A workers’ compensation medical fee schedule is one of the most common tools used in workers’ compensation medical cost containment. Forty-three states used some form of medical fee schedule in 2009.

The designing or updating of fee schedules is often subject to political pressure from payors and providers and involves a delicate balance. If fee schedule rates are set too high, their effectiveness as a cost savings tool is limited; if fee schedule rates are set too low, treating injured workers may be uneconomical for providers and may jeopardize a workers’ access to quality care.

To ground political debates in fact rather than partisan rhetoric, this report, Benchmarks for Designing Workers’ Compensation Medical Fee Schedules: 2009, focuses on the relative comparisons between workers’ compensation fee schedules and state Medicare fee schedules as of December 2009. This report analyzes only nonhospital and nonfacility fee schedules.

Among our findings: 

• Substantial differences in workers’ compensation fee schedule rates exist from state to state when compared to the Medicare fee schedule in each state. The premium over Medicare varied from 8 percent above Medicare in Massachusetts to 215 percent above Medicare in Alaska. (See Figure 1.)
• The interstate variation in fee schedules was not necessarily related to the interstate variation in the expenses that medical providers incurred in producing the services – e.g., malpractice insurance and office practice expenses.
• Many state fee schedules may create financial incentives to overuse invasive and specialty care. Nine states, however, set rates that result in the premium over Medicare being relatively the same (within 
• 45 percentage points) for each of eight major service groups, which may neutralize some utilization incentives.

Some states may have set fee schedule rates for certain service groups that may be below an optimal level, raising concerns about access to quality care. The most likely candidates are states with fee schedule rates that are near or below the state’s Medicare rates.

WCRI Report: Benchmarks for Designing Workers’ Compensation Medical Fee Schedules: 2009. WC-10-32. June 2010.
 

Copyright: WCRI