The US health care system is a mess – it is a convoluted and ridiculous web of cross-subsidies and cost-shifting and billing practices that serves to tax some to pay for care delivered to others. And for some payers, it is grossly unfair.
One of those “some” would be workers comp insurers and employers. Some state reimbursement requirements are unfair at best, forcing WC payers to pay way too much for hospital care. That’s bad enough, but what’s worse is when WC payers ignore favorable regs, and reimburse more than they should.
In many states (states regulate reimbursement for WC) there is a fee schedule for WC; in almost all there is some regulatory/statutory basis for reimbursement. Often arcane and wierd and counter-intuitive but there nonetheless. But just because there is a fee schedule or regulated reimbursement methodology does not mean payers follow that scheme.
Take Connecticut. My home state requires that WC payers reimburse hospitals at cost. (Sec. 31-294d, the Workers’ Compensation Act as amended to January 1, 2005 Medical and surgical aid; hospital and nursing service.)
Yes, cost. Not a percentage below billed charges, or at a fee schedule amount, or a per diem or DRG. Cost. Compared to network deals, reimbursement at cost, or (here’s my innate sense of fairness shining thru) cost plus ten or fifteen percent cuts hospital bills in half…or better.
Yet most payers are using a network in CT, a network that requires the payer to pay much more than they are legally required to. Why? That’s a question employers and policyholders ought to be asking their insurers/TPAs.
Perhaps it is their innate sense of fairness, a willingness to pay twice as much as legally required to help hospitals’ cash flow. Perhaps they can’t figure out how to reimburse at cost (although several payers have figured this out). Or perhaps they haven’t researched the law.
I’ll admit to being somewhat conflicted here; as a strong advocate of the not for profit health care sector, I recognize that the mission requires money. But that does not mean that employers should be required to subsidize a dysfunctional health care system.
What does this mean for you?
If you are an employer, your mod rate is higher than it should be; if you are self-insured your hospital reimbursement is likely too high; and if you are an insurer, your medical expenses are too high.
So why is it that state law mandates the higher payment requirements? It seems the legislature should be asked to fix this.
I have also been told by our ASO that they cannot reimburse other providers at the network rates for workers’ comp claims. This is ridiculous, as well.
Why is ANYONE overpaying hospitals? This has been a question that I’ve had for YEARS! Why can’t insurance companies absolutely refuse to pay $12 for a box of Kleanex or an aspirin and only pay what you’d pay at the Walmart for the same items? When people ask why healthcare costs have spun out of control, I say look closely at all the hospitals’ billing practices! WHAT A CROCK.