Florida hospital reimbursement – Mayday Mayday Mayday

There’s big trouble brewing in Florida – trouble in the form of a seemingly-innocuous workers comp fee schedule change that would increase medical expense by almost 20%.
Yes, twenty percent.
We’ll delve into the details in future posts. First, I’m going to scare the pants off you.
Florida law mandates that hospital outpatient services be paid at 60% of usual and customary charges for scheduled outpatient surgery and 75% of usual and customary charges for most other hospital outpatient services. How to establish “usual and customary” charges has bedeviled regulators.
Florida has a ‘three member panel’ that determines changes to the state’s workers comp fee schedule (as allowed and required under the state’s statutes). At the last hearing of the three member panel, the discussion focused on a proposed change to the workers’ compensation hospital outpatient fee schedule, a change that would establish a benchmark on which ‘usual and customary’ would be based.
The benchmark would be the amount hospitals charge Medicare. Not get paid by Medicare, but charge Medicare. According to testimony at that hearing, 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.
There are about a dozen other problems inherent in basing reimbursement on Medicare, problems that we will cover in detail this week. I’m going to be devoting significant time to this issue as it has all the aspects of a typical workers comp screw-up; regulators unsure about the nuance of reimbursement; providers seeking funds to offset increasing bad debt; workers comp payers ignorant of the impact of the potential change, and in one case actually supporting it because it will make costs more ‘predictable’.
What does this mean for you?
Well, it could be the end of the good times in Florida – a state where 60% of loss costs are due to medical.
This is a highly complex issue, but that doesn’t make it any less important. In fact, the very complexity makes it critical that workers comp payers spend the time to fully and completely understand what’s happening here – because this is not just a Florida issue, it is undoubtedly happening in other jurisdictions.