Posts Tagged ‘fee schedules’

Health Wonk Review & Other Noteworthy News

Thursday, January 17th, 2013

Health Wonk Review: The Inauguration Edition is freshly posted by Chris Fleming at the Health Affairs Blog. Here’s a preview: 2013 predictions, healthcare spending, risky behaviors, nursing workforce projections and more. A good and substantive edition: Get your wonk on.
Electric car crashes could pose new risk for first responders – With the proliferation of hybrids and new technologies, emergency workers that respond to the scene of an auto accident could be subject to shocks from batteries that have not powered down. See our prior post on Electric Vehicle Safety Training for first responders.
Are the flu & Tamiflu overhyped? – At Managed Care Matters, Joe Paduda casts a skeptical eye on the hoopla over the flu and the media’s propensity to blow everything up into a crisis. If it’s not shark month or killer bee week, we need some fear-factor issue to fascinate, worry, and horrify us. Don’t miss his comments on Tamiflu. But if you do need some workplace guidance, see Influenza tools & tips for you & your employees at HR Web Cafe. Also of interest: NIOSH Research on Airborne Influenza Transmission
A Primer on Fee Schedules – Peter Rousmaniere’s most recent column in Risk & Insurance is a good bookmark. He offers an overview and a rundown on the status quo on this complex and important managed care issue of how doctors get paid.
Internet-Use Disorder: The Newest Disability? – There’s apparently a growing catalog of technology related maladies – we’ve previously discussed Blackberry Thumb, Cell Phone Elbow, IPod Ear. But this one is actually included in the DSM-5 – although as a condition that requires further research. Jon Hyman of Ohio Employer’s Blog thinks it bears watching because if it is deemed a psychiatric disorder, then employees who suffer from it may be protected by the ADA. See his post for more on this.
For Americans Under 50, Stark Findings on Health – “Younger Americans die earlier and live in poorer health than their counterparts in other developed countries, with far higher rates of death from guns, car accidents and drug addiction, according to a new analysis of health and longevity in the United States.” Access the full report.
Drugs & Guns: Arming Investigators – Dave DePaolo posts that the Texas Medical Board (TMB) has asked the state’s attorney general to rule on whether the board may authorize its investigators to carry concealed handguns as private citizens when investigating pill mills. Drugs are a big and dangerous business. Ohio recently approved such a measure so the request is not without precedent.
CT officials hope to change workers comp law for Sandy Hook responders – Some lawmakers are looking to extend benefits to first responders for PTSD related to incidents like Sandy Hook (although it is unlikely any legislation would be retroactive). Currently, state law extends workers compensation benefits only to those who had a serious injury/fatality but not PTSD. We’ve seen this issue before: (Uncompensable) Nightmare at Work.
News Briefs

New Hampshire Fee Schedule: Climbing a Mountain in the Fog?

Wednesday, April 6th, 2011

Nearly a year ago we blogged the issue of a medical fee schedule in Maine. The legislature mandated the creation of a fee schedule way back in 1991. Twenty years later, there have been a few reports, a few changes in the membership of the committee trying to establish the fee schedule and, to date, no fee schedule. We now wonder whether neighboring New Hampshire will follow Maine’s example, climbing a slippery mountain trail into a deep fog.
New Hampshire, like Maine, has a two tiered system: in the first tier are managed care networks, which negotiate fees with doctors and hospitals. Everyone in the second tier – those outside the networks, the self-insured, smaller carriers, etc. – are stuck with paying the “usual and customary fees.” Medical costs account for 71% of total costs – a truly staggering number when compared to the national average of 58%.
Dr. Gary Woods, an orthopedic surgeon and chair of the NH Workers Comp Advisory Council, thinks that the high percentage of medicals is the result of good medical care, combined with a strong return-to-work focus: in other words, indemnity is relatively low because workers are not out of work very long. Well, doc, show me the numbers. I expect that New Hampshire – ranked 14th highest among states for comp costs – is spending too much on indemnity and way too much on medical services. It’s no bargain for anyone.
The Fix is (Not Quite)) In
The New Hampshire legislature is contemplating SB 71, which would impose a fee schedule on medical services. The bill proposes that hospitals be reimbursed at a uniform conversion rate of up to 150% of Medicare rates. While somewhat on the high side for such linked payments, it would probably bring down the overall costs of medical services in the state.
SB 71 is going nowhere, at least for the moment. The bill will remain in committee while the lawmakers appoint a study group to review the proposal and make further recommendations.
Ultimately, the details of the fee schedule will be in the hands of the comp advisory council, of which Dr. Woods is the chair. Hmm. This brings to mind the stalemate in Maine, where Dr. Paul Dionne was for a long time chair of the committee responsible for implementing the fee schedule. The group just couldn’t come up with a number that would satisfy the doctors. (How would a doctor define a fair fee schedule? “Usual and customary.” ) Last June, facing allegations of a conflict of interest, Dr. Dionne finally stepped aside.
Perhaps the good folks in New Hampshire could speed up the fee schedule project by asking Dr. Woods to step aside. No doctor is going to embrace a cut in reimbursement rates. Dr. Woods would have a choice: he could sit on the sidelines and watch the committee hash out the details, or, with his health and well-being in mind, he could put on his hiking boots and climb one of the Presidentials. I recommend the latter, even if the peak is momentarily obscured by the fog.
Thanks to Work Comp Central for the heads up on this issue (subscription required).

