The Division of Workers’ Compensation (DWC) has posted an adjustment to the inpatient hospital section of the Official Medical Fee Schedule (OMFS) to conform to changes in the 2017 Medicare payment system as required by Labor Code section 5307.1. The effective date of the changes is January 1, 2017.

Under the regulatory definitions the term “Hospital” means any facility as defined in Section 1250 of the Health and Safety Code.The term “Inpatient” means a person who has been admitted to a hospital for the purpose of receiving inpatient services. A person is considered an inpatient when he or she is formally admitted as an inpatient with the expectation that he or she will remain at least overnight and occupy a bed, even if it later develops that such person can be discharged or is transferred to another facility and does not actually remain overnight.

The Medicare FY17 update to the inpatient prospective payment system was published on August 22, 2016 in the Federal Register (Vol. 81 FR 56762). Using this publication, the DWC calculates changes to Title 8, California Code of Regulations, sections 9789.20 – 9789.25 consistent with the Labor Code requirements.

L.C. 5307.1(g)(1)(A)(i) provides that the annual inflation adjustment for inpatient hospital facility fees for California workers’ compensation claims shall be determined solely by the estimated increase in the hospital market basket. Thus, in lieu of using the Medicare FY2017 rates to determine the updated OMFS amounts, the estimated increase in the hospital market basket was applied to the 2016 OMFS rates for dates of discharge effective, January 1, 2017.

Based on the Medicare Hospital Inpatient Prospective Payment System, all hospitals are paid the same standard rate for operating costs (based on the rate for hospitals located in large urban areas). The 2016 rate was $6,269.83. The estimated increase in the market basket is 2.7%. The 2017 standard rate under the OMFS will become $6,439.11 ($6,269.83 x 1.027).

Pursuant to Labor Code section 5307.1(g)(2), the Acting Administrative Director of the Division of Workers’ Compensation orders that to the extent references to the Federal Register or Code of Federal Regulations are made in any sections starting from section 9789.20 through 9789.25 of Title 8 of the California Code of Regulations, said section is hereby amended to incorporate by reference the applicable Federal Register final rule (including correction notices and revisions) and Federal Regulations in effect as of the date the Order becomes effective, to be applied to discharges occurring on or after January 1, 2017.

Further information and adjustments to the inpatient hospital section of the Official Medical Fee Schedule can be found on the DWC website’s OMFS page.