WC Pricing Disparity

Medical Fee Schedule Under Scrutiny

Despite reforms, the Illinois medical fee schedule remains problematic.
By: | February 27, 2014 • 3 min read

Some prices in Illinois’ medical fee schedule are still too high while some are too low, according to a new analysis. Researchers suggest policymakers may want to revisit the prices to avoid access to care or overpayment issues.

Illinois’ workers’ comp system had one of the highest medical fee schedules until an across-the-board 30 percent cut was implemented in 2011. But a study by the Workers Compensation Research Institute indicates prices for surgeries are still high while costs for office visits may be too low.

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“If maximum workers’ compensation prices paid are set lower than prices paid by Medicare or group health insurers, then one might expect concerns about access to care for injured workers,” the report says. “Similarly, if maximum workers’ compensation prices paid are set much higher than other payors, one might expect that prices could be lowered to some extent without affecting access for injured workers.”

The report looks at how the prices paid for professional services — nonhospital, non-facility — compared with Medicare rates and group health prices after the fee schedule was cut. It found a significant difference among costs for office visits and those for surgeries.

“After the 30 percent fee schedule reduction, the workers’ compensation prices paid were similar to or lower than the reimbursement rates paid by other larger payors for similar evaluation and management services, i.e., office visits,” the report explains. For example, office visits for “low to moderate severity” was $62 in workers’ comp — $11 lower than Medicare rate and $14 below the estimated median group health price paid.

“Given that the workers’ compensation prices were below the group health prices and Medicare rates, policymakers might need to consider whether the fee schedule decrease was too much for office visits and whether access to care for primary care may have been impaired.”

Surgeries, on the other hand, are still more expensive in workers’ comp. “For the four commonly provided surgeries, the median workers’ compensation prices paid in 2012 were more than three to about five and a half times the Medicare rates” and “more than double to more than triple the estimated median group health prices.”

A knee arthroscopy surgery, for example, cost $2,845 in workers’ comp — 382 percent higher than the Medicare rate and 166 percent more than the estimated median group health price paid.

“A question for Illinois policymakers is whether such a large differential is necessary to induce Illinois surgeons to operate on injured workers.”

The researchers also found that the 30 percent reduction in the fee schedule did not produce the same change in the average medical cost of a claim. Instead, the overall average price paid for professional services decreased by 24 percent.

“Changes in the prevalence of network participation and negotiated prices under network agreements were the main factors underlying this result,” the research stated. “The fee schedule sets the reimbursement amounts; however, often in network contracts, providers and payors may agree on prices that deviate from the fee schedule rates.”

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Finally, the authors determined that the fee schedule decrease did result in “significantly” changing Illinois’ interstate ranking for prices paid, at least for office visits. Where the average price paid for office visits was 14 percent higher than the median of 25 states before the fee schedule decrease, it was 18 percent lower after 2011.

For surgeries, however, the average price paid after the fee schedule change was still “significantly higher than in the other nearby states.”

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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The R&I Editorial Team can be reached at [email protected]