A proposed California bill, though seemingly benign, may establish Medicare rates as a standard for workers’ comp reimbursements, which would be a mistake.
The bill, which proposes Medicare reimbursement as a minimum reimbursement, fails to take into account that workers’ comp patients require substantially more work than Medicare patients. When a provider agrees to Medicare reimbursement for a workers' comp patient, the provider is actually agreeing to a payment amount below that of the Medicare equivalent.
Currently, California Senate Bill 537 is winding its way through the legislative process.
This bill would prohibit contracted workers’ comp reimbursement rates from being less than the corresponding Medicare fee schedule payment. Though well-intentioned and designed to protect providers from low-paying contracts, this bill would actually establish a potentially dangerous Medicare reimbursement precedent that is not applicable to California workers’ comp.
Currently, the California Official Medical Fee Schedule (OMFS) reimbursements exceed Medicare reimbursements because the Division of Workers’ Compensation (DWC) recognizes that treating workers’ comp patients requires more physician resources than treating Medicare patients requires. Instead of foisting inappropriate Medicare reimbursements on providers, SB 537 should protect the OMFS reimbursements established by the DWC.
fj
CPT |
Physician Work RVU |
Practice Expense RVU |
Malpractice RVU |
RVU Definition |
Relative time and intensity associated with furnishing services to a Medicare patient |
Costs of maintaining a practice (such as equipment, and staff costs) |
Cost of malpractice insurance premiums |
99358 - Prolonged service without contact (record review) |
2.1 |
0.9 |
0.15 |
64718 - Revise the ulnar nerve at elbow (surgery) |
7.26 |
8.37 |
1.41 |
On average, the proportion of costs for Medicare are 52%, 44% and 4%, respectively.[1]
For a provider to agree to accept Medicare reimbursement for treating workers’ comp patients essentially assumes that the amount of work required for a workers’ comp patient and a Medicare patient are equivalent.
EXCEPT workers' comp patients require substantially more resources than Medicare patients. Specifically, California workers’ comp laws and regulations mandate treatment authorization, extensive reports, and complex billing requirements.
While the OMFS uses Medicare RVUs to calculate reimbursement, the DWC uses a higher conversion factor than Medicare to calculate a higher reimbursement for treating injured workers. This higher conversion factor used by the DWC is intended to reimburse providers for the complexity of the myriad reporting and billing requirements which make treating injured workers’ far more expensive than Medicare patients.
When a provider agrees to Medicare reimbursement for a workers' comp patient the provider is actually agreeing to a reimbursement below the Medicare reimbursement. The correct Medicare-equivalent reimbursement would be higher to reflect the reality that a workers' comp patient requires more Physician Work and greater Practice Expense than a Medicare patient.
These excess workers' comp Physician Work and Practice Expense resources include, but are not limited to:
Physician Work - Workers’ Comp |
Practice Expense - Workers’ Comp |
Submission of Requests for Authorization (RFA) for all treatment |
Submission of RFAs and tracking receipt of utilization review decisions |
Submission of RFAs for diagnostic tests, therapy, and pharmaceuticals, including documentation of MTUS guidelines and formulary research for pharmaceuticals |
Submission of RFAs and forwarding utilization review decisions to the appropriate provider |
Completing the required reports (Doctor’s First Report, PR-2, PR-4) |
Submission of documentation with billing, including reports and authorization |
Primary Treating Physician review of secondary physician reporting |
Forwarding secondary reports to claims administrators |
Peer-to-peer calls |
Time spent intaking new workers’ comp patients (no automatic eligibility) |
Management of hundreds of workers’ comp payers |
|
Inaccurate reimbursements from payers requiring timely Second Reviews and $195 for Independent Bill Review |
Treating injured workers is difficult enough, and providers should not accept reductions that bring their reimbursements below the OMFS, whether as part of a contract or not.
All stakeholders should be alarmed by this attempt to undermine the California Official Medical Fee Schedule. Instead of forcing down reimbursements, California legislators should be protecting the OMFS.
To express your opinions on SB 537, contact your senator, whose name and contact information you can find here. Or, if you know your senator’s name, you can contact your senator through the California State Senator Roster website.
Also submit your comments about this bill to its sponsor, Senator Gerald Hill, by either:
[1] The three RVUs for a given service are each multiplied by a unique geographic practice cost index, referred to as the GPCI adjustment. The GPCI adjustment has been implemented to account for differences in wages and overhead costs across regions of the country. The sum of the three geographically weighted RVU values is then multiplied by the Medicare conversion factor to obtain a final price.
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