Fee Schedule in Maine: Interest without the Conflict?

Wednesday, June 23rd, 2010

We return to the beautiful state of Maine, where moose wander the woods looking for whatever interests a moose and where employers self-insured for workers comp look for a fee schedule. The moose are a lot happier than the self-insureds. As we have pointed out in prior blogs, the legislature mandated the creation of a fee schedule for medical services nearly 20 years ago. There is still no fee schedule. So while insurance carriers are free to negotiate with hospitals to determine rates, self-insureds – Bath Iron Works (BIW) the most notable and vocal – are stuck paying the exorbitant “usual and customary” fees.
BIW has sued a number of times to move this process to a conclusion. Most recently, they sued to remove Paul Dionne, chairman of the workers comp board, from heading up the fee schedule committee. Dionne is also board chairman of Central Maine Healthcare Corp., which includes Central Maine Medical Center in Lewiston. While he claims objectivity, Dionne is in an untenable situation: you do not ask a medical provider how much they want to cut their own revenues.
In deference to the “appearance” of a conflict of interest, and perhaps in an acknowledgement that after 20 years, enough is enough, Dionne has recused himself from any further involvement in the fee schedule process.
“It’s a hard decision because this is a very important issue for the workers’ compensation system,” he said. “But I’ve got a lot of confidence in the board members.”
So from here on Dionne will follow the debate from the sidelines: no conflict, but plenty of interest. His confidence in the other board members might give rise to anxiety for BIW. Regardless, this is surely a step in the right direction.
When it comes to the long-mandated, long-absent fee schedule, patience is wearing a bit thin in Maine. The moose may wander where they choose, but self-insureds are caught in a very expensive trap. Too bad they don’t sell fee schedules at L.L. Bean.

The Idaho Fee Schedule: An Opening Skirmish in the Cost Containment Wars

Tuesday, June 1st, 2010

With a population around 1.5 million and a land mass the size of New England, Idaho is probably not the first state that comes to mind in the national struggle to contain medical costs. Nonetheless, orthopedists in Idaho have managed to attract the attention of the federal government in their effort to increase rates of reimbursement for services. The feds are not happy with the Idaho docs.
The first problem came with the workers comp fee schedule. The “Resource-Based Relative Value system” set a price of $88 for most orthopedic procedures. The 65 or so orthopedists in Boise got together and decided to refuse to treat workers comp cases. As a result, the Industrial Commission raised the rates by 61 percent. Score one for the docs.
Emboldened by their success, the docs refused to accept Blue Cross patients under the prevailing fee scheme. But in taking on the conventional health care (as opposed to the state-based workers comp system), the docs crossed a line from a program run exclusively by the states into a behemoth system in which the federal government plays a big role. The feds came down hard with charges of violations of the Sherman Anti-Trust Act. Prosecutors sued five doctors, the Idaho Orthopaedic Society and the Idaho Sports Medicine Institute in Federal Court. If you think about it, it’s not hard to see how a bunch of doctors agreeing to hold out for higher reimbursements might fall under the general heading of “price fixing.”
As we have blogged rather frequently, Massachusetts has the lowest fee schedule in the nation. Most orthopedists have responded by refusing to accept the (ridiculously low) rates. But unlike the orthos in Idaho, the MA docs deal with the palty rates on their own. By refusing to accept them, they compel insurers to negotiate higher rates. These negotiated rates vary from doctor to doctor. There is simply no way and no need for the hundreds of orthopedic doctors in MA to agree on rates:it would be like the proverbial herding of cats.
In Idaho it’s different. The state’s unique characteristics – the large land mass and relatively small population – make a genuine “conspiracy” possible. The docs all know one another. So what seemed to them a fairly innocent attempt to leverage the system for higher reimbursement rates appeared to the feds as a conspiracy. In other words, their mistake was in sharing information about the rates and in uniting to take action against them. Had they acted individually, there would have been no violation of the anti-trust act.
War on Docs?
One blogger with roots in the libertarian Ludvig Von Mises movement sees in the government action a declaration of war against doctors. He believes that doctors will be “forced” to accept the government rates. Not exactly. As we have seen in Massachusetts, individual doctors can accept or reject patients as they please. What they cannot do is collude with fellow doctors to achieve a fee schedule to their liking.
With rising medical costs looming over every aspect of our economy, this little skirmish in Idaho is simply the opening salvo in what is likely to be a prolonged and painful battle to contain the costs of health care. It’s no accident that the Obama health care bill punted on the cost containment issue. One person’s cost containment plan is inevitably another’s cut in pay.
In the coming months, the battle of Idaho will move into the great metropolitan areas of our country. Just imagine the formidable barricades to be erected by the men and women in blue scrubs! This will be an interesting brouha, to say the least.

