I n recent years, the Bureau of Workers’ Compensation (BWC) has implemented a systematic and precise way to review and set provider fee schedules, going from a simple fee schedule to a payment methodology.
In order to make the shift, it looked to the Centers for Medicare and Medicaid Services (CMS) and the payment methodologies it designed for the Medicare population.
“Using the CMS Medicare methodologies, they have moved away from retrospective fee schedules to a prospective approach for provider payments,” says Karen Conger, CEO of Ohio Employee Health Partnership.
Smart Business spoke to Conger about fee schedules and how they affect employers.
Why are fee schedules important?
The Ohio BWC makes payments to over 70,000 providers for medical services outside the hospital setting each year. A competitive fee schedule is essential to providing access to quality providers for the injured workers.
Provider fee schedules for the BWC are divided into five groups:
- Inpatient hospital
- Professional providers
- Ambulatory surgery centers
- Vocational rehabilitation
- Outpatient hospital
What has changed about the fee schedules?
- The volume of bills may be low, but the costs are among the highest at the inpatient hospital because these represent the most severe treatments to the injured workers. BWC implemented Medicare’s Inpatient Prospective Payment System (IPPS) that utilizes the diagnosis-related groups (DRGs) classification, but with customized outlier and medical education payments.
Diagnostic Related Group (DRG) was implemented as the payment methodology for inpatient hospital bills in 2007. By using the CMS IPPS, the BWC can piggyback off the extensive research CMS does to set the specific rates of each DRG and then set the BWC payment adjustment factors, which ultimately results in the workers’ compensation DRG reimbursement rate. DRGs have been in existence for years and hospitals are adept in billing and understanding them.
- In 2009, the BWC adopted CMS’s relative value units (RVU) and developed conversion factors to set the fees for each covered CPT code for the development of the Professional Provider Fee Schedule. The final reimbursement level is a calculation of the RVU, the geographic practice cost index (GPCI) and the conversion factor. An RVU is calculated based on the associated relative work and costs of services for each procedure or CPT code. The GPCI is a regional cost adjustment which is set by CMS. The conversion factor is the dollar amount selected for that category of service. Both the RVUs and the GPCI are set by CMS and are required by Congress to be updated no less than every five years. BWC uses Medicare’s RVUs, but it maintains and sets its own conversion factors.
- Ambulatory Surgery Centers (ASCs) provide surgical services that do not require an inpatient stay to injured workers. ASCs’ billings represent less than 1 percent of the overall expense each year; however, they can provide the injured worker better access, and the BWC lower cost, for the procedures that can be performed in the ASC setting.
