Workers' Comp Reform

Reform Impacts ASC Costs

Reforms have caused payments to ambulatory surgery centers to plunge — even further than expected.
By: | April 24, 2014

California’s efforts to reduce costs in its workers’ comp program have apparently been successful in at least one area. Average facility fee payments to ambulatory surgery centers (ASCs) have declined 26 percent per episode and 28 per procedure — more than researchers had projected.

S.B. 863 included provisions to reduce the maximum facility fees for services performed in ASCs from a maximum of 120 percent of the Medicare fee to 80 percent. Analysts had predicted the change would reduce ASC payments by 25 percent.

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“Thus far, the change in the ASC fee schedule has achieved its intended objective of reducing one aspect of workers’ compensation medical costs,” according to a new study. “Moreover, the study found no evidence of changes which would potentially undermine the fee schedule savings.”

The study included two independent sets of data from the California Workers’ Compensation Institute and the California Workers’ Compensation Insurance Rating Bureau. The authors measured average amounts billed and paid for workers’ comp outpatient surgery services rendered in the year before adoption of the revised fee schedule and the first six months after.

The researchers looked for:

  • Fees billed
  • Fee schedule adjustments
  • Network discounts
  • Payment per episode
  • Mix of services
  • Service intensity
  • Sites of service

The savings came despite an increase in the average amount billed per ASC procedure — $3,183 to $3,386, a 6.4 percent increase. However, when the conversion factor multiplier from 1.20 to 0.80 was applied, the average ASC fee schedule allowed declined by nearly 31 percent from $977 to $674. The result was a wider spread between the billed and scheduled amounts for ASC services from $2,206 in 2012 to $2,711 in 2013.

The authors also looked at per episode costs. Episodes of care were defined as all procedures and ancillary services on a specific claim, specific bill, and a specific date of service. For example, an arthroscopy episode could include data for both the arthroscopic procedure as well as a debridement procedure, or removal of tissue from the surgical area, that was performed on the same date and included in the same bill.

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“The average amount paid for ASC services per episode declined 26 percent from $3,291 to $2,443 following the adoption of the fee schedule changes in January 2013,” the report said.

The mix of services changed little after the fee schedule change. The researchers found only minor shifts in the distributions of outpatient procedures, indicating the fee schedule changes had little effect on the types of ASC procedures performed.

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]