“In many states, policymakers and other stakeholders are looking to fee schedules to help control the growth of medical care costs in their workers' compensation systems while avoiding access-to-care issues,” said John Ruser, president and CEO of WCRI. “Our research helps these decision makers learn if the reforms they passed are having the impact they intended or need to be modified.”
The objective of the fee schedule changes in HB 373 was to reduce medical expenses by 33 percent by January 31, 2017, over three consecutive annual reductions—a 20 percent reduction in 2015 and additional 5 and 8 percent reductions in 2016 and 2017, respectively. Per HB 373, Delaware transitioned to Medicare-based fee schedules for professional services, hospital inpatient and outpatient services, and ambulatory surgery center (ASC) services effective January 31, 2015.
The medical services covered in the analysis are professional medical services, hospital outpatient and ASC facility services related to surgical procedures, and hospital inpatient services. For all of these services, the study monitors workers' compensation fee schedule changes over three years and offers a comparison between the workers' compensation fee schedule rates and Medicare rates in Delaware. For professional services, the analysis also includes an evaluation of the impact on prices paid as a result of the 2015 and 2016 changes. Also examined is the impact of these changes on interstate rankings of Delaware for professional services, hospital outpatient services, and ASC services.
The following are among the study's major findings:
Before the 2015 change, Delaware had the second highest overall fee schedule rate for professional services relative to Medicare (123 percent above Medicare) among 44 jurisdictions with fee schedules. After the three updates, overall workers' compensation fee schedule rates for professional services decreased by 40 percent as compared with the pre-reform 2014 fee schedule rates. In 2017, the overall professional fee schedule in Delaware was 31 percent above Medicare, more similar to the fee schedule rates of states with relatively lower fee schedules.
Before the 2015 change, Delaware hospital outpatient facility payments for the most common knee arthroscopy ranked in the middle of the 32 other states studied. However, compared with the payments in the states with fixed-amount fee schedules, Delaware had relatively higher payments before the change and relatively higher fee schedule rates after all three changes. In 2017, the workers' compensation fee schedule rates for hospital outpatient services were set at 40–72 percent above Medicare for common knee and shoulder surgeries.
The interstate comparison shows that, before the 2015 change, Delaware ASC facility payments for the most common knee arthroscopy were somewhat below the middle of the 32 states studied. After the 2017 fee schedule change, Delaware moved up several positions in the interstate ranking, with fee schedule rates set above the pre-change payment levels. In 2017, the workers' compensation fee schedule rates for ASC services were set at 91–144 percent above Medicare for common knee and shoulder surgeries.
In 2015, the workers' compensation fee schedule rates for common inpatient services were set 64–68 percent higher than Medicare rates in Delaware. In 2016, workers' compensation fee schedule rates for common types of hospitalization decreased by 7 percent, followed by another reduction of about 13–14 percent in 2017, when the percentage difference between workers' compensation and Medicare was 11–30 percent across common types of hospital stays.
The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Organized in late 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods. Objectivity is further ensured through rigorous, unbiased peer review procedures. WCRI's diverse membership includes employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia, and New Zealand.
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