Medical Management

Fee Schedules Stabilize Surgery Center Costs

Significant interstate differences in payments to ambulatory surgery centers are tied to the way states regulate those payments.
By: | August 7, 2014 • 3 min read

An average rotator cuff surgery for an injured worker in New York may cost $9,000 less than it does in neighboring Connecticut. That’s one of the findings of a new report that looks at average payments for ambulatory surgery centers.

The explosion of ASCs in recent years has attracted the attention of the Workers Compensation Research Institute. The Massachusetts-based organization released studies comparing surgical costs at ASCs in 23 states, and the ASC payments compared to outpatient hospital costs for similar surgeries.

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Many of the findings came down to how states regulate payments. “Large interstate differences in ASC payments per surgical episode were mainly due to the presence and nature of the fee schedules,” the researchers wrote. For example, the average knee arthroscopy in states without a fee schedule was $6,012 — nearly double the $3,148 average payment in states with fixed amount fee schedules.

“The difference between some neighboring states is startling,” the report said. “Payments for ASC surgeries in Connecticut were four times those in New York for knee surgeries and at least five times those for shoulder surgeries. Similarly, ASC payments in Virginia were three and a half times those in Maryland for knee surgeries and two and a half times those for shoulder surgeries.”

There were also payment differences for the same surgeries performed within states, especially those without fixed amount fee schedules. “For instance, a quarter of knee surgeries in Virginia had ASC facility payments under $3,243,” the authors found. “Another quarter of similar knee surgeries in Virginia had facility payments over $7,488. Similarly, a quarter of knee surgeries in New Jersey had ASC facility payments under $3,012 while another quarter of similar knee surgeries in the state had ASC payments over $8,637.”

The second study looked at the payments of similar surgeries performed in ASCs and hospital outpatient departments. Again, the difference in fee schedule regulations may have contributed to differences in the payments.

“The conventional wisdom has been that ASCs are less expensive venues for payors than hospital outpatient departments for common outpatient surgeries. We found support for this in many states,” the report said. “Exceptions were Connecticut, where ASC surgeries were more expensive than hospital outpatient surgeries for all surgery types examined in this study, and to a lesser degree, Georgia, New Jersey, North Carolina and Tennessee, where ASC surgeries were more expensive than hospital outpatient surgeries for some of the surgery types.”

States have different methods to determine payments for surgeries in the two types of facilities, the authors explained. For example, some states set ASC fee schedule rates lower than hospital outpatient fee schedule rates. That contributed to lower ASC surgical payments in Illinois, South Carolina, and Texas.

Other states use fixed amount fee schedules for ASC surgeries and charge-based payments for hospital surgeries. That led to large differences in payments for ASC vs. hospital outpatient departments in Florida, Maryland, Michigan, and Pennsylvania.

“For most of these states we found that hospital outpatient facility payments were at least double the ASC facility payments for the same arthroscopic knee surgery,” according to the report. “In Michigan, the average ASC payment for a knee arthroscopy was $1,334 while the average hospital outpatient payment for the same procedure was $3,670. In Florida, the average ASC payment was $3,731 while the hospital payment was $8,324.”

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Other factors that appeared to contribute to differences in payments for the two types of facilities are network participation rates and billing practices. ASCs, for example, were more likely to bill for multiple surgical procedures from a single surgical event when compared to outpatient departments. That was a “significant reason” for payment differences in Tennessee and North Carolina.

Where states use the same fee schedule rates, payments for ASCs were similar in four of the five states. “This is hardly a surprise given the evidence in this and in other studies that fee schedules play an important role in actual payments,” the report explained. “One exception on this list of states is Oklahoma, where ASC surgeries were less expensive than hospital outpatient surgeries, which may have been determined by a high prevalence of network contracts.”

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]

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]