I received a few calls and emails yesterday from workers comp payers asking for clarification about my post on the potential (highly inflationary) changes to the Florida outpatient work comp fee schedule. Evidently there is some confusion out there about the linkage of Medicare to the WC fee schedule, with several entities contending that Florida is actually linking WC reimbursement to Medicare reimbursement.
Kinda sorta but not exactly.
The three member panel (regulatory entity responsible for the FL WC FS) is looking at the difference between Medicare charges and reimbursement, and basing their calculations on that differential.
The proposed change to the FS would link the “usual and customary” payment standard for outpatient hospital claims contained in Fl. St. § 440.13(12) to the ratio between what Florida hospitals charge Medicare and what Medicare actually pays. The net result would be a dramatic increase in the reimbursement for outpatient services billed by hospitals.
Here’s some detail; apologies for the density of the subject, but you wanted details.
The change proposed by the FL Dept of Financial Services (DFS) is to link what Medicare pays hospitals, as defined by the Ambulatory Payment Classifications (APC) payment rate, adjusted to mark up the Medicare APC payment on a hospital’s charge to roughly equate with what DFS thinks are the average charges billed by FL hospitals for that ‘group’ or APCs.
FL is putting APCs into two APC groups – surgical and ‘other hospital outpatient’. DFS’ calculation is that the average mark up – on which payment would be made – is 302% for surgery and 467% of Medicare payment for other hospital outpatient APCs
Thus, per regulation, 60% of the 302% would be paid for surgeries and 75% for other hospital outpatient.
There are a few issues with the methodology, data sources, and assumptions used by DFS, issues that have been raised in past meetings of the panel.
But the real problem is simple – WC costs are going to be substantially higher if this goes through. First, this methodology will increase costs – today – by 181% for surgeries and 330% for other hospital outpatient services.
Second, the annual inflation rate for charges in FL is 14%. So today’s high costs will be tomorrow’s even higher costs and the day after will bring really really high costs…
Third, the location of services will likely change dramatically to the higher cost hospital location. Thus procedures which were being done in offices will now be billed – at the much higher rates – by hospitals.
Fourth surgeries which were done on an outpatient basis will likely shift to inpatient to take advantage of the much higher reimbursement.
What does this mean for you?
The next meeting of the three member panel is June 19. Unless you want to pay a lot more for medical care in Florida, make your voice heard.
Jun
3
Joe: two comments on today (and yesterday’s post). The first is tongue-in-cheek: As a practice administrator, I want to know the hospital lobbyist whispering in the regulators ears. Physicians would like this kind of reimbursement also!!! Where do we sign up?
My 2nd comment comes from when I was the Cost Containment Coordinator for the now-gone RISCORP. Back in the late 1980’s, Hospital’s were paid a percentage of billed charges for work comp (a less complicated version of the new ‘methodology’). If a work comp injured worker went to a doctor’s office for physical therapy, we (the work comp payer) paid about $35 per session (that was 15-20 years ago). However, if the same patient went to hospital for PT (or to a free standing facility that billed under the hosptial tax id)we paid $200 or MORE per PT session. As one of your alert readers noted, the Networks getting a fee based on %age off fee schedule will be the real winners in this. Maybe they are the ones ‘advising’ DWC.
Actually, Joe, if they’re going to get 75% of the 467% for other hospital outpatient work, the number is even higher than quoted – up 350% , not 330%. This is truly scary stuff.
Is there anyone concerned about this (either agree or disagree) who is actually IN Florida or knows someone in Florida who’s concerned and would talk to me? I’m hoping to write something for Florida Health News this week but would like an in-state quote or two.