That’s the conclusion I reached after reviewing WCRI’s latest treasure trove of research on medical prices paid for professional services in workers’ comp. [report is free to download] Sure utilization is a very important driver, but the biggest difference in medical costs across states is price.

Rebecca Yang PhD and Olesya Fomenko PhD  have outdone themselves with this edition, cementing their reputation as two of the most knowledgeable experts in the nation on medical costs in workers’ comp.

Kudos to WCRI for including data from the first half of 2020 in their report…the fine folk in Boston have done a great job speeding up data collection and analysis to the point where we have data that is less than a year old. This is helpful indeed for anyone trying to understand what’s happening and why and what to do about it.

Takeaways…

• Wisconsin’s professional services (MD, PT, etc) are darned expensive. WI has a very provider-friendly
  
• While prices paid in non-FS [fee schedule] states generally increased more than in FS states, NJ is an exception. WCRI noted that NJ saw a pretty significant increase in network penetration during the study period; I’d suggest NJ’s employer direction laws directly contributed to lower price increases.
  
• Network participation varies widely, and generally the more the growth in network penetration, the lower the increase in prices paid.  However, in some cases (PA), it doesn’t.
  
• Finally, there’s a VERY useful chart on p 39 providing network penetration rates for each of the 36 states studied. 

What does this mean for you?

This is extremely useful information, with many nuggets buried in the 190 page report.  IF you aren’t a WCRI member – join now!

Perhaps the most practical presentation at this year’s WCRI conference focused on outpatient facility costs. While the content itself was excellent, what was more valuable were the implications for medical spend management.

Rebecca Yang PhD provided a wealth of information about outpatient fee schedules, Medicare reimbursement, and the impact of Medicare’s changes on workers’ comp fee schedules. Note that as the slides indicate, findings are preliminary so subject to change.

First, the findings.

Dr Yang noted that outpatient hospital and Ambulatory Surgical Center costs  [outpatient costs] represent about 15% of total medical spend across the 18 study states, with Louisiana the outlier at 28% of spend.

There are lots of different ways to manage spend via fee schedules; one can base reimbursement on a fixed amount, % of charges, cost to charge, Medicare or some hybrid mechanism.

All have strengths and weaknesses, issues and challenges, but – with one very big exception – in general it is better to have a fee schedule than not – except when the fee schedule is easily gamed (we’re looking at you, Florida).

That exception is cost-to-charge, a term describing the ratio between a hospital’s expenses and what they charge. As we’ve discussed here ad nauseam, all hospitals in C-t-C states have to do to make bank is jack up their charges. 

I won’t dive deep into details about how Medicare’s changes to reimbursement affect workers’ comp except to note that when the dog wags the tail, the flea on the end (that’s workers’ comp) gets whipped about.

Okay, maybe a little detail…

The Peach State adopted Medicare as the basis for the WC FS back in 2013.  Essentially, the change followed Medicare FS changes, except excluded device reimbursement and (if I heard this right) some associated charges.

Medicare made changes to its reimbursement in 2016 and 2017 which drove  reimbursement declines for some knee surgeries; others were unaffected.

The point of this is to note that basing a fee schedule on a third party’s reimbursement demands payers really deeply fully understand the underlying third party’s reimbursement policies, practices, requirements and nuances.

Most workers’ comp entities don’t. The result is they are unable to ensure medical bills and accompanying documents support reimbursement – or don’t. Far too often, bill review entities just assume everything is in order (if the surgery was pre-approved) and authorize payment for all billed services. Reality is it’s pretty common that some of those billed services should have been bundled into the overall surgical fee.

What does this mean for you?

This isn’t unique to Georgia, or knee surgeries. If your BR operation doesn’t know this stuff at a granular level, you’re probably overypaying. 

(WCRI published an excellent summary of outpatient reimbursement and drivers last year).

Oh, and don’t forget my annual Aril Fool’s post is coming up Thursday. Don’t be fooled!

To hear hospital lobbyists talk, you’d think Florida’s taxpayers and employers should subsidize hospital losses by paying exorbitant amounts for hospital care.

Yesterday’s virtual meeting of the State’s Three Member Panel (TMP) featured several hospital lobbyists and officials waxing poetic over proposed changes to workers’ comp facility reimbursement, citing the changes’ “fairness”, describing the TMP’s proposal as a “win-win” and the proposed changes as “reasonable”.

Ha.

After Hoovering hundreds of millions out of taxpayers’ and employers’ wallets for years, some hospitals want to continue forcing those taxpayers and employers to pay rates that are often 8 to 12 times what Medicare pays.  They cited an NCCI analysis that purported to show big system savings.

Unfortunately the analysis itself appears to be a state secret as it hasn’t been shared…so no one except NCCI and the Three Member Panel know what data was used, what time period it covered, the methodology employed, or anything else. That’s unfair to NCCI and to every stakeholder, unwise politically, and unhelpful as parties who like the finding can’t cite specifics, and parties that don’t like it can dismiss it outright.

What these hospital advocates didn’t discuss was the basic unfairness of Florida’s work comp physician reimbursement. WCRI data indicates the State’s docs, PTs, OTs, chiros, and other clinicians get paid less than their colleagues in every other state in WCRI’s report. The changes proposed by the TMP would increase providers’ reimbursement by a whopping 0.9%.

As WorkCompCentral’s Will Rabb reported in an excellent summary of the call,  the TMP is somewhat limited by statute, a challenge noted several times by Ass’t Director, Dept of Workers’ Comp Andrew Sabolic. However, Mr Sabolic’s words to the effect that it isn’t possible to define or determine “reasonable” (a statutory criterion for determining reimbursement) are puzzling. I’d suggest an analogy might be helpful (wish I’d thought of this while testifying on the call yesterday…)

Think of it this way; you pull into a gas station – which doesn’t post gas prices – in your personal car, fill up, and only after you’re done do you find out what you have to pay.

If you pulled into an HCA station, you’re going to pay about 8 times what the driver in front of you who filled up their government-issue car pays.

Under the per-diem plus outlier scheme that is kind of/sort of in place today (although many payers are basing reimbursement on a Court ruling essentially eliminating outlier payments) HCA – and some other mostly for-profit hospitals and health systems – get paid 8+ times Medicare rates.  And that was based on data from 2016; I’d suggest that it is highly likely you are paying even more today.

By any “reasonable” definition that is wildly “unreasonable”.

(A detailed discussion of this is here and here is an excellent report by Johns Hopkins researchers on Florida facility costs (non-subscribers to HealthAffairs have to buy it, but the summary is free)

I won’t get into the bizarre multiplier scheme proposal; suffice it to say that it is unique, hasn’t been used in any other state, is not based at all on what it actually costs a hospital to deliver services, and is completely game-able; any hospital can increase their reimbursement by a factor of 5 just by increasing their charges.

I will note that many hospitals don’t wildly overcharge work comp payers; many – but not all – not for profit facilities get paid less than 3 times Medicare.

What does this mean for you?

How is this “reasonable”?

If you want more info on why some hospitals are supporting this scheme, see here.

The TMP will meet December 17 to discuss implementing the changes; you can register here.