Outpatient hospital payments are higher and growing at a faster rate in states without fee schedules, according to a study released Tuesday from the Workers Compensation Research Institute.
Researchers at the Cambridge, Massachusetts-based WCRI compared hospital payments from a group of common workers comp outpatient surgeries in 36 states from 2005 to 2018, finding that states that paid a percentage of charge versus a fixed-amount fee schedule also paid as much as 168% more per surgical episode than the median of study states with flat-rate fee schedules in 2018.
The study compared workers compensation hospital outpatient payments with Medicare rates, since a number of states use Medicare rates as a benchmark for setting workers comp fee schedules. The researchers found wide variation in the average workers compensation payments and Medicare for various procedures, with comp payments as low as 42% below Medicare for some surgeries in Nevada and as high as 365% above Medicare for certain procedures in Alabama.
In states that pay a percentage of charge under their workers comp fee schedules, payments for common surgical procedures were 233% to 365% higher than Medicare outpatient hospital rates, and hospital outpatient payments per surgical episode grew in many states with that percentage-of-charge-based fee schedule.
In states without fee schedules, hospital outpatient payments per episode grew between 30% and 60%, but payments for episodes in states with fixed-amount fee schedules decreased about 2% collectively during that same time period.
In the 21 states classified as having fixed-amount fee schedules, only three states — Illinois, Florida and Minnesota — saw significantly higher hospital outpatient payments per episode. The researchers noted that Florida and Illinois set their fee schedule rates based on frozen historical hospital charges.
Fixed-amount fee schedule states that did not experience any substantial changes to schedule regulations over the study period saw little growth in workers comp payments for common outpatient surgeries. Changes in payments for outpatient surgeries between 2011 and 2018 in those states ranged from -8% to 4%.
The four states with cost-to-charge ratio fee schedules — Kentucky, Michigan, New Mexico and Oregon — saw hospital payments similar to those paid in fixed-amount fee schedules, according to the study.
The study excluded payments for professional services billed by nonhospital medical providers, transactions for nonhospital provided medical equipment and pharmaceuticals and payments made to ambulatory surgery centers.
The states evaluated in the study include 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 by Business Insurance.