Many payers look at ‘medical’ as a line item and nothing more. This myopia, this failure to look deeper, to try to understand what drives medical, is perhaps the most significant shortcoming in the industry.
Many readers will dismiss this criticism, claiming that they are different and smarter, that they know better.
And most will be wrong.
One current example provides compelling evidence of the industry’s ignorance of many things medical. I’ve posted on the pending changes to the Florida fee schedule, namely the move by the Three Member Panel to establish Medicare billed charges as the standard for Usual and Customary for facilities. That’s right, billed charges, not reimbursement. Yet many payers – self insured employers, insurers, and TPAs – are blissfully unaware of the damage this will do.
Here’s why hospital costs are important. According to the WCRI, hospital costs are rapidly accelerating for claims with more than 7 days lost time (which account for 83.5% of all workers’ compensation medical payout).
- Medical payment for NonHospital providers: up 3.8%
- All hospital medical payments: up 7.1%
- Inpatient hospital medical payments: up 12.1%
(Source, Stacy M. Eccelston et. al., The Anatomy of Workers’ Compensation Medical Costs, 6th Edition, 2007, WCRI).
In Florida, where hospital costs are about half of all medical expenses, this is particularly significant. In fact, two studies indicate the Panel’s proposed changes will dramatically increase hospital costs – by over $50 million annually. More troubling, the change will likely have the unintended consequence of shifting the location of care for many patients. With facility reimbursement becoming much more profitable, payers can expect to see many more bills for care delivered in hospitals, outpatient facilities, and ASCs. And they will be paying much more for that care.
Yet payers, in testimony before the Panel, seem to be completely ignorant of the impact of the proposed changes.
Here’s hoping payers wake up from their slumber – and soon. If not, many will have to explain to their clients why they didn’t act to prevent this disaster. Because it is preventable.
(for detailed information on this in the form of an extensive analysis, email infoAThealthstrategyassocDOTcom with Florida Hospital Reimbursement in the subject line)
