Trade Group: Ill. Workers’ Comp Fee Schedule Lacks Expected Savings

April 27, 2006

The American Insurance Association today said an analysis by the National Council of Compensation Insurance (NCCI) of Illinois’ new workers’ compensation medical fee schedule provides the first indication that the medical cost savings predicted by some were off the mark.

“Upon the passage of HB 2137 last year, we cautioned that the benefit increases were definite and significant, while the projected medical cost savings were indefinite. On the heels of a 9 percent increase in advisory rates this January, the latest NCCI analysis reinforces our concerns that Illinois’ confusing, unproven medical fee schedule will struggle to produce the savings that proponents expect,” said Steve Schneider, AIA vice president, Midwest Region.

House Bill 2137 brought about the first changes to Illinois’ workers’ compensation laws in 20 years. Insurer opposition focused on the new medical fee schedule, which involves an unproven method for calculating reimbursement rates based on provider charges, as well as creating a 29-region, zip code-based fee schedule. Most states have three to four regions. The NCCI calculated a meager 0.2 percent savings from the medical fee schedule.

“A better alternative would be to base the fee schedule on Medicare’s system, which is used in other states, and for which cost savings may be more reliably measured. Otherwise, as the NCCI has pointed out, the system is ripe for gaming,” added Schneider.

The NCCI noted that with 29 different fee regions, some providers may “…choose to perform and/or bill a procedure in a zip code which provides for a higher reimbursement level…” and may find such activities “…financially rewarding.” Additionally, NCCI stated because the Illinois fee schedule has “no proven effective mechanism in place to control charges…implementing a maximum reimbursement level as a percentage of charged amounts…would result in no long term impact on overall system costs.”

“As we commented to the Illinois Workers’ Compensation Commission during development of the new fee schedule, as it is currently structured, we believe it will have negative repercussions on the cost component of the state’s workers’ compensation system,” said Schneider.

Source: American Insurance Association

Was this article valuable?

Here are more articles you may enjoy.