Insight, analysis & opinion from Joe Paduda


Where were the payers in Florida?

The ongoing battle over the work comp hospital fee schedule in Florida continues, as challenges have been filed by two hospitals, the Florida Hospital Association, and FairPay Solutions that prevent implementation of a dramatic revision to existing fees pending further action by an administrative law court.
According to Mike Whitely’s piece in WCC, the suits, reported this morning in WorkCompCentral (sub req) allege that the FL Department of Workers Compensation

“DWC exceeded its rule-making authority and strayed into the legislative realm by abandoning the usual-and-customary charge system.
Florida Statute Section 440.13 gives the final authority for setting workers’ compensation medical fees to the state’s Three-Member Panel. But it specifies that all outpatient fees are to be paid at 75% of usual and customary charges, except as otherwise provided by state law. The statute separately sets the payment for outpatient surgeries at 60% of charges.
FHA and FairPay argue in the filings the proposed fee plan “enlarges, modifies and contravenes” the law by shifting to a Medicare multiple fee schedule.”

Fortunately for employers and insurers in the Sunshine State, the actions of FairPay and the hospitals will save them from much higher hospital costs, costs that the payers have done nothing to address.

I’m bewildered as to why payers – insurers, employers, TPAs, self-insured groups – have not vociferously protested the proposed changes. As I’ve noted repeatedly, the proposed changes will dramatically increase medical costs in Florida’s work comp system with no concomitant increase in value, return to work effectiveness, quality of care, or reduction in total claim cost or duration of disability.
No, this is nothing more than a giveaway to hospitals, a big increase in their income from treating workers comp patients. Here’s how work comp payers are going to be harmed by the proposed changes.
First, this methodology means work comp will pay 174% of Medicare for surgeries and 395% for other hospital outpatient services. Does anyone, at any payer, think that it is reasonable for them to pay hospitals four times more than Medicare does?
Second, the location of services will likely change dramatically to the higher cost hospital location. Thus procedures which were being done in offices will now be billed – at the much higher rates – by hospitals.
Yet not a single payer filed a protest that would have delayed the implementation of this onerous and costly regulatory change.
Not one.
What does this mean for you?
Who’s looking out for your interests?

3 thoughts on “Where were the payers in Florida?”

  1. I would question the motives of those challenging the rulemaking authority of the DWC. I am sure that hospitals would not be challenging a change that would provide them with additional revenue and more services.
    For Fairpay, they themselves reveal the motive stating “FairPay, which reviews medical billings, also argues the fee schedule will cause it “great economic harm” and a loss of research money devoted to establishing the usual-and-customary fee data.
    this is most likely the reason payers are not “paying attention”. the general feeling is that this is and will be a cost neutral event that will only add stability to charges across the state where their are currently wide variations between hospitals for like services.

  2. GW – Having worked with hospitals extensively in FL, in my experience the finance and managed care contracting staffs aren’t all that aware of the nuances and impact of the WC FS. They like what they have today – a payer providing wildly profitable rates, and are reacting to the unknown more than anything. I’m pretty familiar with FairPay, having introduced them to several clients over the past few years, and to my knowledge they have little business in Florida today due to the very tight reporting timeframes that few payers can meet.
    My sense is this is more of an issue of the three member panel overstepping its authority (in the eyes of the protesters) than a concern about the reimbursement change. Both FPS and the hospitals are focused on the TMP’s jurisdiction in their filings; if the TMP succeeds in getting this thru, the panel may be able to make more changes unilaterally.
    I agree that payers just want stability, unfortunately it will be stability at a much higher cost.

  3. I have no personal knowledge of the situation in Florida, but in Texas, most workers’ comp outpatient procedures are surgeries and 174% of Medicare would in most instances be less than 60% of charges. Thus, hospitals may be concerned about a loss in revenue as well as the precedent. If a statute really grants the hospitals a fee of 60% of charges, the hospitals will fight to the death to keep that because it is a license to print money. If a state agency can change the basis of the outpatient fee to Medicare, the percentage can be reduced later.

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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