Market Factors Drive Workers' Compensation Reimbursement

Changes in a state workers’ compensation fee schedule for a specific service do not necessarily stabilize the percentage of change in provider reimbursement, according to a new study from the National Council on Compensation Insurance (NCCI).

The Impact on Physician Reimbursement of Changes to Workers’ Compensation Medical Fee Schedules compares distributions of group health payments to workers’ compensation reimbursement in 2002 and 2006. The six CPT codes featured in the study illustrate the effect of certain special circumstances and outside influences on workers’ compensation medical reimbursement.

Among the findings:

• The change in average workers’ compensation reimbursement resulting from a change in a state physician fee schedule for a given service depends heavily on the relationship between the fee schedule and actual market prices.
• Workers’ compensation fee schedules are more effective at controlling the cost of high-volume, low-priced procedures than low-volume, high-priced procedures.
• The impact of increasing a workers’ compensation fee schedule maximum reimbursement is not simply the reverse of decreasing the scheduled amount.
• The lag time for providers to respond may depend on the relationship between the current fee and prices paid by group health and the timing of provider network contract renewal.
• Who performs the procedure and who bills for it—whether a single physician, multiple providers, or a hospital or other facility—can influence the reimbursement pattern and whether a fee schedule applies.
• Some medical treatments are performed several times, and some are reimbursed on a time basis rather than on a per-service basis.

For those of you who wish to delve deeper, group health is compared to workers’ compensation experience in the following state studies:

• Alabama—Emergency Department visits (CPT Code 99283)
• Florida—Carpal tunnel surgery (CPT Code 64721)
• Georgia—Burn treatment (CPT Code 16020)
• Kentucky—Established office visit (CPT Code 99213)
• Maryland—Therapeutic exercise (CPT Code 97110)
• Oregon—Shoulder X-ray (CPT Code 73030)

The NCCI notes that with the advent of more complex billing methods, such as Medicare’s Ambulatory Payment Classifications and Diagnosis-Related Groups, the task of building and maintaining workers’ compensation medical fee schedules is becoming more challenging. “These billing schemes and other reforms, such as treatment protocols, are meant to address utilization of services as well as prices. To meet the challenges these pose to monitoring, estimating and ultimately controlling workers’ compensation medical costs, it is important to make optimal use of information that reflects the entire medical marketplace," NCCI researchers conclude.