WORKERS’ COMPENSATION PAYMENTS PER CLAIM TO NORTH CAROLINA HOSPITALS HIGHER THAN TYPICAL OF 14 STATES AND GROWING, SAYS WCRI STUDY
 

CAMBRIDGE, MA, July 10, 2009   –   Payments per workers’ compensation claim to hospitals in North Carolina were much higher than typical of states in a 14-state study and growing rapidly, according to a new study by the Workers Compensation Research Institute (WCRI).

This was the main driver of the state’s somewhat higher-than-typical medical costs per claim and the focus of recent regulation in the form of fee schedule changes that will become effective in July 2009, WCRI said.

Reimbursement rates were lowered for hospital inpatient and outpatient services and for ambulatory surgery centers under the 2009 fee schedule changes. According to the financial impact statement prepared by the Office of State Budget and Management, the changes to the fee schedule would cut costs by an estimated $35.4 million, or about 10 percent of the amount projected to be spent on hospitals and ambulatory surgery centers during the 2009 to 2010 fiscal year.

The study, CompScope^™ Medical Benchmarks for North Carolina, 9th Edition, found that medical payments per claim in North Carolina were 13 percent higher than the median of the 14 states, but that result masked offsetting factors—higher payments to hospital providers and lower payments to nonhospital providers, compared to other study states.

Payments per claim to hospital providers were 43 percent above the median, the highest among the study states. That result stems from higher hospital outpatient payments per service for similar services, somewhat higher inpatient payments per claim, and a higher surgery rate.

The higher surgery rate suggests a different mix of care that leads to a more costly mix of services than in a state where hospital providers have a lower surgery rate and provide more primary care than in other states.

The study noted that the average hospital outpatient payment per service in North Carolina at $361 was 58 percent higher than the median state and nearly $100 higher than in the next highest states.

For example, payments per hospital outpatient service were much higher than typical for important service groups: more than 70 percent higher for minor radiology (X rays and ultrasounds), more than 40 percent higher for laboratory services, physical medicine, and major radiology (MRIs and CT scans), and roughly 15 to 20 percent higher for evaluation and management services and treatment/recovery/operating room services.

Under the new fee schedule, the hospital outpatient reimbursement rate was reduced to 79 percent of charges from 95 percent of charges for most hospitals. The number of services per claim was not a driver of higher payments per claim to hospital outpatient providers.

The study reported that about 38 percent of claims with more than seven days of lost time in North Carolina involved surgery, compared to 35 percent in the 14-state median.

By contrast, payments per claim to nonhospital providers were lower in North Carolina than typical, largely because of typical to lower prices paid (lower especially for frequently- provided services like evaluation and management and physical medicine). The lower prices paid were in line with the fee schedule, which was lower than the median of 42 states with fee schedules for all categories except surgery.

Although utilization for nonhospital services was generally typical of the study states, chiropractor involvement in North Carolina claims was among the lowest of the study states and, when involved, chiropractors had significantly fewer visits per claim. This may raise questions about access to chiropractor care for injured workers.

Medical payments per claim grew steadily—seven to 12 percent per year from 2001 to 2005 and at a somewhat slower rate (five percent) in 2006 for claims at an average 12 months of experience. The growth rate was slightly slower than in the median study state in 2006, but had been higher than the median in most prior years.

The study found rising hospital costs per claim were the main reason for the medical cost growth, with rapid growth for both inpatient and outpatient services through 2005. In 2006, hospital outpatient payments were the main driver of the increase; hospital inpatient payments were stable and payments to nonhospital providers declined five percent.   

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.