Study: North Carolina Workers’ Comp Hospital Outpatient Payments Increase

Hospital charges for the treatment of injured workers in North Carolina are growing quickly following regulatory changes to help reduce outpatient costs, according to a new study by the Workers Compensation Research Institute (WCRI).

“This study is an invaluable tool for policymakers and other stakeholders who are looking to better understand the impact of recent provisions focused on cost drivers in North Carolina’s workers’ compensation system, such as the fee schedule reductions,” said Ramona Tanabe, deputy director and counsel.

The Early Impact of Outpatient Fee Schedule Reduction in North Carolina: CompScopeTM Medical Benchmarks, 12th Edition, study provides a look at the early impact of the effort to reduce outpatient hospital costs. Hospital payments per claim in North Carolina have been among the highest of the 16 states studied since at least 2004.

Regulations enacted in 2009 reduced the reimbursement rate for hospital outpatient services. Effective July 27, 2009, the outpatient fee schedule was reduced to 79 percent of charges from 95 percent for most hospitals. The study findings reflect eight months of experience under the fee schedule reduction.

The WCRI study said that the payment-to-charge ratio for hospital outpatient services overall was reduced as expected, to 72 percent from 82 percent. Growth in the average payment per service was moderate at three percent.

However, the study reported the average charge per service grew 17 percent compared with a similar period for the prior year. By contrast, in prior years the changes for payments and charges generally were consistent.

The study reported that charges increased at a rate much faster than cost-savings estimates anticipated. Over time, the study said, this could affect the impact of the fee schedule reduction, because a lower percentage of a higher charge would be less likely to achieve the state cost-savings goals.

According to the study, prior to the implementation of the fee schedule reduction, charges per service increased rapidly for some services, especially for treatment/operating/recovery room services.

Physical medicine services, a high frequency service, showed little impact from the fee schedule reduction because they were already being paid at significantly lower than 79 percent of charges, the study said.

Source: WCRI