical Fee Schedule Need – Chart Says It All

Check out the chart below.  I like when WCRI concludes the same thing that I do.  See below the chart for some of the WCRI’s conclusions.  You can obtain a copy of the report (worth the cost) here.  https://www.wcrinet.org/reports/compscope-medical-benchmarks-for-wisconsin-22nd-edition

 

WCRI Wisconsin Medical Fee Schedule Graph

 

The following are among the study’s other findings:

  • Prices paid for professional services grew 3 percent per year from 2014 to 2019. This increase was similar to changes in other states without medical fee schedules.
  • Payments per service for hospital outpatient services grew about 5 percent per year, with charges per service growing 4 percent per year between 2014 and 2018, before increasing nearly 8 percent in 2019. A combination of factors may have influenced these results: medical inflation, recent hospital consolidations, and changes in the characteristics and severity of claims receiving inpatient/outpatient care. Outside workers’ compensation, hospital rates in Wisconsin have been increasing about 4 percent annually.
  • The percentage of claims receiving hospital outpatient services increased, a departure from the typical state studied where fewer claims received services in hospital outpatient departments. Nearly 80 percent of Wisconsin claims involved hospital services.

Fee Schedules Still Win The Day

Workers Compensation fee schedules usually prevail in cost analyses.  Let us hope that a Wisconsin medical fee schedule will be a new addition to the states with medical fee schedules.

 

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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

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