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Keefe: A New and Blurring Part of WC Reforms

By Eugene Keefe

Thursday, May 18, 2017 | 601 | 0 | 0 min read

A Chicago Democrat presented new Illinois workers' compensation reform legislation incorporating a “resource-based relative value scale,” or RBRVS, as the physician-health care payment system and a cost savings mega-plum for state employers and local governments.

Eugene Keefe

Eugene Keefe

This concept is now included in the pending workers' compensation bill as part of a compromise with Republicans to solve our nutty state's budget deadlock. Please note: Our state hasn’t had a real budget under Gov. Bruce Rauner. 

Sen. Kwame Raoul filed Amendment No. 4 to the “grand bargain,” or Senate Bill 12, last Wednesday; it remains in the Senate Assignments Committee. The proposed change calls for an RBRVS- or Medicare-based fee schedule to lower some of the highest workers’ comp medical costs in the U.S.

In short, it appears the doctors, hospitals and other health care givers are again being pushed to take moderate to dramatic cuts to demonstrate WC cost savings. This will be the third major cut in medical costs in the Illinois WC industry since the 2005-2006 amendments to the state WC Act were created.

From what we can tell, the state Chamber of Commerce, and other business and insurance interests, cautiously support this unexpected amendment.

What in tarnation is RBRVS?

As my wife said, it sounds like a complete snooze-fest. But it seems to be important for many WC industry folks to study, learn and start to understand. We assure you that we feel it could only be loved by nerds and dweebs, but sometimes those folks save you more money.

The American Medical Association's RBRVS overview is here. In its clear-as-mud explanation, AMA says:

The resource-based relative value scale (RBRVS) is the physician payment system used by the Centers for Medicare & Medicaid Services (CMS) and most other payers. The RBRVS is based on the principle that payments for physician services should vary with the resource costs for providing those services, and is intended to improve and stabilize the payment system while providing physicians an avenue to continuously improve it.

Sounds simple, sort of like quantum physics, right? Huh?

The RBRVS concept appears to have been implanted into California’s work comp system some years ago.

Stakeholders in the Illinois WC system feel the expected savings from RBRVS would depend on the percentages of Medicare reimbursement that would be allowed for doctors and hospitals by the Illinois Workers’ Compensation Commission, should Amendment No. 4 and the "grand bargain” in SB 12 pass and then be signed by Gov. Rauner. The new bill directs the IWCC to set the rates, but establishes parameters tied to where current medical reimbursement rates stand.

Jay Dee Shattuck, executive director of the Illinois Chamber of Commerce’s Employment Law Council, was quoted as saying, “We believe the change will bring Illinois’ workers’ compensation medical fee reimbursements more in line with medical fee schedules of other states around the country.”

He also said, “It more fairly reimburses management and evaluation service codes, which are some of the lowest in the country, and reduces the codes — such as surgery — that are some of the highest in the country.”

As we have advised our readers in the past, Jay Shattuck and Todd Maisch, the president of the state chamber, are among the top business leaders in the WC field in this state. If they did their homework and still like RBRVS, it is probably a solid idea, no matter how difficult and boring RBRVS may be to understand.

If you are interested in learning more about Illinois WC reform and/or cutting workers’ comp costs, consider joining the state chamber and the Employment Law Council.

Illinois currently has a home-grown, charged-based medical fee schedule based on geographic areas called "geozips." Illinois medical reimbursement rates are considerably higher than our state's neighbors, even with a 30% across-the-board reduction created from the 2011 amendments to the state Workers' Compensation Act, per the Illinois Policy Institute.

The Workers Compensation Research Institute’s recent study confirmed the average total cost per workers’ compensation claim in Illinois has decreased 6.4% since 2010, primarily due to significant cuts in medical costs. However, our overall WC costs continue to outpace most of the 17 other states studied in WCRI’s recent report.

Before that claim decrease, Illinois had the second-highest WC medical fee schedule, behind only Alaska, in a comparison with 43 other states and the District of Columbia, WCRI said in a 2016 study. After the medical fee schedule reduction, Illinois had the 10th-highest fee schedule rates among those 43 states when measured as a percentage of Medicare's maximums, WCRI said.

How would RBRVS affect your claims?

Sen. Raoul’s proposed fee schedule would continue to use four regions for non-hospital amounts, and 14 regions for hospital schedules. It would task the IWCC, within 45 days of the bill’s enactment or some time later this summer, to determine the Medicare percentage amount for each current procedural terminology and diagnosis-related group code, using the most recent data available from the CMS.

Within 30 days of that, the IWCC would be required to make several adjustments:

  • If the percentage for a particular CPT or DRG code is 125% of the Medicare rate or less, it would be set at 125%.
  • If the percentage is more than 125% but less than 150%, the rate would not be adjusted.
  • If the rate is greater than 150% of Medicare but less than 225%, the rate would be set at the higher amount of 150%, or 85% of the most recent maximum amount allowed for that CPT or DRG code in the current fee schedule.
  • If the Medicare percentage is greater than 225% but less than 428.57%, the amount would be set at 191.25% of Medicare or 70% of the current maximum rate.
  • If the percentage is greater than 428.57%, it would be set at 300%.
  • By Sept. 1 of each year, the IWCC would be required to raise the maximum fee for each CPT and DRG code by exactly half of the most recent annual increase in the urban consumer price index.

Eugene Keefe is a founding partner of Keefe, Campbell, Biery and Associates, a Chicago-based workers' compensation defense firm. This column was reprinted with his permission from the firm's client newsletter.

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