Workers compensation cases touch many lives and many industries. Insurance employees, medical professionals, government officials, employees and employers all influence each other in different ways. A main motivator for many decisions is money, and when people lose focus of that fact it can lead to surprises. This article explains how fee changes can affect behavior so you can be prepared if you see anything that looks fishy.
The Workers Compensation Research Institute held a conference where two doctors described their experience with fee changes. In the majority of states the researchers found that group health rates are lower than workers' compensation rates, so for the exact same services a workers' comp payer may pay more than group health would.
Physicians were also found to raise prices if they were charging less than a fee schedule standard. Most fee schedules are some variation of Medicare fees (often higher than Medicare), but states differ in how they set rates. For example, Illinois relies on billed charges, which can result in much higher costs than group or Medicare payment methods.
In states where statutory fees are low, there is evidence that providers sometimes classify more injuries as work related so care falls under workers' compensation pricing. That reclassification can help balance a provider's net revenue, so incentives to misclassify exist under multiple fee structures and may differ by state. Because the treating physician often controls the work-related determination, employers should be alert to how decisions are being documented and billed.
As an employer, be aware of how your state structures fee schedules and who has the incentive to misrepresent an injury. For background, see The History of Workers' Compensation in the United States. For related coverage considerations, you may also review J.M. Wilson Builders Risk Insurance Program. If you have concerns about a claim, consider taking steps to verify it or talk to your agent.
The study cited an example: if reimbursement rates rise by 20 percent, a doctor was about 6 percent more likely to characterize a soft-tissue back injury as work related. That finding is not a reason to assume widespread fraud, but it is a reminder to monitor fee schedules and documentation in your state so you can question or clarify claims when appropriate.
Frequently Asked Questions
How do fee schedules affect medical billing in workers' compensation?
Fee schedules set the maximum amounts payers will reimburse, and they can change provider incentives for how services are billed and classified.
Can providers change how an injury is classified because of payment differences?
Research shows providers may be more likely to classify injuries as work related when workers' comp reimbursement is higher than alternative payers.
What should an employer do if they suspect misclassification?
Employers should review documentation, ask for clarification from the treating provider, and consult their insurance representative or legal adviser if needed.