WCRI Recap: Impact of Fee Schedules On Case Shifting in Work Comp

Hello, Michael Stack here, Principal of Amaxx and Founder of COMPClub. The dust has settled on the WCRI conference which occurred about a week and a half ago. I’d had a chance to look through my notes and I want to share some of my top take-aways from the sessions.

Do Higher Fee Schedules Affect The Number Of Workers’ Comp Cases?

Please note the results of this WCRI study are preliminary and subject to change.

The first session was called the Impact of Fee Schedules on Case Shifting in Workers’ Compensation. And what they did in this session was ask the question “Do higher fee schedules end up having an impact on the number of cases that are considered workers’ compensation”. What they did was they took a look over a number of states, and the fee schedule in those states. This is going to be a very rough draft outline of what that graph looked like. But, essentially there were a number of states that were in the middle that had very similar fee schedules, and there were some outliers that were high and low. It was ultimately the comparison of those outlier states that lead to the data in this study.

Basically they looked at the two different types of injuries, the two different classifications or main classifications of injuries. And we all know there are some injuries in workers’ comp that are very clearly defined, they are clear as the causation of that injury. And there are some that are unclear, or much more gray as far as that causation and much more up the doctor’s discretion to classify that particular injury.

Now these clear cases are typically trauma cases, these are physical injuries that require immediate medical attention right after the injury. The unclear or gray-area claims, these are more the back injuries, stains, shoulder or knee injuries. Again the causation is much more gray or unclear, and it’s very much up to the discretion of the doctor to define whether or not that injury would be considered workers’ compensation.

No Change When Causation Clearly Defined

So, the next thing they did was they looked at these fee schedules, the impact the fee schedule had on the number of claims. The number of claims that were considered workers comp for that particular type of injury. Here is what was interesting and really was the conclusion of this study. In these clear cases, the clearly defined cases, that the causation was very much known and undisputed, there was no change in the number of cases that were considered workers’ compensation. When the causation was clearly defined, there was no change in the number of workers’ compensation cases.

In the unclear, or gray area cases, when it was up to the discretion of the doctor to define whether or not it was a workers’ compensation case; what they found was that a 20% increase in the fee schedule lead to a 6% greater odds that case was considered workers compensation. So, a 20% increase in the fee schedule for the provider, for that back injury, a 6% greater odds that case would be considered workers’ compensation. And they equated this down to a 1.5% increase in costs.

Now 1.5% might now sound like a large percentage, but from a state level, from a policymaker level, that can equate to millions and millions of dollars. So, what does this mean for you, what sort of an impact do these numbers and the results of this study have on your organization?

Understand Tendency Exists To Shift Gray-Area Claims

My take-away from this is really the understanding this tendency exists, the understand that this incentive exists at the provider level. From a work comp management standpoint, the action step that I would recommend is to have a medical review become a standard part of your company compensability investigation. I’ll say that one more time, so from a work comp management standpoint, have a medical review become a standard part of your company compensability investigation.

Because of this tendency, particularly on these unclear, or gray area claims, bringing that exertise to the table on your side can ensure that you are not accepting claims that you should not be, and thereby paying costs that you shouldn’t be paying.

So, again, in workers’ compensation, your success if defined by your integrity. So, be great!

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.