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States without fee schedules for professional services in workers compensation pay prices 39% to 171% higher for these services than the median of study states with fee schedules in place, according to a report released Thursday.
In the Cambridge, Massachusetts-based Workers Compensation Research Institute’s new study, WCRI Medical Price Index for Workers Compensation, 11th Edition, the researchers examined prices of professional services in 36 states from 2008 to 2018. Professional services account for about 44% of workers compensation spend, according to the WCRI.
Seven of the states studied did not have fee schedules for professional services — which include evaluation and management, physical medicine, surgery, major radiology, minor radiology, neurological testing, pain management injections and emergency care — and those states typically reported higher costs in most professional services categories compared with states with a fee schedule in place, according to the study results.
The researchers found that medical prices in most states with no fee schedules grew faster than in states with fee schedules — the median growth rate among the non-fee schedule states was 34% from 2008 to 2018, compared with the typical growth rate of 6% among the fee schedule states.
Several states in the study have transitioned to fee schedules that tie workers comp payments to Medicare’s resource-based relative value scale, which has led to some increases and some decreases in professional services prices, WCRI reported. In 2014, California began its four-year transition to a Medicare RBRVS fee schedule for professional services, which has led to an increase in prices for office visits but a decrease in prices for major surgeries, pain management and emergency services. Prices for professional services between 2013 and 2017 increased by 14% in the state; but since then, California has had one of the lowest overall professional services comp spends among study states, and network participation in the state has increased to 93% from 85% during that same period, the researchers reported.
Colorado began tying its fee schedule for professional services to the Medicare RBRVS in January 2016 and saw prices increase by about 5% for office visits, but prices nearly doubled for minor radiology and neurological testing. However, major surgery prices dropped by 25%, and prices for emergency services were nearly cut in half in the state between 2016 and 2018.
Arizona, which followed Colorado’s lead in 2017, saw a similarly mixed bag of comp price changes, with costs for specialty care such as surgeries decreasing 12%, while prices for office visits increased 11% between 2017 and 2018.
North Carolina, which introduced a fee schedule in 2015 that set professional services prices at about 158% of 1995 Medicare values, saw prices for office and emergency visits increase “substantially” from 2014 to 2016, while prices for major surgeries, pain management injections, and neurological testing dropped; and in Virginia, which implemented a fee schedule in January 2018, comp costs for professional services decreased 14% in 2018 compared with 2017, according to the report.
“If you are a policymaker or other stakeholder and want to understand how medical prices in workers compensation in your state compared with other states, or how prices in your state changed over time, you would benefit from this study,” said Ramona Tanabe, WCRI’s executive vice president and counsel, in a statement. “If you are in one of the many states that implemented fee schedule changes recently or are considering such changes in the future, this study shows how certain policy initiatives impact medical prices.”
The 36 U.S. states studied, which represent about 88% of the workers compensation spend in the United States, include Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin.
North Carolina will lower payments to hospitals but increase payments to physicians treating workers compensation patients under medical fee schedule revisions.