Declining Workers’ Compensation Payments Linked to 2014 State Law
A move Connecticut state lawmakers made a few years ago to adopt fixed-amount fee schedules for outpatient surgeries has resulted in significantly lower workers’ compensation payments, a new study shows.
In 2015 and 2016, Connecticut saw a 22% reduction in hospital payments for outpatient shoulder and knee operations, according to the Workers Compensation Research Institute.
Those are common injuries in workers’ compensation cases, according to the Massachusetts-based institute.
It pointed to a 2014 Connecticut law, supported by CBIA, that set outpatient reimbursement rates at 210% of Medicare rates.
Between 2005 and 2015, at least 10 states have set outpatient reimbursement rates to Medicare rates.
In six of those states, per-episode costs have declined, according to the WRCI study.
It found that prices paid for a similar set of medical services varied across state lines.
WRCI examined price trends and fee schedules in 35 states that represent 87% of the workers’ compensation industry for procedures that include evaluation, physical medicine, surgery, radiology, neurological testing, pain management, and emergency care.
The study found that in 2017 the cost of a similar set of medical services varied greatly across state lines, ranging from Florida, at 26% below the median of the 35 states, to Wisconsin, which is is 158% above the median.
Fee Schedules Lower Costs
The study compared medical prices paid in the 35 states and tracked price changes in the decade from 2008 to 2017.
Among the findings:
- States with no fee schedules for professional services had higher prices paid compared with states with fee schedules—39% to 168% higher than the median of states with fee schedules in 2017.
- Changes from 2008 to 2017 in prices paid for professional services varied across states, from a 17% decrease in Illinois to a 39% increase in Wisconsin.
- Most states with no fee schedules have faster growth in prices paid for professional services compared to states with fee schedules—the median growth rate among the non-fee schedule states was 30% from 2008 to 2017, compared with the median growth rate of 6% among the fee schedule states.
The study also found that fee schedules can ensure workers’ compensation payers are not overpaying for common outpatient surgeries and other services, and that hospital outpatient payments were higher and growing faster in states with percent-of-charge-based fee regulations or no fee schedules.
With a fee schedule, all parties know the costs in advance and claimants can focus on their recovery and returning to work.
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