States with no fee schedules see hikes in comp costs for outpatient services

Hospital outpatient payments were higher and growing faster in states with percent-of-charge-based fee regulations or no fee schedules, according to a study released Tuesday by the Workers Compensation Research Institute. 

Cambridge, Massachusetts-based WCRI compared hospital payments for a group of common outpatient surgeries in workers compensation across 36 states, representing 88% of the workers compensation benefits paid in the United States, from 2005 to 2020, and includes early data on the effects of COVID-19 on hospital payments. 

According to the study, hospital payments per surgical episode in states with percent-of-charge-based fee regulations were 69% to 217% higher than the median of the study states with fixed-amount fee schedules in 2020. In states with no fee schedules, they were 61% to 134% higher.  

WCRI also found that hospital outpatient payments per episode in most states with percent-of-charge-based fee regulations or no fee schedules grew faster than in states with fixed-amount fee schedules. 

Variation in the difference between average workers comp payments and Medicare rates for a common group of procedures across states was even greater: reaching as low as 43% (or $2,740) below Medicare in Nevada and as high as 530% (or $28,229) above Medicare in Alabama. 

WCRI also analyzed major policy changes in states with recent fee schedule reforms. For example, effective July 1, 2020, Oklahoma adopted a fee schedule for hospital outpatient services. The average hospital outpatient payment for common surgical episodes in Oklahoma grew materially in 2020—by 17%. However, after this change, Oklahoma did not change its interstate ranking in 2020 and remained among the states with relatively lower hospital outpatient payments.