While fee schedules can help control costs for medical care to injured workers, they are not the final answer, experts say. By closely examining the actual services provided and applying the proper reimbursement rates, companies can potentially save money.
"When companies load fee schedules into their systems and run the bills through, yes, they are losing money because they are not taking that extra step to do a manual comparison and side-by-side analysis from a clinical perspective to make sure what is being billed," said Erica Fichter, senior vice president of medical management for Broadspire. "There are a lot of opportunities for upcoding or unbundling of services where, if you are not paying attention, you could be paying well more than what you should be."
Broadspire, a third-party administrator, is among the companies that helps workers' comp payers ensure the medical costs they are paying are accurate. Navigating the world of medical schedules is daunting for many employers.
Fee schedule types. The majority of states use some type of medical fee schedule in their workers' comp system. There are physician -- medical -- fee schedules and hospital fee schedules, which deal with inpatient or outpatient services. Within the various types are many nuances. In a recent study of workers' comp hospital fee schedules in 20 states, the Workers Compensation Research Institute identified the following three:
- Fixed-amount fee schedules. These assign specific reimbursement amounts for each procedure or each group of procedures. Nine of the 20 states included in the study use this type of regulation, which were then categorized into several subgroups.
- Percent-of-charge based fee regulations. These base the fees on provider charges and allow a pre-specified percent of charges to be reimbursed. The states using this type of regulation set different reimbursement rates. Two of the states use elements of percent-of-charge based and per-procedure methods.
- Cost-to-charge ratio. One study state, Michigan, bases reimbursements on "appropriate charges multiplied by a hospital specific ratio for the date of service times 107 percent (when paying a properly submitted bill within 30 days) or 110 percent (when paying a properly submitted bill after 30 days)," according to the study.
Six of the 20 states studied had no medical fee schedule, although Connecticut "requires that hospitals are reimbursed at their actual cost; however, in reality, negotiations occur which may or may not result in actual costs being paid."
Despite the varying types of regulations, the issue of billing for medical services in the workers' comp system is far from clear cut. While the study showed states with no fee schedules are generally more costly than those with fixed amount fee schedules, those with percentage-of-charges regulations were nearly as costly as those with no fee schedules.
"While some methodologies seem to do a better job controlling cost inflation than others, all can be gamed," said Joseph Paduda, principal of Health Strategy Associates and author of the ManagedCareMatters blog.
The multitude of regulations surrounding fee schedules seem to be lost on many employers. "Employers have heard the term, but they don't ask, 'what is it and how does it apply to my account?'" said Rebecca Shafer, an attorney and president of Hartford, Conn.-based Amaxx Risk Solutions. "It's looking at medical costs and not knowing how to fix it."
The mistake many companies make is accepting fee schedules at face value. "A lot of people assume if a state has a fee schedule, then that's it. Stop right there. Problem solved," said Dr. Jacob Lazarovic, Broadspire's chief medical officer. "Anybody who implements or applies that fee schedule is just providing a commodity."
Getting the most out of fee schedules. The reimbursement rates are based on medical diagnostic codes such as the current procedural terminology code or diagnosis-related group code.
"CPT codes are used to pay for physician and some outpatient services, whereas the DRG coding methodology is used in many states for hospital payments and are often tied to the Centers for Medicare and Medicaid Services rates," Lazarovic said. "Both of these coding systems are subject to upcoding and unbundling, and that is the value-added benefit of clinical review."
For a typical visit to a physician's office, there are a series of CPT codes, ranging from lower to higher level. "We have the ability to impact that by reviewing the CPT codes against the medical records to make sure the provider is actually performing at the level of service that they are reimbursed at," Fichter said. "If the criteria that the CPT code mandates be done to get paid is not being met, we have the capability to reimburse it at a lower level because the provider has not met the criteria."
By Nancy Grover
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May 28, 2013
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