Workers Comp Payments to Hospitals in North Carolina Higher than in Many Other States

Payments in North Carolina per Claim Higher Than Many Other States

Workers’ compensation payments per claim to hospitals in North Carolina (NC) were found to be much higher (and growing rapidly) than typical of other states in a 14-state study by the Workers’ Compensation Research Institute (WCRI).

These results were the main driver of the state’s focus on recent regulation in the form of fee schedule changes, effective in July 2009, lowering reimbursement rates for hospital inpatient and outpatient services and ambulatory surgery centers.

According to the Office of State Budget and Management’s financial impact statement, the fee schedule changed are estimated to reduce costs by $35.4 million (about 10%) of the projected amount for spending on hospitals and ambulatory surgery centers during the 2009 to 2010 fiscal year. The new fee schedule reduces hospital outpatient reimbursement from the current 95% to 79%.

CompScope^TM Medical Benchmarks for North Carolina, 9^th Edition, found:

Medical payments per claim in NC were 13% % higher than the median of the 14 states, because of NC made higher payments to hospital providers and lower payments to non-hospital providers.
Payments per claim to hospital providers were 43% above the median, the highest among the states studied because NC pays higher hospital outpatient payments per similar services; somewhat higher inpatient payments per claim, and a higher surgery rate.
A higher surgery rate suggests a different mix of care, leading to a more costly mix of services than in states where hospital providers have a lower surgery rate and provide more primary care.
The average hospital outpatient payment per service in NC is $361, 58% higher than the median state and nearly $100 higher in the next highest states.
About 38% of claims with seven days plus of lost time in NC involved surgery, compared to 35% in the 14-state median.
By contrast, payments per claim to non-hospital providers were typically lower in NC especially for frequently provided services like evaluation and management and physical medicine. The lower prices were in line with the fee schedule, also lower than the median of 42 states, except for surgery.
Non-hospital services were generally typical of states studied; but NC chiropractor claims were among the lowest, with significantly fewer visits per claim.
Medical payments per claim grew steadily: 7%-12 % per year from 2001-2005; more slowly in 2006 (5%) on a 12 month average experience.
Rapid growth for inpatient and outpatient services through 2005 were the main reason for hospital medical cost increases.
In 2006, hospital outpatient payments were the main increase driver; hospital inpatient payments were stable; payments to nonhospital providers declined 5%. (workersxzcompxzkit)
Hospital outpatient payments per service rose at double-digit rates for most important service groups in 2006, offset to some extent by a decline in the number of services per claim for many of the groups.