Hospital Outpatient Costs Still Rising Says New Study

A new study released earlier this week by the Workers’ Compensation Research Institute (WCRI) and reported on in Claims Journal, found the following:

  • States with percent-of-charge-based fee regulations or no fee schedules had the highest payments to hospitals for outpatient surgical episodes for knee and shoulder surgeries. In particular, states with no hospital outpatient fee schedules had 60 to 141 percent higher hospital outpatient payments per episode compared with the typical state with fixed-amount fee schedules.
  • There was tremendous variation in the rates of change in hospital payments per surgical episode across states. From 2006 to 2013, South Carolina saw a reduction of 31 percent in this metric while in Alabama the average hospital payment per surgical episode grew by 81 percent. States with percent-of-charge-based fee regulations or no fee schedules had more rapid growth in hospital outpatient payments per episode than states with other regulatory approaches. In particular, most percent-of-charge-based fee regulation states that did not have updates to the reimbursable percentage of charges experienced growth in hospital payments per surgical episode that was 157–286 percent faster than the median of states with fixed-amount fee schedules.
  • States with cost-to-charge ratio fee regulations had similar levels and growth rates in hospital outpatient payments per episode to states with fixed-amount fee schedules. Hospital outpatient payments per episode in states with cost-to-charge ratio regulations grew 10–25 percent from 2006 to 2013.

The indices compared payments per surgical episode for common outpatient surgeries under workers’ compensation from state to state for each study year, as well as the trends within each state, from 2005 to 2013.

The WCRI study covered 33 large states, representing 86%  of workers’ compensation benefits paid in the United States. The states are studied in the report were : Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.

Given this study’s findings and the scope of states represented, it would be a no-brainer for any insurance company or broker, or any employer to consider alternatives to the ever increasing cost of hospital care in the US, by exploring medical tourism hospitals which charge a fraction of what US hospitals are charging.

Yet, the workers’ comp industry still ignores what is staring them in the face, and insists that if they do something different, if they use this technique, or that company’s cost-saving scheme, they are going to save money on expensive surgeries. IT AIN’T GONNA HAPPEN, FOLKS.

Earlier this week, my fellow blogger, Peter Roumaniere, released a report called, “Seismic Shifts: An Essential Guide for Practitioners and CEO’s in Workers’ Comp”, published by WorkCompCentral, and reported by Lynch Ryan.

The report examines how technology and changes in the demographics of the workforce will impact workers’ comp from the present through 2022. Some of the report discussing things that this writer has already seen personally from experience in the industry, such as the shrinking of the workers’ comp industry as more companies are bought up or go out of business altogether, how jobs in industries that used to account for the bulk of workers’ comp claims are seeing a decline in claims being filed, how automation is impacting the processing of workers’ comp claims, and the nature of how adjusters do their job.

From what I found in the report, it would seem that there is not much time for the industry to adapt to the changes Peter outlines, and given the resistance to change with regard to rising health care costs in general, and medical care costs in workers’ comp in particular, as I have discussed in previous posts, it would take some really forward thinking executives to throw caution to the wind, step outside of the padded cell, and find alternatives on their own.

These two excellent reports paint a very bleak picture indeed for the industry if they refuse to act, and act now, instead of waiting for 2022, to make these and other necessary and crucial changes. Opting-out of state systems is one way, but will take years to spread through all fifty states, let alone a majority of states, and as costs keep rising, with no end in sight, economic laws of supply and demand will necessitate looking at better quality health care for lower costs in medical tourism destinations.

You have until 2022 to change, so my advice is to start now. As I mentioned in an earlier post, I am willing to work with any broker, carrier, or employer who is sick and tired of being bled by the Wall Street vulture capitalists and the entire medico-legal system known as workers’ comp, to save money, and to provide the best care for their injured workers or their client’s employees, while at the same time, helping to break the monopoly of the American health care cartel.

You know where to reach me.

If you would like to purchase the WCRI report, you can order it here:


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