Outpatient costs higher where comp fee regulations limited

States with percent-of-charge-based fee regulations or no fee schedules for hospital outpatient care saw exponentially higher costs nationwide, according to a report released Thursday by the Workers Compensation Research Institute.

Cambridge, Massachusetts-based researchers compared hospital payments for a group of common outpatient surgeries in workers compensation across 36 states from 2005 to 2019, finding costs to be more than double in certain instances when compared to costs in states with fee schedules.

Specifically, hospital payments per outpatient surgical episode in states with percent-of-charge-based fee regulations were 73% to 209% higher than the median of the study states with fixed-amount fee schedules in 2019. In states with no fee schedules, they were 61% to 130% higher.

The study also found that growth in hospital outpatient payments per episode among non-fee schedule states ranged from 25% in Iowa to 54% in Missouri from 2011 to 2019, while the payments in the median fixed-amount fee schedule state without substantial changes in regulations increased about 4% over that same time period.

Variation between average workers comp payments and Medicare rates for a common group of procedures across states ranged from a low of 38%, or $2,294, below Medicare rates in Nevada to a high of 502%, or $24,758 above Medicare rates in Alabama.

The study data was limited to payments for services provided and billed by hospitals, with such costs as professional services billed by nonhospital medical providers, transactions for durable medical equipment and pharmaceuticals billed by providers other than hospitals, and payments made to ambulatory surgery centers excluded.

The study covers 36 large states that represent 88% of the workers comp benefits paid in the United States. The states 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.

This article was first published in Business Insurance.

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