With rising hospital costs a focus of public policy debates across the country, a new study from the Workers Compensation Research Institute (WCRI) finds that hospital outpatient payments are lower and growing slower in states with fixed-amount fee schedules.
“This study provides meaningful comparisons of hospital payments across states, as system policymakers and stakeholders monitor hospital payment trends in relation to reforms of hospital outpatient fee regulations,” said Ramona Tanabe, WCRI’s CEO.
The study, Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 13th Edition, compares hospital payments for a group of common outpatient surgeries in workers’ compensation across 36 states from 2005 to 2022. The 36 study states represent 88 percent of the workers’ compensation benefits paid in the United States.
The following is a sample of the study’s findings:
– – Hospital payments per outpatient surgical episode in states with percent-of-charge-based fee regulations were 65 to 196 percent higher than the median of the study states with fixed-amount fee schedules in 2022. In states with no fee schedules, they were 65 to 128 percent higher.
– – The growth in hospital outpatient payments per episode among non-fee schedule states ranged from 41 percent in Arizona to 75 percent in New Jersey, while the payments in the median fixed-amount fee schedule state without substantial changes in regulations increased about 17 percent from 2011 to 2022.
– – This study also provides a comparison between workers’ compensation hospital outpatient payments and Medicare rates. For example, the variation between the average workers’ compensation payments and the Medicare rates for a common group of procedures across states ranged from a low of 40 percent (or $2,743) below Medicare in Nevada to a high of 443 percent (or $25,202) above Medicare in Alabama.
The study also provides an analysis of major policy changes in states with recent fee schedule reforms. For example, effective November 15, 2022, Mississippi updated the state’s Ambulatory Payment Classification (APC)-based fee schedule, from the 2019 Medicare APC values to the 2022 Medicare APC values. In 2022, the hospital outpatient payments increased by 15 percent. Other policy changes are also reviewed in the report.