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In the report, the National Council on Compensation Insurance used experience from group health coverage as a natural measure to assess the effectiveness of workers' comp fee schedules. In addition, the fee schedule promulgated by Medicare provided another useful comparison, NCCI said.

Researchers found that the proportion of workers' comp medical costs that were covered by physician fee schedules in states where NCCI provides ratemaking services declined from about 58 percent in 2001 to about 53 percent in 2006. According to the study, two major factors contributed to this decline. First, the study found that prices for services not covered by the state workers' comp physician fee schedule generally increased at a faster rate than prices for services covered by the physician fee schedule, so the proportion of total costs for services not covered by the fee schedule increased. Secondly, researchers noted that in general health care, and in workers' comp, there has been a shift to a greater proportion of medical services being provided by hospitals and other facilities and a lower proportion by private physicians.

• Higher priced services were used more in workers' comp. For comparable injuries, researchers found that when workers' comp pays higher prices than group health for specific services, those services tend to be used more often in comp than in group health.
• Medicare fee schedule has notable shortcomings for comp. According to the study, the Medicare fee schedule is very useful as a starting point for the design of workers' comp medical fee schedules. However, researchers said the Medicare fee schedule has notable shortcomings for workers' comp, including too little emphasis on return to function and too little sensitivity to cost differences among states.
• Fee schedules can yield high reimbursement rates in comp. Particularly in specialty areas such as surgery and radiology, NCCI researchers noted that fee schedules can result in workers' comp reimbursement rates that are especially high when compared with group health.
• Many payments are greater than or less than maximum allowable rate. While fee schedules tend to concentrate reimbursements at the maximum allowable rate, researchers found that there are many payments that are either greater than or less than the maximum allowable rate.
• Reimbursement at hospitals more often exceeds the fee schedule. The study noted that reimbursement for care that physicians provide at hospitals and other facilities is more likely to exceed the fee schedule than care provided in their offices. Researchers said this is partly because the fee schedule does not always apply when facilities bill for these services.
• Reimbursements more likely at or below schedule when services are provided through network. The study found that a higher proportion of reimbursements are at or below the fee schedule when workers' comp medical services are provided through a network, as opposed to when they are not.

While the main thrust of the study was the use of workers' comp and group health medical experience to investigate the effectiveness of comp medical fee schedules, the study also examined the design, implementation and maintenance of comp medical fee schedules; the competing requirements to ensure access to medical care while controlling utilization of medical services; and the challenges posed by a rapidly changing environment in the delivery of medical care, including a growing use of ambulatory surgical centers and specialists in hospital care.

March 23, 2009

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