One of the more successful reforms in work comp over the last decade was in Florida. But there are two major issues getting lots of attention that may well overturn much of the good achieved in the Sunshine State.
Dennis Ross, one of the primary authors of the reform plan that became law in 2003, has written an excellent article summarizing these two problems. In brief –
Litigation expense was slashed dramatically under reform. That happy result looks to be in serious trouble, and legal costs may once gain skyrocket.
Before reform, attorneys would litigate anything, no matter how minor, because they would get paid their hourly rate for all work on the claimant’s case. As a result there was litigation around ‘underpayments’ of a few dollars, where the legal fees would be ten times the actual ‘underpayment’. Now, due to a recent court decision, some parts of the reform look to be in jeopardy – the very parts that eliminated the incentive to litigate everything all the time.
The specific case I’m referring to is Murray v Mariners Health/ACE USA. As things stand now, we can expect litigation costs to increase dramatically, and we’ll likely see a big upsurge in medical utilization as attorneys will once again be incentivized to push claimants to get as much care as possible.
Ok, that’s bad. What’s going to happen with hospital costs may even be worse.
Medical costs came down dramatically as well, thanks to changes in the fee schedule that actually increased reimbursement for physicians and should have cut facility costs (but apparently didn’t). As a result, more docs participated in comp, and the ones that did were doing good work (amazing how that happens when you pay docs a fair rate…) But the decision by the three member panel to fundamentally change facility reimbursement will likely add several hundred million dollars to employer’s work comp claim costs.
I’ve posted on this before – here’s the net. The proposed change to the Fee Schedule 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. There are four issues here.
First, 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, as a result, 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?
Work comp costs in Florida are going to go up – a lot.
Mar
13