Fresh Cavalcade of Risk and other news briefs

Thursday, April 22nd, 2010

Cavalcade of Risk #103 – Risk Management with the Stars Edition is posted at My Wealth Builder. Check it out – and don’t miss Nancy Germond’s post on the alarming increase in the U.S. disability rate.
Misclassification – Employers can expect a heightened focus on misclassification, with a push on both the federal & state levels. Risk & Insurance reports that the Obama administration recently earmarked an additional $25 million in the DOL’s proposed FY 2011 budget for a misclassification initiative. The plan calls for hiring 100 additional enforcement personnel to address the problem and to provide grants to aid states in addressing the problem. Prior studies have indicated that more than 3 million employees may be misclassified. A 9-state study by the DOL found as many as 30% of audited employers misclassified at least some employees.
Fee schedules – Joe Paduda offers his thoughts on the role fee schedules play in workers comp: “…at best, a short term fix, and at worst, a blunt instrument that actually encourages over-treatment and extended disability.” He also cites a column by Greg Krohm, Executive Director of IAIABC, who has a similar take.
New blog finds
First up – as we all watch developments in the new health care law playing out, you might add Covering Health to your reading list. It’s a blog maintained by the Association of Health Care Journalists. While its mission it to keep health & healthcare journalists informed, it’s a good read for anyone tracking the issues. The Association of Health Care Journalists is an independent, nonprofit organization with more than 1,100 members, and is dedicated to advancing public understanding of health care issues. In addition to the blog posts, the blogroll has a good list of health news blogs.
Reinsurance, you say? Try reinsurance girl’s blog. She features a recent helpful post: Who to follow: insurance and reinsurance businesses in social media, which links to more reinsurance resources.
Death on the job – We haven’t linked to the Weekly Toll in some time – it’s a sobering look at recent on-the-job deaths. It puts a human face on statistics and exposes the geographic and industrial diversity of workplace fatalities. In a world that aspires to “zero defect” for product parts, can we aspire to any less when it comes to human injuries?
Hard market – Conning Research & Consulting forecasts that property and casualty insurance rates will begin to firm up in 2011 and that premium will grow modestly at about 2%. But the firm says to expect larger UW losses this year, and a deterioration in loss ratios. Meanwhile, the RIMS Benchmark Survey reports that the soft market still prevails, at least at present.
Virtual medicine – Jon Gelman has an interesting post about the trend to virtual doctors and online medical care, and speculates about whether such technological advances could benefit workers comp.
Massachusetts health care reform – “When Massachusetts’s politicians designed their reform, they calculated that achieving near-universal coverage first would then give all participants in the health care system an incentive to help rein in costs. There are encouraging signs that that is starting to happen.” This according to a New York Times editorial, Health Care Reform and Massachusetts. Thanks to Tinker Ready at Boston Health Blog for the pointer and for more links on Mass. reform.
Quick takes

Bath Iron Works: “All I want for Christmas is a Fee Schedule”

