Call or email us anytime
(805) 484-0333
Search Guide
Today is Friday, March 29, 2024 -

Industry Insights

Moore: No Medical Fee Schedule = Higher Costs

  • State: Wisconsin
  • -  0 shares

Workers' comp fee schedules tend to keep costs down in most states. A medical fee schedule for workers' comp would assist Wisconsin employers in keeping their costs under control.

James Moore

James Moore

The Workers Comp Research Institute recently published a study that showed the state’s workers comp medical costs as some of the higher ones in a recent study of 18 states, called CompScope.

Wisconsin's medical fee schedule is based on the venerable yet more expensive usual and customary fees. Using U&C means taking the average medical costs in an area based on a similar phone number prefix or ZIP code. Dental insurance companies use this practice often to reprice and pay bills.

I was often brought in by third-party administrators, captives and self-insured employers to negotiate the medical bills after, for instance, a collection attorney was pursuing multiple bills that were not paid up to U&C, which is an opinion-type number. There are no exact numbers to go by in these collection matters.

A hidden benefit of fee schedules is one that I have written about a few times. Let us look at the steps in a workers' comp adjuster setting medical reserves on a lost time file.   This example is very simplistic, but still a representative procedure.

  1. Investigate the claim.
  2. Document the injuries to the employee in the file.
  3. Examine what bills have been received.
  4. At 60 days after the accident, set reserves for the lifetime of the file.
  5. Adjust the reserves every 90 or 180 days as needed, usually for increases or file closure.

The date for major reserve setting (60 days) means the adjuster has to usually fill out some type of form that breaks down the indemnity reserves (TTD, TPD, PPD and PTD) and medical reserves.

The medical reserve analysis may require 20-30 blanks to be filled in on an analysis sheet. If the adjuster knows what the projected medical costs are going to be with a fee schedule, she can more accurately forecast the reserves. Nos. 4 and 5 above can be more accurate when projected medical costs are known ahead of time.

The more accurate the reserves, the more accurate the premium charged to employers.  For self-insured employers, the more accurate the budgeted cost projections over the next year are on the file. 

Virginia decided to institute medical fee schedules a few years ago and moved to a lower-cost tier after 2017.

The following are among the study’s other findings:

  • Prices paid for professional services grew 3% per year from 2014 to 2019. This increase was similar to changes in other states without medical fee schedules.
  • Payments per service for hospital outpatient services grew about 5% per year, with charges per service growing 4% per year between 2014 and 2018 before increasing nearly 8% in 2019. A combination of factors may have influenced the results: medical inflation, recent hospital consolidations and changes in the characteristics and severity of claims receiving inpatient/outpatient care. Outside workers’ compensation, hospital rates in Wisconsin have been increasing about 4% annually.
  • The percentage of claims receiving hospital outpatient services increased, a departure from the typical state studied where fewer claims received services in hospital outpatient departments. Nearly 80% of Wisconsin claims involved hospital services.

Fee schedules still win the day

Workers' compensation fee schedules usually prevail in cost analyses. Let us hope that a Wisconsin medical fee schedule will be a new addition to the states that have them.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.

No Comments

Log in to post a comment

Close


Do not post libelous remarks. You are solely responsible for the postings you input. By posting here you agree to hold harmless and indemnify WorkCompCentral for any damages and actions your post may cause.

Advertisements

Upcoming Events

  • May 13-15, 2024

    NCCI's Annual Insights Symposi

    Join us May 13–15, 2024, for NCCI's Annual Insights Symposium (AIS) 2024, the industry’s premier e …

  • Jul 29 – Aug 2, 2024

    76th Annual SAWCA Convention

    SAVE THE DATE! 76th Annual SAWCA Convention July 29 – August 2, 2024 Hotel Effie Sandestin 1 Grand …

  • Aug 14-17, 2024

    CSIMS 2024 Annual Dual Track C

    California Society of Industrial Medicine and Surgery (CSIMS) is combining its two conferences, PI …

Workers' Compensation Events

Social Media Links


WorkCompCentral
c/o Business Insurance Holdings, Inc.
PO Box 1010
Greenwich, CT 06836
(805) 484-0333