WCRI’s new workers comp medical price research

I’m attending the annual Workers Compensation Research Institute today and tomorrow and will be posting from the meeting.
The first presentation was an analysis of WC provider fee schedules, comparing the actual fee schedules to providers’ operating expenses. It will come as no surprise that some states’ fee schedules are pretty low, while others pay up to 2.5 times more than Medicare (alaska, for one).
No extra credit for guessing which type of service is paid at a higher rate; most fee schedules pay relatively more for surgery than for evaluation and management services.

The medical CPI (for all payers, not just WC) has gone up 4.5% per year since 1999; but the WC price index goes up much faster than the CPI rate. Remember, this is just price, and does not contemplate volume or frequency.
To better understand the impact of price, WCRI developed a WC medical price index, or WC MPI.
Using that index, the price variation was about 2.5 times from highest to lowest state. WCRI will be publishing the WC MPI, based on a market basket of WC services.
Ok, that is somewhat interesting. But some of the detail in the slides was more interesting. For one, surgery prices paid in FL only increased 8.5% when the fee schedule was increased by approximately 35% several years ago – because most providers were charging rates above the then-ridiculously low FL fee schedule (which was 105% of Medicare).
This points to the fallacy of fee schedules – when they are artificially low, providers refuse to accept patients unless they are paid a premium. So, those regulators, or managed care folk, who think that squeezing providers for discounts will reduce WC medical expenses (in low fee schedule states) are going to be disappointed, especially in geographic areas where there are relatively few providers of a given specialty.