Designing Workers’ Compensation Medical Fee Schedules

By Olesya Fomenko, Te-Chun Liu

June 1, 2012 Related Topics: Fee Schedules

As policymakers from across the country search for ways to contain rising medical costs in the workers’ compensation arena, one tool that is often considered is a medical fee schedule.   

Since the construction of a medical fee schedule involves a delicate balance of tradeoffs, the Workers Compensation Research Institute (WCRI) released this study to highlight some of the most important design choices that public officials face in adopting, reforming, and updating a fee schedule, and to show how the 43 states with physician fee schedules have resolved these choices, as of July 2011.  

These Choices Include:

  • Should the fee schedule be based on the relative values of different medical services or based on some other metric (e.g., historical charges or usual and customary charges)?
  • If based on relative values, should the fee schedule use the relative values developed for the Medicare program or some other set of relative values?
  • Should the state use a single  conversion factor (monetizing factor) for all services or implement different conversion factors for different groups of services (e.g., surgery, radiology, etc.)?
  • If multiple conversion factors are adopted, how large should the disparity be between different service groups?
  • How high or low should the fee schedule level be set?
  • Should the state use a single fee schedule for the entire state or have different fee schedules for different regions?

In addressing the different design choices, the study also provides the inter- and intrastate comparisons of the workers’ compensation fee schedule rates that illustrate the realization of the fee schedule design options. Additionally, the state- and service group-level comparisons of the workers’ compensation fee schedules answer a common question that policymakers and stakeholders ask: “How does my state compare to other states?”

Designing Workers’ Compensation Medical Fee Schedules. WC-12-19. June 2012.

Copyright: WCRI

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