Monday, January 27, 2014

Fighting Over Fee Schedules

Referencing a new draft bill in Wisconsin seeking to establish a medical fee schedule for workers’ compensation, Mark M. Grapentine, a senior vice president of government relations for the Wisconsin Medical Society, is on the record as saying, “This will cause a holy war at the capital.”

Might have phrased it differently, but I get his point.  He might not even be far off the mark.  There are some big stakeholders involved and one of them (the physicians) wasn’t invited to the table.

A fee schedule seems like a straightforward way to combat medical inflation and workers’ compensation reimbursement severity, but a glance at price and utilization numbers out of Wisconsin wouldn’t suggest such a legislative move is necessary.  The linked article points out, courtesy of the National Council on Compensation Insurance, Wisconsin ranks in the top third of all states considered with one of the lowest average costs per medical claim filed between 2010 and 2012.  Similarly Wisconsin can boast the fewest work days lost to disability by total disability claim of any state.

To some extent, we know what to expect with the implementation of a fee schedule: a negligible impact on utilization and an inelastic price response.  The recent WCRI study on the impact of a fee schedule adjustment in Illinois serves as an excellent case study.  While there was a 30 percent reduction in the Illinois medical fee schedule enacted in 2011, medical prices on average fell 24 percent.  This was accompanied, however, by more frequent billing of costlier and more complex offices visits.

My guess?  This is a result of income targeting.

An implementation of a fee schedule in Wisconsin might similarly leave providers to pursue income targeting – increasing the amount of services provided to maintain the previous income level.  Or it might cause providers to exit the business.  As always time will tell and hopefully someone’s keeping track.

The economic recovery, while slow, is still ongoing.  As employment numbers rise, so do workers’ compensation claims and expenditures.  A fee schedule is a means of controlling costs, but it may do so at the cost of quality services and overburdened physicians.  And lest we forget, the full impact of the Affordable Care Act has yet to play itself out as well.

I’d be surprised if Wisconsin legislators were eager to move on a new fee schedule.
On Twitter @PRIUM1

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