The Workers Compensation Research Institute (WCRI) reports a reduction in medical costs per claim in Tennessee as a result of reforms in 2004 introducing a medical fee schedule for the state’s workers’ compensation system.
Monitoring the Impact of the Tennessee Fee Schedules: CompScopeTM Medical Benchmarks, 9th Edition, showed, on average in 2006/2007, (18 months post-fee schedule) Tennessee’s employers paid $1,300 less for medical cost per case than prior to pre-reform years, reflecting the impact of the new fee schedule. The new schedule addressed fees for a wide range of services provided by physicians, chiropractors, physical/occupational therapists, hospitals, and outpatient ambulatory surgery centers.
On average Tennessee experiences relatively higher rates compared to other states. However, the new fee schedule led to a significant drop in the average prices paid to non-hospital providers.
Decreases Reported in 2006:
- 9% Major surgery (arthroscopic knee and shoulder, laminotomy, carpal tunnel).
- 12% Physical medicine (modalities and procedures) decreased 12 percent.
- 5% Major radiology (MRI, CT scan).
- 15% Minor radiology (X rays) decreased 15 percent.
Decreases for hospital outpatient services
- 23% Physical medicine services.
- 34% Major radiology.
- 43% Minor radiology.
In contrast prices paid for non-hospital evaluation and office visits services increased 9%, as expected, due to higher fee schedule rates in comparison to the average prices paid prior to the fee schedule.
The study pointed out that having such substantial changes in prices paid may lead to changes in utilization of medical services.
1. In 2006/2007, the study found growing utilization among non-hospital providers and decreasing utilization among hospital outpatient services. Before the fee schedule regulations, utilization among all types of providers in Tennessee was relatively stable for a period of four years.
2. Utilization of medical services among non-hospital providers grew 5% in 2006/2007, driven by an increase in the number of services per visit when surgery was performed and a somewhat larger volume of billed services among all other non-hospital services.
3. The number of services per claim among hospital outpatient services declined 16%, especially for services delivered at the operating/treatment/recovery room.
However, the study said, the current trend in utilization in the post-fee schedule period should be analyzed in light of the typical use of medical services among non-hospital providers and lower use of services rendered in a hospital outpatient setting.
Tennessee’s fee schedule also focused on hospital inpatient cost. The inpatient fee schedule may have helped to reduce the hospital inpatient payments per episode. Before the regulations, Tennessee had higher hospital inpatient payments per episode.
Based on claims with 12 months of experience in the post-fee schedule period, hospital inpatient payment per claim was typical of the study states, driven by typical payment per episode with surgery. workersxzcompxzkit)
In 2004/2005, prior to regulations, the average total hospital payment per episode was 13% higher than the median study state.
To order this report, go to the WCRI Web site: www.wcrinet.org.
Author: Robert Elliott, J.D.
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