Connecticut Medical Fee Schedule: One Mini-Step for Mankind
Connecticut has finally implemented a workers comp fee schedule for hospital and out-patient services. That's the good news. The bad news for CT employers is that the fee schedule, warmly embraced by the medical profession, is simply too generous. As a result, the savings to insurers and their insureds will be modest. Still, a mini step is better than no step at all.
Under the new fee schedule, the state will cap reimbursement for in-patient services at 174% of the Medicare rate. Out-patient services are capped - and I use the term lightly - at 210% of Medicare. On average, insurers had been paying 193% above Medicare for inpatient and 261% for outpatient services. The state projects a savings on medical costs ranging from 10 to 20 percent.
This cost-containment measure is unlikely to budge CT from its ranking as the second most expensive state for workers comp (Oregon rankings 2014). If CT wants a model for a truly effective fee schedule, they need only look across the border at Massachusetts, where a long-standing fee schedule is set slightly below or slightly above Medicare rates. To be sure, good doctors often refuse to treat for the low fees in MA, so these rates become the starting point for an individual negotiation: carriers can offer the best physicians significantly higher-than-fee-schedule rates, while holding the line for doctors whose reputations and performance are less than stellar.
The true measure of a fee schedule is the satisfaction of the medical profession: if they can still smile after the negotiations have been completed, the fee schedule is probably too high; I'm sure that CT docs are still smiling. If, on the other hand, the doctors are upset, the fee schedule can be graded as effective. From a cost-containment perspective, the MA model is the way to go. Injured workers still receive outstanding care (once negotiations have been completed), while their employers benefit from remarkably low insurance rates: the Bay State is ranked 48th for cost in the country.
With relatively high costs continuing for the foreseeable future in CT, perhaps the state will revisit the fee schedule and gradually tighten it up. While they are at it, they might want to reconsider the overly-generous benefits that are way out of line with the benefits in other states. In the struggle to contain the cost of comp, CT has a very long way to go.