Why is workers comp reimbursement based on Medicare?

Wednesday, February 20, 2008 | 1

By Joe Paduda

Many states have physician fee schedules for workers' comp, and most of those are based on Medicare.

That makes no sense.

Medicare covers all the health conditions and maladies encountered by elderly and disabled folks -- from breast cancer to cataracts, from dementia to diverticulitis. There is little to no concern for the patient's ability to 'return to work'; few are actually working.

In contrast, most of the working population is not old, and the conditions are overwhelmingly musculoskeletal, and returning that claimant to functionality is critical. There is lots of paperwork to fill out, return to work scripts to write, adjusters to talk with, job descriptions to review, and employers to appease, all while treating an injury and dealing with a worker who may/may not want to return to their job.

Sure, many states pay providers a slight premium over Medicare, but that premium doesn't even offset the already low medicare rate, much less adequately compensate providers for the additional work.

Unfortunately, a bad situation may well get worse. Medicare reimbursement is scheduled to decline, and not by a little. According to Paul Ginsburg writing in the Health Affairs blog, "a cumulative payment rate reduction of 41% is scheduled through 2016 (9.9% on  July 1 and approximately 5% annually thereafter), in contrast to a 21% increase in physician input prices projected by the Medicare Actuary."

Yes, although their costs are going up 21% over the next ten years, they will be paid 41% less. And due to the shortsightedness of regulators and legislators, reimbursement for comp will suffer an identical drop. I know, Congress always bails out the docs and increases reimbursement...but sooner or later that won't happen. Then we're really in trouble.

Perhaps states should start thinking now about a smarter way to pay docs.

Or, we can wait for Congress...

<i> Joseph Paduda's Weblog, managedcarematters.com, on managed care for group health, workers compensation and auto insurance, covering health care cost containment, health policy, health research, and medical news for insurers, employers, and healthcare providers. Paduda is the principal of Health Strategy Associates.</i>