Florida: Medical costs driven by increase in payments per service, report finds

Medical costs per workers' compensation claim in Florida have grown in recent years after stabilizing following the enactment of comprehensive reforms in 2003, according to a study.

The report by the Workers Compensation Research Institute found that medical costs per claim grew at a rate of 5 to 7 percent annually in 2005 and 2006 after slowing for a period immediately following the reforms. The legislation affected many aspects of the workers' comp system in the state, including a change in fee schedule rates.

The study, Monitoring the Impact of 2003 Reforms in Florida: CompScope^TM Medical Benchmarks, 9th Edition, analyzed claims with experience as of March 2007. Researchers found that the 5 percent growth in medical costs per claim in the most recent study year 2006 was mainly driven by the significant increases in the average payment per service for hospital outpatient services. Previously in 2004, the average payment per service for most hospital outpatient services decreased at double-digit rates.

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Researchers pointed out that changes in the fee schedule rates for most hospital outpatient services in 2004 and the corresponding adjustment of the parties in the system -- providers, injured workers, and payors -- may be related to the decrease in 2004 and the increase in 2006. In November 2008, Florida's three-member panel that determines changes to the state's fee schedule approved a new schedule for hospital outpatient charges that adjusts the Medicare-based fees by a hospital's usual and customary charges. WCRI officials said future research of Florida's comp system will monitor the impact of this change on medical costs.

Report highlights. Among the highlights of the study, researchers found that:

Prices for surgeries decreased after increasing post-reform. The study reported that prices paid for surgeries decreased 9 percent in 2006 after jumping in the prior two years following the fee schedule increase in 2004. Because of the decrease, researchers said the prices paid in 2006 for many of the most commonly billed surgeries -- especially arthroscopic surgeries -- were closer to the fee schedule rates, although still higher.
The study also noted that prior to the reforms, the prices paid for surgeries in the state were often negotiated at much higher levels than the fee schedule rates, which were among the lowest nationwide.
Physical medicine services drove increases in 2005. The study also noted that in 2005, medical costs per claim grew 7 percent in Florida. A main driver of that growth was the increases in prices paid for physical medicine services provided by chiropractors and physical/occupational therapists, which researchers said may be tied to the fee schedule increases in May 2005.
The 2003 reforms also increased the maximum number of visits allowed for chiropractor care. The average number of visits per claim to chiropractors had a small increase (from 12 to 13 visits) from 2003 to 2004, and then fell to 11 visits in 2005 and 2006. Compared to other states in the study, researchers said the average number of visits per claim to chiropractors in Florida was fairly typical. However, chiropractors were involved in fewer claims in Florida than in most other states.

Read more at the WORKERSCOMP Forum^TM homepage.

November 30, 2009

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