States with fee rules have higher hospital costs

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Hospital costs are higher when states have hospital outpatient fee regulations based on a percent of charges rather than "fixed-amount" fee schedules that assign specific reimbursement amounts for procedures, according to a new study from the Workers Compensation Research Institute (WCRI). The nonprofit researcher based in Cambridge, Mass., looked at the most common outpatient surgeries in workers' compensation in 20 states.

It found that areas that used charge-based fee regulations (Florida, Louisiana, Minnesota and North Carolina) had 61 percent to 91 percent higher outpatient costs than states with fixed-amount fee schedules. On the flip side, states that used "fixed-amount" fee schedules (California, Georgia, Illinois, Maryland, Massachusetts, Oklahoma, Pennsylvania, Tennessee and Texas) saw 45 percent lower costs than the median costs for states with regulations based on charges. Announcement