NCCI has released a new research study, The Impact on Physician Reimbursement of Changes to Workers Compensation Medical Fee Schedules that examines examples of how workers compensation medical payments responded to state fee schedule changes for particular services.
NCCI’s Summary of the report:
Medical costs are more than 50% of workers compensation (WC) costs in most states. An important medical cost-control mechanism in many states is the physician fee schedule, which specifies maximum allowable reimbursements for specific medical services provided to treat WC claimants. Most states use such fee schedules to regulate payments to doctors and there is a substantial body of research to document that fee schedules are effective in controlling WC medical costs.
Because WC physician fee schedules set a maximum reimbursement amount, actual payments for services are often less than the fee schedule amount. The relationship between the fee schedule amount and the market price for the medical service can affect the degree to which WC payments are at the fee schedule amount versus the degree to which they are below that amount. If the WC maximum fee for a medical service is significantly higher than the market price, then the average WC reimbursement could be below the fee schedule. On the other hand, if the WC fee schedule amount is close to or even below what is usually paid in general healthcare, then one might expect most WC reimbursements to be at the fee schedule amount.
Because WC reimbursements for medical services are not necessarily at the fee schedule amount, changes in WC reimbursements are not always strictly proportional to fee schedule changes. When a state fee schedule is changed for a specific service, the percentage change in WC reimbursements for that service can be similar to, smaller than, or even larger than the percentage change in the fee schedule. This study looks at some examples of how WC medical payments responded to a few state fee schedule changes for particular services. The study does not look at overall changes in WC medical costs. Nor do we try to draw any general conclusions that would apply to arbitrary fee schedule changes.
Although many factors can affect particular WC price changes, the study supports a few general findings:
- The change in average WC reimbursements resulting from a change in a state physician fee schedule for a given service depends heavily on the relationship between the fee schedule and the market prices for the medical services
- WC fee schedules are more effective at controlling the cost of high-volume low-priced procedures than low-volume high-priced procedures
- The impact of increasing a WC fee schedule maximum reimbursement is not simply the reverse of decreasing the scheduled amount
The full report is available here (PDF).