Monday, December 21st, 2009

It’s hard to think of anyone bullying Bath Iron Works, the General Dynamics subsidiary that builds destroyers for the U.S. Navy. But they are being kicked around like the proverbial 90 pound weakling by the workers comp system in Maine. Two years ago we blogged the inability of Mainers to come up with a viable fee schedule for workers comp medical costs. The legislation authorizing the fee schedule became law in 1992. Now we approach 2010 – nearly 20 years! – and there’s still no fee schedule.
Workers comp insurers are free to negotiate rates for medical services. In effect, they develop their own de facto fee schedules. Bath Iron Works (BIW) is self-insured for comp. They do not have the leverage to negotiate fees. So when a local hospital sent a bill for $107,000 for treatment of two injured workers, BIW filed a lawsuit. They lost: they had to pay the hospital’s “usual and customary” fees – an ironic appelation if there ever was one. The only suckers stuck with paying the full boat (so to speak) are self-insureds and uninsureds.
So how is the fee schedule coming along? And why the inordinate delays?
The rule-making group charged with developing the fee schedule is trying to come up with something acceptable to the medical providers. That’s like asking an employee how much of a pay reduction they would like. How about nothing? In the current draft, total billings of $80 million would fall by about $1 million. In other words, a drop of less than 1 percent. That’s a fee schedule only a medical provider could love!
The Massachusetts Model
Maine officials are worried that low fees would drive doctors away. Paul Dionne, executive director of the Maine Workers’ Compensation Board, says he heard from a group of orthopedic doctors who said if the board made the new base fee too low, “they weren’t going to treat injured workers. They’re private, they can do that.”
That’s not what happens in Massachusetts, which has the lowest fee schedule in the nation. Everyone recognizes that the fee is too low. So insurance carriers and TPAs routinely negotiate a reasonable fee with doctors on an individual basis. For example, the scheduled fee for hand surgery is only $725. The “usual and customary” fee of a skilled surgeon might be $5,000. The insurer and doctor would settle somewhere in the middle, perhaps $3,000 for the service. It sounds frictional and inefficient and to some degree it is, but overall, medical costs remain unusually low in Massachusetts, doctors continue to provide services and injured employees are satisfied with the results. The system is working despite what appear to be severely deflated medical rates.
One unusual and perhaps unintended benefit of the low fee schedule is the leverage it provides against medical providers who refuse to treat with a return-to-work focus. If “Dr. Feelgood” insists on keeping a marginally injured employee out of work, the adjuster can dig in and offer to pay only the deflated fee schedule rates. That will get the doctor’s attention immediately.
Maine used to be part of Massachusetts. If they want to solve this particular problem, they might consider re-joining the Commonwealth, or at least copying Massachusett’s highly successful comp model. Step one involves some tough negotiations – with or without the doctors in the room. Thus far, by trying to please everyone, Maine is punishing some of their most valued employers. Nearly twenty years into a failed process, it’s time to face reality: a fee schedule is a cut in pay. If the doctors are happy, it’s not an effective fee schedule.
Meanwhile, it looks like a bleak Christmas for the mighty folks at Bath Iron Works. There are undoubtedly a lot of nice goodies under their tree, but a fee schedule is not among them.

As Kelly goes, so goes the nation.

Wednesday, October 22nd, 2003

More and more, the nation’s health care crisis is bleeding into the workers’ compensation insurance arena where medical costs in a number of jurisdictions are rising dramatically.

Until now, many states had insulated themselves from escalating costs by creating and enforcing medical fee schedules, most often tied to Medicaid rates. While this strategy has mostly kept the lid on the pressure cooker of medical reimbursement, steam is beginning to escape as the medical community brings its considerable weight to bear on insurers. Around the country employers are feeling the heat intensify.

This week, Kelly Services, Inc., a large, international, publicly traded (KELYA) temporary staffing agency, saw its quarterly profit fall sharply due to an increase of $6.4 million in workers’ compensation medical costs.

The company, which places people in professional and industrial jobs, said that the third quarter workers’ compensation charge is the principle reason that its earnings have dropped from 18 cents a share a year ago to 4 cents a share this year.

In some states, medical costs now exceed the costs of indemnity, or wage replacement, costs. Nearly ten years ago, LynchRyan predicted that such a thing could happen (The LynchRyan Report, Spring, 1994, Managed Care – Who Manages, Who Cares?), but even we never thought things would get so bad so fast!