Fee Schedule Changes Likely to Create Price Differences
“Large increases in office visit fee schedule rates under Senate Bill 863 will likely lead to substantial increases in prices paid in California,” according to a new analysis. “However, the reimbursement rule change regarding commonly billed report, record review, and consultation codes may moderate the potential increase in payments.”
The Workers Compensation Research Institute used findings from previous studies to estimate the potential impact of reform legislation on California’s workers’ comp system. Specifically, it targeted several fee schedule changes.
SB 863 was passed by the state Legislature in 2012 and took effect in January 2013. In addition to increasing some benefits to injured workers, it reduced ambulatory surgery center fees from 120 percent to 80 percent of Medicare hospital outpatient rates and mandated adoption of Medicare resource-based-relative-value-scale fee schedule for professional services.
The report discusses the potential implications of the fee schedule and price changes in California relative to other states. It found, for example, that the required decreases for surgery and ASC services “will likely result in a material decrease in the average payment for common knee surgeries done in ASC settings; this measure in California will likely become among the lowest of the study states after the change.”
One change eliminated separate reimbursements for a group of current procedural terminology codes. The CPT codes for reports, record review, and consultation had been the most frequently billed codes in California before the reforms.
“The potential effect of eliminating separate reimbursement for these codes on payments to physicians has become an active topic in recent policy debate in California,” the report said. “In this report, we illustrate the possible effect of the reimbursement rule change for these common codes on payments for evaluation and management services.”
Based on a series of assumptions, the study found “the estimated increase in payments for the common office visits would be 36 percent in 2014, and the estimated decrease in payments for the common report, record review, and consultation codes would be 69 percent. These offsetting changes would result in an approximately 8 percent increase in overall payments for evaluation and management services.”
The report also looked at potential changes and access to care. Physician dispensing of medications tends to be “more prevalent in states with lower office visit prices,” the authors noted. In California, for 2011 claims with prescriptions filled through March 2012, 55 percent of prescription payments went to dispensing physicians.
“As the transition to RBRVS under S.B. 863 will likely lead to large increases in prices paid for common office visits, one may wonder if the prevalence of physician dispensing in California could change,” the report stated. “The practice of physician dispensing might not be particularly responsive to office visit price increases since the decision to engage in physician dispensing of prescriptions can be motivated by other factors.”
The reforms may also affect access to care, depending on whether prices are higher or lower than those from other payors.
On the one hand, higher workers’ compensation prices over group health might help to compensate for the potential hassle factor in workers’ compensation, and thus might help improve access to care, the authors speculate.
“On the other hand, some system participants suggested that the potential negative impact on physician payments from the elimination of separate reimbursement for report, record review, and consultation codes under many circumstances would be likely to adversely affect physicians’ decision-making regarding the services provided and whether to treat injured workers to a certain extent … especially for those physicians who billed those codes for a material portion of their overall payments for evaluation and management services. However, in terms of the whole system, the potential effect of the RBRVS transition would still likely result in an increase in overall payments and the average payment per event for evaluation and management services.”
Study: Aggressive Beats Conservative Care for Best Outcomes
Shorter claim durations, lower indemnity costs, and less litigation may result from early, aggressive care of injured workers. Those are the results of a pilot study on clinical practice guidelines, according to Harbor Health Systems.
While proponents say guidelines allow for a reduction in health care variation and lead to enhanced value and improved patient care, critics say they may impede innovation and promote “cookbook” medicine. The study compared claims that received aggressive care where the date of surgery was prior to the recommendations of clinical practice guidelines with conservative care where the date of surgery was beyond the guideline recommendations.
“The findings show that when knowledgeable and experienced physicians were allowed to perform some common specific surgical procedures prior to the recommendations of the guidelines, the outcomes improved,” according to the newly released white paper. “These results demonstrate the importance of integrating best-in-class physicians with the use of evidence-based guidelines, and validate the importance of outcomes-based networks by supporting the concept of working with experienced, proven providers and accelerating care when there is a trusted diagnosis.”
The study included data from more than 700,000 claims with a date of injury between January 2010 and June 30, 2012, from one of four common procedures: ACL repair, knee menisectomy, shoulder rotator cuff repair, and carpal tunnel injuries. The researchers used the Official Disability Guidelines from the Work Loss Data Institute as a reference point to separate the claims into aggressive or conservative care.
“Within the workers’ compensation industry in the United States, the Official Disability Guidelines are commonly used to assess the appropriateness of requested medical care. These guidelines typically outline a progressive course of treatment based on the diagnosis of the patient,” the paper states. “The purpose of this study is to investigate whether allowing some common specific surgical procedures to be performed prior to the guideline recommendation would impact the outcome of the case.”
To determine the outcome of a case, the authors considered the cost of the claim, number of disability days, and claim duration. According to the authors, the more aggressive approach achieved the following results:
- Reductions in claim duration from 13-20 percent.
- Reductions in indemnity costs from 19-61 percent.
- Reductions in litigation from 7.2-16 percent.
“In all of the procedures studied, there is a statistically significant shorter time in the study group (aggressive care) versus the control group (conservative care) with regard to the interval between the date of injury and date of surgery,” according to the report. “Therefore, the premise of this paper is validated as this parameter confirmed the validity of the cohorts.”
There was also a noticeable different in the litigation rates with a “remarkably lower litigation rate in the study group compared to the control group,” the paper said. “Perhaps a perceived delay of care led to the higher litigation rate in the control group, or by virtue of the litigation and perhaps change of treating physicians, the surgery was delayed in the control group.”
Long Term, Younger Injured Workers Cost More
The increased percentage of quadriplegics and paraplegics and a higher use of narcotics may explain cost differences between younger and older long-term injured workers. A new report says a comparison of injured workers 20 to 30 years after an injury shows younger workers have higher medical expenses.
NCCI looked at late-term costs for claims of injured workers younger than 60 and older than 60 during the period 2011 to 2012. It showed that while the younger group had a smaller share of claims, they had a larger share of late-term costs.
“This indicates that annual medical cost per claim is larger for the younger cohort,” the report said. “Having only 45 percent of the claims but 57 percent of the cost, the younger cohort costs approximately 60 percent more per year per claim to treat than the older cohort.”
The younger workers averaged 14 more late-term medical care services per claim compared to the older workers. Also explaining some of the cost difference was the mix of injuries.
“A noticeable difference between age cohorts exists for quadriplegic and paraplegic claims,” the report said. “The share of quadriplegic and paraplegic claims for the younger cohort is more than three times the share of quadriplegic and paraplegic claims for the older cohort.”
The increased share of such injuries among younger injured workers may be explained by life expectancies. The report noted that life expectancies for persons with spinal cord injuries are “significantly shorter” than for those without, meaning the share of persons with such injuries would decline with age.
Prescription drug costs also played a role in the cost differences. The percentage of medical costs of a claim typically increases the longer a claim lasts because the emphasis may be more on relieving pain than curing the injury. However, “even after accounting for mix of injuries being treated, the younger cohort’s average annual prescription drug cost per claim is $1,000 higher,” the report explained. “This suggests that regardless of the type of injury, the younger cohort is either: prescribed more drugs, prescribed more expensive drugs, or some combination of the two.”
While both cohorts have eight of the top drugs in common, “eight of the top drugs for the younger cohort are narcotics while only four of the top drugs for the older cohort are narcotics,” according to the report. “The narcotics share of drug costs generally decreases with claimant age. It follows that the narcotics share of drug costs is larger for the younger cohort than for the older cohort.”