The National Commission on Compensation Insurance collects, analyzes and reports on a variety of data related to workers’ compensation. Its most recent report focuses on the effect of fee schedules on payments to providers. (NCCI Report) Paying for health care services related to injuries sustained on the job used to be a relatively minor component part of total workers’ compensation costs. Over recent years, as health care prices have risen dramatically, health care can account for half or more of workers’ compensation payouts. Consequently, employers and insurers have adopted a variety of managed care techniques to limit health spending growth. One approach has been the use of fee schedules for all or the most common workers’ compensation services. These fee schedules are typically established by the states and set a maximum that will be paid for the service. NCCI evaluates whether these fee schedules have had the intended effect of limiting payments to providers. Obviously, the value of a fee schedule depends on what level it is set at. NCCI compares the workers’ compensation fee schedules with the typical fee schedules used by group health plans and looks at the spread of payments. The big picture result is that workers’ compensation fee schedules are not always at or lower than group health payments and that the maximum payment tends to become the overwhelming most common payment, meaning that workers’ compensation payers are often paying more for a service than a group health plan would.
Among the common services NCCI examined are evaluation and management visits with physicians, surgeries, and imaging. In regard to surgery, the workers’ comp fee schedule maximums tend to be substantially higher than most group health plan payments for these services. In addition, the median payment for surgery in workers’ comp is 96% of the maximum allowable, meaning that almost all payments are at the fee schedule maximum, so those maximums have become the de facto actual payment. In contrast, the median group health payment is only 64% of the workers’ comp maximum allowable. For evaluation and management, the workers’ compensation maximums are more consistent with group health payments, and while the median workers’ comp payment for these services is 98%, the group health plan median is 89% of the workers’ compensation maximum. The analysis strongly demonstrates the flaws with a fee schedule maximum–in the absence of other pressures, it tends to become the payment. So unless the maximum is set close, for example, to a median group health payment, workers’ comp payers end up paying more than they probably should.