Hospital outpatient costs higher in states without set fee schedules

Hospital outpatient payments for injured workers grew faster in states with fee schedules based on a percentage of hospital charges and in states without fee schedules, according to a study released Thursday by the Workers Compensation Research Institute.

The Waltham, Massachusetts-based institute analyzed payments for common outpatient surgeries across 36 states, representing 88% of the nation’s workers compensation benefits. Covering data from 2005 to 2023, the study also compared workers compensation hospital payments to Medicare rates, finding that the average comp payments for a common group of outpatient surgeries ranged from 40% below Medicare in Nevada to 480% above in Alabama.

Researchers also found that outpatient payments were 63% to 154% higher than the median of states with fixed-amount fee schedules. In these states, workers compensation paid $7,550 to $22,002 more per surgical episode than Medicare. States like Alabama and Louisiana, using percent-of-charge-based fee schedules, paid 83% to 233% more than states with fixed-amount fee schedules, according to the report.

The report also tracked the impact of recent policy reforms. In May 2023, Florida expanded its fixed-amount fee schedule by eliminating charge-based reimbursement for unlisted procedures. This policy change led to a 6 percent decrease in hospital outpatient payments per surgical episode within the same year.