Comp industry balances fee schedules with provider demands

Lawmakers in Delaware are considering legislation that would provide a one-time 3% increase in the workers compensation medical fee schedule to correct lagging reimbursements for some medical services, while Florida raised its fee schedule this year for the first time in nearly a decade.

Both moves highlight a growing concern in workers compensation: keeping medical costs under control and predictable with fee schedules while paying doctors enough to want to treat injured workers.

Forty-four states and the District of Columbia have some form of workers compensation fee schedule, with most based on Medicare reimbursements and paying a set percentage above that, and it’s common for states to make adjustments, some of which are mandated, according to Rebecca Yang, a senior public policy analyst at the Waltham, Massachusetts-based Workers Compensation Research Institute.

Delaware’s S.B. 164, introduced May 22, specifically mentions doctor shortages as a reason for the proposed increase in its fee schedule.

A change in Delaware, where pricing has remained below average, would likely be minor, according to Jennifer Cogbill, Frisco, Texas-based senior vice president of GB Care with Gallagher Bassett Services Inc. She said the industry generally favors fee schedules but that it is “incumbent for states to make sure that there are measures to ensure that providers are adequately paid, especially when in an inflationary environment like we are right now.”

Florida is a good example of what can go wrong, said Michele Hibbert, San Diego-based senior vice president of regulatory compliance and governmental affairs for Enlyte LLC, which provides workers comp services.

As Florida lagged in increasing its fee schedule, doctors treating injured workers were seeking “prepayment agreements” with insurers and employers before treatment as a way to secure more than the fee schedule dictated, Ms. Hibbert said, a move state law allows.

“It was causing a lot of issues,” such as instability and unpredictable pricing, she said. The issue resulted in state regulators enacting “huge jumps” in the fee schedule, including an increase of up to 65 percentage points for physician services and a 70-percentage-point increase for surgical services, which, as an example, used to be paid at 140% of the Medicare schedule and has now been set to 210%.

“What they are trying to do is catch up,” she added.

Jean Feldman, Tampa, Florida-based senior director of managed care at Sentry Insurance, called small increases — such as Delaware’s proposed 3% — “reasonable,” adding that increases typically coincide with medical inflation, “to keep doctors engaged in the workers comp.” Larger increases, such as those in Florida, can put pressure on payers, she said.

“It’s really important for the states to keep up with the fee schedules and the reimbursements,” she said.

In favor of monitoring pricing and making adjustments as needed, Karen Clifton, St. Louis-based director of cost containment for workers compensation claims at Safety National Casualty Corp., said in an email that fee schedules “are a critical part of stabilizing future medical costs.”

“Not only does this help to ensure the current medical expense reserves are properly set, it also aids in future medical cost projections,” Ms. Clifton wrote.