3/6/2015
Workers Compensation News | WorkCompCentral | ­ Workers Compensation Industry News, Tools, Education and Training
Back to News | Print News
State: Low Reimbursements, Price Freezes, Cuts Lead to "Perverse Effects," WCRI Says: Top [2015­03­06]
BOSTON – When it comes to workers’ compensation fee schedules, how low can you go?
If state regulators are limbo­ing lower than Medicare or group health reimbursement rates, the Workers
Compensation Research Institute suggested Thursday, they might be entering the danger zone with
respect to access to care. And cutting or freezing reimbursements in an effort to bring down costs often
comes with consequences.
In a presentation titled, “Perverse Effects of Low Fee Schedules,” WCRI researcher Rebecca Yang
looked at examples in several states of providers adjusting their behavior when faced with low
reimbursement levels, price cuts or price freezes in order to mitigate the damage to their revenue stream.
Yang’s presentation came at WCRI’s Annual Issues & Research Conference at the Westin Copley Place
hotel.
In the vast majority of states that use a physician fee schedule for workers’ compensation, rates are set at
30% or more above Medicare rates. Just a few states – such as California, Massachusetts and Florida –
have rates set near or below the Medicare level.
California adopted a new fee schedule effective Jan. 1, 2014, that sets prices at 120% of the Medicare
rate. Yang was referencing data from 2011 in her presentation.
With respect to group health, Yang highlighted a handful of states – including New York, North
Carolina, Oklahoma, Massachusetts and California – whose workers’ compensation prices paid for an
intermediate office visit were below group health prices in 2009. WCRI noted that from that year until
2012, New York and Oklahoma both implemented a double­digit fee schedule increase for that office­
visit code.
“One has to wonder whether the … rates in those states might be too low, and whether this will (cause)
an access to care concern,” she said.
The thinking holds that if reimbursements are too low, and a health care provider’s required time and
expenses for treating a workers’ compensation patient are the same as those for a Medicare or group
health patient, providers may not provide timely treatment to an injured worker.
“If the provider’s time or expenses for treating a workers’ comp patient is higher than treating a group
health or Medicare patient … then there may be even more concerns about access to care for injured
workers,” Yang said.
States with lower average prices paid for common office visits typically have more frequent billing of
complex office visits and more prevalent physician dispensing, according to WCRI’s research. Recent
https://ww3.workcompcentral.com/news/print/id/298ae8c81065ecd9090b3903586eb972ecd0b4fe
1/2
3/6/2015
Workers Compensation News | WorkCompCentral | ­ Workers Compensation Industry News, Tools, Education and Training
WCRI studies pegged California and Florida as states with low average prices per common office visit
and more frequent billing of complex office visits, as well as a higher percentage of physician­dispensed
prescriptions.
The same phenomenon – providers making offsetting adjustments – often occurs when states freeze or
lower their fee schedule rates, WCRI research shows. For example, during a three­year price freeze in
California during the mid­2000s, Yang showed, providers coded an increasing number of office
evaluation and management visits as more complex – and expensive – Level 4 or Level 5 office visits.
When the fee schedule freeze was ended in 2007, the upcoding stopped, only to start again once the state
refroze prices. In 2012, Level 4 and 5 office visits comprised about 65% of established visits.
Reforms in Florida in 2003, which reduced reimbursement rates for many hospital outpatient services,
showed how cutting prices can also result in offsetting provider behavior. The 2003 reforms changed the
rate for outpatient physical medicine services from 75% of billed charges to 110% of the Medicare rate.
From 2003 to 2012, the share of claims with physical medicine services in a hospital outpatient setting
fell 10 percentage points.
Yang said that raised the question of whether workers were having a more difficult time obtaining
physical medicine services.
“The answer is 'no',” Yang said. “What happens is, the workers change the site of services.”
During the same time period, nonhospital providers saw a 9­percentage­point increase in claims with
physical medicine services.
Barry Lipton, practice leader and senior actuary for the National Council on Compensation Insurance,
gave his own presentation before Yang’s on Thursday, entitled, “Price and Impact of Workers’
Compensation Fee Schedules.” When both had finished their presentations, the pair took questions from
the audience.
David Lang, a representative of the International Association of Firefighters, asked Lipton and Yang
why no study has been done specifically to find out “what fee schedule is the perfect recipe between the
provider and the payer, and what indemnity costs (create) the perfect recipe together” to benefit
everyone affected by a fee schedule.
“I guess I would say that there is no perfect fee schedule,” Lipton said. “A fee schedule concept is a
maximum price. The fundamental issue is to align the financial and other interests of the injured worker
with all the other stakeholders.”
The WCRI conference concludes today.
https://ww3.workcompcentral.com/news/print/id/298ae8c81065ecd9090b3903586eb972ecd0b4fe
2/2