EARLY IMPACT OF TEXAS WORKERS’ COMPENSATION MEDICAL FEE SCHEDULE CHANGES IDENTIFIED IN WCRI STUDY

CAMBRIDGE, MA, June 28, 2007 – Reforms enacted in 2003 to address
medical costs of the Texas workers’ compensation system are beginning to have some early impact, according to a study by the Workers Compensation
Research Institute (WCRI).  

The study reported that by 2004, changes to the medical fee schedule implemented in August 2003 resulted in significant decreases in the average prices paid for surgery and radiology (decreasing up to 25 percent from 2002 to 2003), and an increase in average prices paid for evaluation and management services of 12 percent from 2002 to 2003.  

The impact on the average price paid overall for physician services was moderate, decreasing by 8 percent.  

Despite little change in the fee schedule rates for physical medicine services in the 2003 fee schedule, average prices paid to physical/occupational therapists and chiropractors increased by 2 to 5 percent, respectively.  The increase was the result of rising prices paid to them for physical medicine and evaluation and management services billed.  

The study, Baselines for Evaluating the Impact of the 2005 Reforms in Texas and an Early Look at the Impact of the 2003 Fee Schedule Changes: The Anatomy of Workers’ Compensation Medical Costs and Utilization, 6th Edition, pointed out that other trends observed between 2003 and 2004 may also be affected by reforms passed as part of House Bill 2600, such as the development of a list of approved doctors wishing to participate in the workers’ compensation system, required training and quality of care monitoring of those doctors, an independent review organization to resolve medical disputes, the use of generic drugs, and preauthorization for certain medical procedures. 

The study also noted that it is premature to use data in this report to evaluate the impact of the significant reforms included in House Bill 7, enacted in September 2005.  The requirements in HB 7 that might be expected to directly affect medical costs and utilization included permitting employers and insurers to establish medical networks for the care of injured workers; the selection of evidence-based treatment guidelines; adoption of a pharmaceutical fee schedule;  the adoption of inpatient and outpatient fee guidelines, when appropriate; and adding physical and occupational therapy to the list of procedures requiring preauthorization. 

However, the study provides pre-reform baselines for evaluating the impact of the 2005 reforms.

For example, the study found that the rapid growth in non-hospital medical costs in Texas had reversed before implementation of HB7, decreasing by six percent in the latest pre-2005 reform study period after increasing in previous years. 

Decreases in medical costs and utilization may have resulted from the fee schedule decreases under HB2600.  Many system participants believe, however, that an increased awareness of the relatively higher and growing utilization of services in Texas led to tightened utilization review processes. 

The study noted that the average payment per claim to providers of physical medicine and chiropractic care in Texas decreased four to eight percent in the most recent pre-2005 reform study period.   

This was the result of a decrease in visits per claim to chiropractors and a decrease in services per visit to physical/occupational therapists. The average payment per claim for these providers was still among the highest of the 12 other study states. 

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, health care and disability issues. Its members include employers, insurers, and governmental entities, insurance regulators and state administrative agencies, as well as several state labor organizations.

To purchase the report, visit WCRI’s web site at www.wcrinet.org.