Hospital payments for workers compensation injuries can stack up fast

Hospital payments for workers compensation injuries can stack up fast

Workers compensation outpatient payments are growing increasingly in North Carolina hospitals, according to a study by the Workers Compensation Research Institute (WCRI), after an effort a few years ago to reduce these costs.

The Early Impact of Outpatient Fee Schedule Reduction in North Carolina: CompScopeTM Medical Benchmarks, 12th Edition, study gives insight on the effects of early efforts to reduce these hospital outpatient costs. Since 2004, North Carolina has been in the top 16 states for highest hospital payments per claim.

In 2009, North Carolina made regulatory changes to try and reduce hospital charges for the treatment of injured workers. These regulations reduced the reimbursement rate for hospital outpatient services.

On July 27, 2009, the North Carolina directive was taken into effect. It reduced outpatient fee schedules to 79 percent of charges as opposed to most hospitals’ 95 percent of charges.

The WCRI study was taken over the course of eight months of this fee reduction. The study shows that these regulations had both positive and negative impacts on the outpatient fees in the state.

“This study is an invaluable tool for policymakers and other stakeholders who are looking to better understand the impact of recent provisions focused on cost drivers in North Carolina’s workers’ compensation system, such as the fee schedule reductions,” said Ramona Tanabe, deputy director and counsel.”

The study showed that the payment-to-charge ratio for hospital outpatient services lowered from 82 to 72 percent, and the growth in average payment per service was a modest three percent.

It also reflected that the charge per service increased 17 percent in comparison to a similar period in a prior year. In previous years, studies show usually consistent changes for hospital payments and charges.

Before the execution of the fee schedule reduction, specific services, such as treatment, operating and recovery room services were increasing rapidly.

After the implementation, however, physical medicine services, a high occurrence service, saw minimal impact. This is because this service was already being paid at a considerably lower percentage of charges.

The rate of charges, though, increased quicker than cost-saving estimates had predicted they would. In time, according to the study, this could have a direct influence on the impact of the fee schedule reduction.

With a lesser percentage of a higher charge, the state is less likely to accomplish its anticipated state cost-savings goals.