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A new WCRI study says that prices paid for common hospital outpatient shoulder and knee surgeries vary greatly depending on whether the treatments are paid for through workers’ compensation insurance or employer-sponsored group health plans. In most of the 16 states examined by the Workers Compensation Research Institute, workers’ compensation plans paid more — sometimes a lot more. The 16 states included in the study are California, Florida, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia and Wisconsin. The payments represent 60 percent of the workers’ compensation benefits paid in the United States.

The amounts paid to health care providers on workers’ compensation claims are often regulated by the states, but in some states, the payments are not regulated, but rather are negotiated between insurers and the health care providers. Five states are classified in the report as unregulated, or “no-fee schedule” states. In three of those states — Iowa, New Jersey, and Virginia — the workers’ compensation treatment costs were exceptionally high.

In Massachusetts and California, which have established fixed payment amounts that hospitals can charge in workers’ compensation cases, the payments were actually lower than payments made through group health plans. The average workers’ compensation payment in Massachusetts for shoulder surgery was $2,636 compared with $4,592 for group health plans. In California, workers’ compensation payments were $5,895, 16 percent lower than group health plans.

In Virginia, workers’ compensation insurers paid $11,321 on average for shoulder surgery, more than twice the $5,279 group health average in that state. In Iowa, workers’ compensation insurers paid $8,586 on average for shoulder surgery, which was 50 percent more than the group health care plans.

The average workers’ compensation payment for shoulder surgery in New Jersey was $7,323. Group health plans paid only $4,583 on average, a difference of $2,740, or 37 percent less.

In two-thirds of the states examined by the nonprofit research group, the workers’ compensation payments were higher than those paid by group health.  Another contributing factor to the particularly high costs paid by workers’ compensation insurers in several states where hospital fees are not regulated is that workers’ compensation insurers have less bargaining power in price negotiations with hospitals than the private group insurers, which represent a much larger portion of the market.