The Rip-off Continues

Once again, Joe Paduda comes up with a post that sheds light on the problems of the US health care system and its impact on Workers’ Compensation. Today’s blog post looks at the way Medicare-based fee schedules have caused Workers’ Compensation carriers to pay more for medical care because the RBRVS (Resource Based Relative Value System) that Medicare uses, estimates the time it takes for physicians to do certain tasks, which in turn determines their bill for the procedures and treatments they perform (you see, I did learn something in my MHA degree program).

According to Joe, time estimates are (generally) way overstated, resulting in higher compensation for docs, higher costs for taxpayers, and a whole raft of downstream unintended effects – including higher costs for work comp payers.

The estimating is conducted by the AMA’s Resource Based Relative Value System Update Committee (RUC). Joe mentions a piece in the Washington Post that said the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent …If the time estimates are to be believed, some doctors would have to be averaging more than 24 hours a day to perform all of the procedures that they are reporting. This volume of work does not mean these doctors are doing anything wrong. They are just getting paid at the rates set by the government, under the guidance of the AMA.

Over thirty states with fee schedules, Joe points out, uses RBRVS as the basis of their fee schedule. California is adopting RBRVS, Joe goes on to say. It is also important to state, that CMS set the dollars per time unit, so the ultimate cost is also based on that as well.

What this means to the Worker’ Comp industry is this, Joe says, there’s no getting around that the AMA’s RUC is inflating the time, and thereby inflating their members’ income, and employers’ and taxpayers’ work comp costs.

The question that the Work Comp industry must ask itself is this, how much longer are you going to stand by and allow the American health care system to rob you, cheat you and steal you blind (pardon the pun). When is the industry going to accept the fact that whatever means you employ to lower the cost of medical care for work comp claimants, the health care system is going to charge you more and more.

You are avoiding a simple economic reality that goods and services always flow to those who can produce those goods and services faster and cheaper. You are causing your own misery by relying on the health care system here to provide you with lower cost care.

The fact that the AMA, CMS, and hospitals (see my last post) are charging the industry more for medical care than what should be charged is proof positive that there is something terribly wrong here.

The refusal of the industry to see reality reminds me of the play I just saw this past Sunday. It was a local production of ‘Man of La Mancha’ in a concert format, and as anyone who has ever seen it, or read the original novel by Cervantes knows, Don Quixote is brought to his senses when his niece’s fiance disguised as the evil “Enchanter” or “Knight of Mirrors” forces Quixote to look into a mirror and see his real face.

That’s where the workers’ comp industry needs to be. It needs to look in the mirror and see what fools they are for trusting the AMA, CMS and hospitals and doctors to provide them with lower costs for medical care.

Medical tourism will offer that, not for everything, but for most surgeries that are by now recognized to be overly inflated and based on a value system that is governed by the practitioners, and not the payers. It won’t be easy to implement medical tourism into workers’ comp, as I have said before, and it is not without its complications and risks, but what is more risky, trusting physicians and government agencies that over-inflate estimates of physician’s time units, or sending a claimant to a medical tourism facility that is the best facility in that destination country and spending a fraction of the cost of care that you would here in the US?

The choice is yours, of course, but like Don Quixote, only you can come to your senses.

This entry was posted in Health Care Costs, Medical Tourism, Workers' Compensation and tagged , , , , , on by .

About Transforming Workers' Comp

Have worked in the Insurance and Risk Management industry for more than thirty years in New York, Florida and Texas in the Claims and Risk Management spheres, primarily in Workers’ Compensation Claims, Auto No-Fault and Property & Casualty Claims Administration and Claims Management. Have experience in Risk and Insurance Business Analysis, Risk Management Information Systems, and Insurance Data Processing and Data Management. Received my Master’s in Health Administration (MHA) degree from Florida Atlantic University in Boca Raton, Florida in December 2011. Received my Master of Arts (MA) degree in American History from New York University, and received my Bachelor of Arts (BA) degree in Liberal Arts (Political Science/History/Social Sciences) from SUNY Brockport. I have studied World History, Global Politics, and have a strong interest in the future of human civilization in all aspects; economic, political and social. I am looking for new opportunities that will utilize my previous experience and MHA degree. I am available for speaking engagements and am willing to travel. LinkedIn Profile: Resume:

5 thoughts on “The Rip-off Continues

    1. Andrea Cagle

      Working in comp in California, and us having had reform effective 1/1/04, 1/1/13, and 1/1/14 regarding payments and liens that bolstered our current fee schedules, and knowing that our current Medical Fee Schedule was made for the purpose of getting away from our old RVS system we used prior to 1994, I am curious to know where the info about California supposedly adopting this RBRVS over our current fee schedules originated. Were any sources cited? We have different types of fee schedules for different types of services, and MDs and DOs already have time built into their payment codes in the current fee schedule we have, with different levels of exams based on a duality of time spent, extent of exam/record review, as well as type of injury. So, a doctor could say he spent 3 hours for the exam and review of records, but if it is a sprained toe, he isn’t going to get the highest level exam code. But if the injury is a traumatic brain injury, that is different, and matches the exam the doctor is saying he did.


      1. richardkrasner Post author


        I don’t know where the info about California originated from, I only reported on what Joe Paduda reported to his readers. There were no other sources cited other than the ones I linked to and that Joe mentioned in his piece. The Washington Post article was not linked, but if it had been me writing it, it would have.

        From what I know of CA comp, there is a lot of difference between what is done there and in other states. Reading the CA WC Stat Manuals some years back as part of my job with a software company, sounded to me like a hippie surfer wrote it, so I am not surprised that CA has so many codes.


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