I’m mystified, perplexed, confused, confounded, and appalled.
There’s just no other logical reaction to the goings-on in the Sunshine State, where several workers comp payers are actually supporting a major increase in reimbursement for outpatient facilities – an increase that is wildly inflationary and completely unnecessary.
I’ve reported on this impending disaster a couple times over the past month, a disaster that the payers are bringing on them selves. Comp reimbursement in Florida is under the control of the ‘three member panel‘, a triumvirate that is attempting to come up with a clear definition of ‘usual and customary’ – the criteria by which facilities are reimbursed under workers comp.
Here’s a brief video metaphor of the last hearing…
The panel is looking to specifically and clearly define U&C in an effort to eliminate the ongoing legal battles between payers and hospitals over what exactly is ‘usual’ and ‘customary’. The benchmark that the panel seems committed to is the amount hospitals charge Medicare. Not get paid by Medicare, but charge Medicare. According to testimony at one of the panel’s recent hearings, hospitals mark up their Medicare costs by 715% – they charge Medicare seven times more than it costs the hospital to provide the service.
If the proposed regulation is adopted, workers comp’s ‘usual and customary’ would be based on that 715% mark up. Running the numbers, this would result in workers comp payers paying Florida hospitals (and perhaps ASCs) 472% of what Medicare pays for outpatient services – one of the highest rates in the nation.
And this will increase Florida WC costs by about 20%. (the calculations and basis thereof are too lengthy to go into here, email me at infoAThealthstrategyassocDOTcom if you want the gory details)
Yet payers are supporting this change. Why? Do they want to increase policyholders’ costs? Jack up their loss ratios? Are they feeling particularly charitable (always easy when spending policyholders’ money)?
Or is it because they are sitting in the back of the train, relaxing while it hurtles down the tracks, blindly confident in their ability to determine its destination?
In private conversations, they say because it will make it easier to deal with the issue, establish a firm basis for reimbursement, eliminate the hassle, end the litigation.
If that’s the case, why not just set the amount at “whatever the billed amount is, you have to pay it”? That would be even simpler, eliminate the complex calculation needed under the proposed system – and have the same result.
Payers are being incredibly short sighted. Lazy even. And here’s where that train is heading.
What does this mean for you?
(Many) employers in Florida are being ill-served by their insurers and TPAs. Send this post to your broker and ask them to find out what your work comp carrier’s position on this is and why, and what they are doing to protect your interests.
Or you can just hang out in the club car, trusting that someone will get control of this impending disaster before too late.
Jun
2
You’ve got it wrong. This has nothing to do with charges. Most w/c are reimbursing outpatients centers at 20% LESS than the Medicare fee schedule reimburses. The centers are asking that they at least pay what Medicare pays. While charges may seem high, they have no relationship to reimbursement.
There is a new movement taking place to improve WC/Disability Management. A meeting is taking place today at the Single Rosen Creek Hotel by a group of professionals who are trying to make substitutive changes to the system. The 60 Summits is a work group of local leaders in the practice who want to improve the system and decrease disability to citizens. To learn more, go to http://www.60summits.org. The group is about improving practice by using evidence to support treatment. Much better than through politics who have to cater to the special interest groups….Anne Llewellyn
It seems like the last comment sums up the problem we are seeing nation-wide: “While charges may seem high, they have no relationship to reimbursement”. Charges have no relationship to reimbursement, huh… How about when reimbursement is tied to stop-loss factors or % off contracts. Why is there no DIRECT relationship between charge amounts and reimbursements? Think it may have anything to do with 700% mark-ups? Come on folks, the majority of the healthcare providers out there are doing the right thing. The handful that aren’t push nonsensical legislation that lines provider pockets at the expense of the payer. Joe – Please comment on ripple effects tied to this reimbursement methodology. If you look at all of the players involved in the Florida situation, it seems painfully clear that a number of groups stand to gain. Hospital financial incentive is obvious, PPO incentive is tied closely in that payers will be seeking any relief possible. With access fees tied to charge reductions, PPOs stand to see windfall profits. So, just where do payers/employers gain in this scenario? How about the cost to the State when employers move to neighboring states, pushed out by sky-high coverage costs? Sounds like it’s time to pink slip some consultants!
Ryeny –
perhaps you could clarify how I’ve gotten it wrong.
The panel is looking to base WC reimbursement on the ratio between what facilities charge Medicare and what they are paid – a formula that will result in payments set at 181% – 330% of Medicare. And with the annual charge inflation rate averaging 14%, payers can expect to see a similar increase in their prices.
South Carolina put in a Medicare+ hospital fee schedule on 10/01/06. Now, per NCCI, there is a 23.7% WC rate increase filed and pending. Even though SC adopting a Medicare+ hospital fee than pays hospitals less than the fee-schedule being proposed by DFS (140% of Medicare in SC vs 181% to 330% of what Medicare pays being proposed for Florida by DFS), paying SC hospitals more has significantly increased medical costs and utilization in SC.
Ben – I’d expect to see the location of service move rapidly to outpatient and inpatient settings as providers look to maximize reimbursement. As NCCI has repeatedly warned, increased utilization drives 70%-80% of the inflation in WC medical costs – not the prices paid for each procedure. This will undoubtedly result in even more costly medical care in FL for WC payers.