Large Variations in Payments for Hospital Outpatient Care to Injured Workers

Back in April of this year, I wrote about a study by the Workers’ Compensation Research Institute (WCRI) in which it was found that fee schedules may increase the number of workers’ comp claims.

Today, the WCRI released a new study that said that “hospital outpatient payments per surgical episode varied significantly across states, ranging from 69 percent below the study-state median in New York to 142 percent above the study-state median in Alabama in 2014,” according to Dr. Olesya Fomenko, co-author of the study and economist at WCRI, and who also is mentioned in my previous post.

The report also stated that “variation in the difference between average workers’ compensation payments and Medicare rates for a common group of procedures across states was even greater—reaching as low as 27 percent (or $631) below Medicare in New York and as much as 430 percent (or $8,244) above Medicare in Louisiana.”

Here are the major findings:

  • States with no workers’ compensation fee schedules for hospital outpatient reimbursement had higher hospital outpatient payments per episode compared with states with fixed-amount fee schedules—63 to 150 percent higher than the median of the study states with fixed-amount fee schedules. Also, in non-fee schedule states, workers’ compensation paid between $4,262 (or 166 percent) and $8,107 (or 378 percent) more than Medicare for similar hospital outpatient services.
  • States with percent-of-charge-based fee regulations had substantially higher hospital outpatient payments per surgical episode than states with fixed-amount fee schedules—32 to 211 percent higher than the median of the study states with fixed-amount fee schedules. Similar to non-fee schedule states, workers’ compensation payments in states with percent-of-change based fee regulations for common surgical procedures were at least $3,792 (or 190 percent) and as much as $8,244 (or 430 percent) higher than Medicare hospital outpatient rates.
  • Most states with fixed-amount fee schedules and states with cost-to-charge ratio fee regulations had relatively lower payments per episode among the study states. In particular, for states with fixed-amount fee schedules, the difference between workers’ compensation payments and Medicare rates ranged between negative 27 percent (or -$631) and 144 percent (or $2,916).

Still think that workers’ comp is doing okay? Still think that keeping the status quo is the best option for injured workers? Still think that thinking outside the box, and considering alternatives to the ever increasing cost of medical care for workers’ comp is stupid, ridiculous and a non-starter?

Or do you believe, as Joe Paduda wrote about today in his blog, that workers’ comp is no longer needed for 90% of America’s employees, as the workplace has become safer than the non-occ environment.

The idea brought forth, and as Joe said, it is an intriguing, but wrong one, is that the medical care can be provided under health insurance, and the disability coverage can be added to long-term or short-term disability insurance.

Whichever way you look at the issue, workers’ comp is not going away, but it is getting more expensive to pay for medical care. The problem here is, too many Americans are slavishly wedded to outmoded ways of thinking, outmoded economic policies and models, as well as an outmoded economic ideology, to think rationally and seriously about alternatives.

Lastly, there are too many cooks (or should that be crooks) with their hands in the pot who have a vested interest in keeping things the way they are. If that is so, then the WCRI is only telling us what we should already know…injured workers are screwed and so are the carriers and employers. As long as outside interests have a hand in the system, and those who profit from higher costs block real change, this situation will only get worse.

I am sure glad it is not my money being wasted like this.

As always, to purchase the study click this link:


6 thoughts on “Large Variations in Payments for Hospital Outpatient Care to Injured Workers

  1. dinajpadillagmailcom

    I think Joe Paduda is one of the most over paid useless people in the worker comp system and we shouldn’t pay for salary via insurance premiums that we all have to pay either through home, health care or car.


  2. Transforming Workers' Comp Post author


    I will not tolerate any criticism of a fellow blogger. I have spoken to him a few times, and I respect his opinion. With the death of David De Paolo and the demise of Business Insurance, we need people like Joe.

    The only people I criticize are two men who in the beginning, attacked my idea for work comp and medical travel.

    I thank you to never comment like this again, or I will delete your comment immediately. Joe cares. It is just that the entire health system, including work comp is skewed towards those who profit the most from it, and not to the workers or the general public. Joe’s articles are insightful and are very popular.

    Please realize that not everyone is an enemy of injured workers. You do your cause a great disservice.


    1. dinajpadillagmailcom

      Richard, WHEN anyone like Joe Paduda says that there is no need for workers comp insurance because the workplaces are safer and an that our heath insurance can cover this rather than the employer take care of their financial responsibilities for the workers that are injured , ill or dead because of what the employer didn’t do and should’ve done, then I get greatly offended as an injured worker who got so abused by all of those who are running the comp system, those who are the experts that don’t know a damn thing because unlike me they haven’t listened for 3 decades, the many thousands of injured workers who end up in the same tortuous boat that more than borders on fraud and corruption all for the sake for employer not to have dole out on their profit margin , that injured workers are just a thing to make money off of, then I have to wonder why JOE HAD to say what he did. What needs to be done to save costs is for the many in the middle to just get other jobs, instead of getting in the way of injured workers getting the medical care they need and something sustainable to lvie on and not live on the streets or commit suicide.
      WE had 7 suicides in 2 years and the employer is a HMO! That started my trek in this even while injured my own darn self. If Joe or anyone else wants to exactly what they re talking about, then he needs to talk to those who have been through it and look at them as a thing. God forbid that anyone in the insurance industry get hurt at work, only to find out what being in the WC system is really like and people like Joe wouldn’t say the things he does which don’t belong to anything in WC. for injured workers.


  3. Transforming Workers' Comp Post author


    You obviously DID NOT read Joe’s article. He did not say that there is no place for Work Comp. That was someone else. Joe clearly said he disagreed with that person and said it was here to stay.

    Once again, your outrage towards anyone in the industry got the better of you. You need to re-read his article again, and pay close attention to the man he mentions, as that is the person you should be angry at.

    Blind hatred of people who are trying to do good is not the way to go.


      1. Transforming Workers' Comp Post author


        Apology accepted, but check your facts before you go off on a rant.

        There are scenarios that are possible for the future, one of them is the bundling of both comp and health care, since the medical care is nearly the same. Example, a knee surgery for a worker is no different than one for someone with a chronic injury to the knee.

        The other scenario is that work comp goes away, as this person said in Joe’s piece, and really there is no difference between the bundling scenario and his, only in that instead of health insurance alone, as with bundling, there would be two forms of coverage, health insurance for the injury and disability insurance for both short or long-term disability.

        I’ve written about bundling in the past, and about having two silos, so this individual is not far off. Yet, it probably will not happen, as there will always be risks to some jobs in the future.


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