New WCRI Study Helps Policymakers with Key Questions Involved In Designing a Medical Fee Schedule

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This WCRI report highlights some of the most important design choices that public officials face in adopting, reforming, and updating a fee schedule for physicians.

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If you are a policymaker considering adopting, reforming, or updating a medical fee schedule, this is the study for you. WCRI’s study provides you with detailed descriptions about each of the 43 fee schedule states and the District of Columbia."

As policymakers from across the country search for ways to contain rising medical costs, a tool that is often considered in workers’ compensation is a medical fee schedule.

Since the construction of a medical fee schedule involves a delicate balance of tradeoffs, the Workers Compensation Research Institute (WCRI) has released a new study to help policymakers who are looking to adopt, reform, or update the medical fee schedule in their state workers’ compensation system.

The study, Designing Workers’ Compensation Medical Fee Schedules, 2016, provides essential information on how each of the 43 states with workers’ compensation physician fee schedules and the District of Columbia resolved key fee schedule design decisions as of March 2016. These decisions often become the center of intense policy debates.

“If you are a policymaker considering adopting, reforming, or updating a medical fee schedule, this is the study for you. WCRI’s study provides you with detailed descriptions about each of the 43 fee schedule states and the District of Columbia,” said Dr. Olesya Fomenko, co-author of the study and economist at WCRI.

According to the study, the fee schedule level is very important. If fee schedule rates are set too high, savings will be negligible and the fee schedule will not achieve its cost containment goal. Conversely, setting rates too low makes treating injured workers uneconomical for providers and jeopardizes workers’ access to quality care.

“The study highlights some of the most important design choices that public officials face in adopting, reforming, and updating a fee schedule, such as what basis (e.g., Medicare relative value units [RVUs], historical or usual and customary charges) the fee schedule should rely on to establish rates for various services. The study also discusses a number of technical choices that all policymakers have to face,” said Ramona Tanabe, WCRI’s executive vice president and counsel.

Additionally, the state- and service group-level comparisons of the workers’ compensation fee schedules answer a common question that policymakers and stakeholders ask: “How does my state compare with other states?”
The following are among some other findings from the study:

  •     Seventy percent of fee schedule jurisdictions used Medicare RVUs as a benchmark to set their fee schedule.
  •     About one-quarter of the fee schedule states established their reimbursement rates for office visits near the Medicare level or below.
  •     In contrast, about 20 percent established their fees for major surgery at triple the Medicare rates or more in each state.
  •     In general, the difference between workers’ compensation and Medicare rates varied widely from 2 percent below in Massachusetts and Florida to 189 percent above in Alaska.
  •     Substantial variation in workers’ compensation fees across states cannot be explained by differences in provider expenses.

Other WCRI researchers involved in the study included Te-Chun Liu.

A copy of this study can be purchased on WCRI’s website at http://www.wcrinet.org/studies/public/books/fee_schedule_16_book.html.

ABOUT WCRI:

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Organized in 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods. Objectivity is further ensured through rigorous, unbiased peer review procedures. WCRI's diverse membership includes employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia, and New Zealand.

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Andrew Kenneally
Workers Compensation Research Institute - WCRI
since: 06/2011
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