Many in the worker’s compensation community are concerned by the continued rates of increase in medical costs in Indiana as compared to other states. The Indiana legislature passed a “Fee Schedule” in 2013 which became effective on July 1, 2014. That legislation was the subject of a prior ISIA Newsletter. So, why is it that W/C medical expenses continue to increase? The answer depends on the nature of the provider of W/C medical services.
It is clear that hospitals are subject to the Fee Schedule and that their charges are paid at a rate which is statutorily limited to two times the amount which Medicare would reimburse the hospital for the same services. That has been very helpful in the effort to contain W/C medical expenses. But, the definition of the medical service facilities as to which the Fee Schedule is applicable is apparently not so broad as to include ambulatory surgery centers (ASC). There have been significant increases in the amounts of payments to such providers. Professional fee payments were never intended to be covered by the Fee Schedule legislation and there have been significant increases in such payments as well. While payments to ASC and professional providers are still limited to the 80th percentile of the charges made in the same community for like services (the so called “usual and customary” limitation), when charges go up, the 80th percentile goes up as well. Statistically speaking, jurisdictions which do not have a comprehensive fee schedule applicable to all W/C medical providers have higher prices and faster growth in prices than jurisdictions which rely upon a fee schedule to provide reasonable reimbursement to all W/C medical providers.
There is little likelihood of a legislative correction in 2016. So, what are you to do? Indiana is a choice of medical state which means that as the employer, you have the right to select the medical provider AND to negotiate with that provider a discounted payment. The 2013 legislation specifically preserved the employer’s right to control the costs for W/C medical services or products by negotiation with medical providers and by participation in provider networks that have agreed to accept reduced reimbursements. As a self-insured employer, it is your right and it makes sense for you to have a discussion with your chosen medical providers about ways in which costs may be controlled while assuring quality patient care. Or, you may be able to locate a provider network which offers reduced reimbursement rates for W/C services to your injured employees. You don’t know what savings may be accomplished until you try!