Cambridge, MA, May 31, 2023 – During these times when rising hospital costs are a focus of public policy debates, a new study from the Workers Compensation Research Institute (WCRI) finds that hospital outpatient payments are lower and growing slower in states with fixed-amount fee schedules.

“This study provides meaningful comparisons of hospital payments across states, as system policymakers and stakeholders monitor the hospital payment trends in relation to reforms of hospital outpatient fee regulations,” said Ramona Tanabe, WCRI’s CEO.

The study, Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 12th Edition, compares hospital payments for a group of common outpatient surgeries in workers’ compensation across 36 states from 2005 to 2021. The 36 study states represent 88 percent of the workers’ compensation benefits paid in the United States. The following is a sample of the study’s findings:

• Hospital payments per outpatient surgical episode in states with percent-of-charge-based fee regulations were 81 to 190 percent higher than the median of the study states with fixed-amount fee schedules in 2021. In states with no fee schedules, they were 70 to 138 percent higher.
• The growth in hospital outpatient payments per episode among non-fee schedule states ranged from 42 percent in Arizona to 72 percent in New Jersey, while the payments in the median fixed-amount fee schedule state without substantial changes in regulations increased about 14 percent from 2011 to 2021.
• This study also provides a comparison between workers’ compensation hospital outpatient payments and Medicare rates. For example, the variation between the average workers’ compensation payments and the Medicare rates for a common group of procedures across states ranged from a low of 39 percent (or $2,594) below Medicare in Nevada, to a high of 408 percent (or $22,799) above Medicare in Alabama.

The study also provides an analysis of major policy changes in states with recent fee schedule reforms. For example, effective on January 1, 2021, Colorado updated the rules of reimbursement for multiple surgical procedures, adopting a Medicare reimbursement approach. After this change, the hospital outpatient payments in Colorado experienced a 27 percent decrease in 2021. Other policy changes are reviewed in the report.

For more information about this report or to download a copy, visit https://www.wcrinet.org/reports/hospital-outpatient-payment-index-interstate-variations-and-policy-analysis-12th-edition. The report was authored by Olesya Fomenko and Rebecca Yang.

ABOUT WCRI

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Organized in late 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods. Objectivity is further ensured through rigorous, unbiased peer review procedures. WCRI's diverse membership includes employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia, and New Zealand.

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