Billing changes negatively impact physician fee schedules
The proportion of workers' compensation medical costs that are subject to physician fee schedules is declining, which is eroding the effectiveness of the common cost-containment method, according to a recent study.
The report, issued by the National Council on Compensation Insurance, examined some aspects of the role that Medicare has played in workers' comp medical cost containment. Researchers said failures to account for changes to Medicare's methodology or for trends in how Medicare reimburses physicians in the various medical specialties are playing a role in reducing the effectiveness of fee schedules.
Medicare influences workers' comp medical cost containment because it pays a significant share of overall medical costs. As a result, Medicare reimbursement rates influence prices generally paid for medical services, including medical services for workers' comp. In addition, many states base their workers' comp medical fee schedules on the Medicare physician reimbursement schedule.
Among the highlights, NCCI researchers noted that:
- Fee schedules must react to ongoing Medicare changes. Researchers said that workers' comp fee schedules that reference the Medicare reimbursement formula must react appropriately to changes in Medicare methodology.
The report noted that some workers' compensation fee schedules have not been adjusted to account for changes in the relationships between Medicare reimbursements and prices paid by private payers or Medicare reimbursement relativities between service types. In some cases, this has allowed excessive reimbursements to specialists by workers' comp insurers, the report said.
- Fee schedules losing effectiveness. The proportion of workers' comp medical costs that are subject to physician fee schedules is declining with proportionally more billings by facilities, the study noted. To maintain the effectiveness of medical fee schedules, researchers said workers' comp might consider using Medicare billing approaches for hospital stays (Diagnosis Related Group) and ambulatory services (Ambulatory Payment Classification) but in doing so should adapt Medicare models to workers' comp priorities.
- Aging workforce is a concern. As the workforce ages, researchers said workers' comp should focus safety initiatives toward falls and hip injuries, and Medicare protocols should provide valuable insight into designing treatment guidelines.
- Medicare faces enormous demographic and fiscal challenges. The study concluded that workers' comp shares some of those challenges, and Medicare's response might offer suggestions to enhance workers' comp medical cost containment.
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February 11, 2010
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