Moore: Fee Schedules = Less Costly Claims and Premiums

Tuesday, July 10, 2018 | 0

Virtually all workers' compensation fee schedules cut comp costs across the board. 

James Moore

The Workers Compensation Research Institute just published a massive study on workers compensation fee schedules. The study covers 87% of the workers' comp benefits paid in the U.S. 

Drs. Rebecca Yang and Olesya Fomenko’s extremely comprehensive study covers 35 states. These two researchers are data geniuses along with all the staff at WCRI.   

For many years (more than 11) I have written numerous articles on fee schedules.  Why? Because they are governmental interventions that usually totally works to reduce the cost to employers, carriers and all other parties.

Virginia just enacted a fee schedule. For some reason, I thought Virginia would never have one. Some tweaks will likely be needed for that fee schedule. 

The WCRI study compares medical prices paid in 35 states and tracks price changes in most states over a 10-year span, from 2008 to 2017, for professional services billed by physicians, physical therapists and chiropractors.

The medical services fall into eight groups: evaluation and management, physical medicine, surgery, major radiology, minor radiology, neurological testing, pain management injections and emergency care.

One interesting development pointed out by WCRI is that the following states had major fee schedule changes: Arizona, California, Colorado, Illinois, Kentucky, Massachusetts, North Carolina and Texas.

The rating bureaus such as the National Council on Compensation Insurance (most of nation) and the Workers' Compensation Insurance Rating Bureau (California) both provided numerous articles on fee schedules reducing costs.  

The following is a sample of the WCRI study’s findings (directly from its website): 

• Prices paid for a similar set of professional services varied significantly across states, ranging from 26% below the 35-state median in Florida to 158% above the 35-state median in Wisconsin in 2017.
• States with no fee schedules for professional services had higher prices paid compared with states with fee schedules — 39% to 168% higher than the median of the study states with fee schedules in 2017.
• Changes in prices paid for professional services exhibited variation across states, spanning between a 17% decrease in Illinois and a 39% increase in Wisconsin over the time period, from 2008 to 2017.
• Most states with no fee schedules experienced faster growth in prices paid for professional services compared with states with fee schedules. The median growth rate among the non-fee schedule states was 30% from 2008 to 2017, compared with the median growth rate of 6% among the fee schedule states. 

I think we can draw a direct conclusion from the data by NCCI, WCIRB and especially WCRI. States can help themselves by enacting and properly adjusting their workers' compensation fee schedules. 

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.