Workers' Comp Reform

Fee Schedule Changes Likely to Create Price Differences

Fee schedule increases in California will impact payers significantly. However, it might help ensure access to care.
By: | December 8, 2014

“Large increases in office visit fee schedule rates under Senate Bill 863 will likely lead to substantial increases in prices paid in California,” according to a new analysis. “However, the reimbursement rule change regarding commonly billed report, record review, and consultation codes may moderate the potential increase in payments.”

The Workers Compensation Research Institute used findings from previous studies to estimate the potential impact of reform legislation on California’s workers’ comp system. Specifically, it targeted several fee schedule changes.

SB 863 was passed by the state Legislature in 2012 and took effect in January 2013. In addition to increasing some benefits to injured workers, it reduced ambulatory surgery center fees from 120 percent to 80 percent of Medicare hospital outpatient rates and mandated adoption of Medicare resource-based-relative-value-scale fee schedule for professional services.

The report discusses the potential implications of the fee schedule and price changes in California relative to other states. It found, for example, that the required decreases for surgery and ASC services “will likely result in a material decrease in the average payment for common knee surgeries done in ASC settings; this measure in California will likely become among the lowest of the study states after the change.”

One change eliminated separate reimbursements for a group of current procedural terminology codes. The CPT codes for reports, record review, and consultation had been the most frequently billed codes in California before the reforms.

“The potential effect of eliminating separate reimbursement for these codes on payments to physicians has become an active topic in recent policy debate in California,” the report said. “In this report, we illustrate the possible effect of the reimbursement rule change for these common codes on payments for evaluation and management services.”

Based on a series of assumptions, the study found “the estimated increase in payments for the common office visits would be 36 percent in 2014, and the estimated decrease in payments for the common report, record review, and consultation codes would be 69 percent. These offsetting changes would result in an approximately 8 percent increase in overall payments for evaluation and management services.”

Behavioral Changes

The report also looked at potential changes and access to care. Physician dispensing of medications tends to be “more prevalent in states with lower office visit prices,” the authors noted. In California, for 2011 claims with prescriptions filled through March 2012, 55 percent of prescription payments went to dispensing physicians.

“As the transition to RBRVS under S.B. 863 will likely lead to large increases in prices paid for common office visits, one may wonder if the prevalence of physician dispensing in California could change,” the report stated. “The practice of physician dispensing might not be particularly responsive to office visit price increases since the decision to engage in physician dispensing of prescriptions can be motivated by other factors.”

The reforms may also affect access to care, depending on whether prices are higher or lower than those from other payors.

On the one hand, higher workers’ compensation prices over group health might help to compensate for the potential hassle factor in workers’ compensation, and thus might help improve access to care, the authors speculate.

“On the other hand, some system participants suggested that the potential negative impact on physician payments from the elimination of separate reimbursement for report, record review, and consultation codes under many circumstances would be likely to adversely affect physicians’ decision-making regarding the services provided and whether to treat injured workers to a certain extent … especially for those physicians who billed those codes for a material portion of their overall payments for evaluation and management services. However, in terms of the whole system, the potential effect of the RBRVS transition would still likely result in an increase in overall payments and the average payment per event for evaluation and management services.”

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected].

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