States that put workers' comp hospital fees on schedule reduce costs

North Carolina made a significant move to cut down on workers' compensation costs and it has paid off in lower hospital outpatient costs, according to a new study by the Workers' Compensation Research Institute (WCRI).

Another organization known as the Workers' Compensation Institute noted that in 2009 when North Carolina moved to cut fee schedule rates to hospitals, the average payment dropped from 95 percent of chargesto 79 percent of charges. WCRI reported that the average outpatient surgical episode cost declined by 11 percent in 2013.

Overall, the states that took measures to control the payments to hospitals had lower costs. The study concluded that states with no hospital outpatient fee schedules had 60 to 141 percent higher hospital outpatient payments per episode compared to states that fixed payments through fee schedules. Among those states with no fee schedules, their growth in costs for outpatient charges was at least 124 percent higher and up to 191 percent higher than those states that had fixed fee schedules, according to the report.

"Rising hospital costs have been a concern and focus of recent public policy debates in many states," said Olesya Fomenko, co-author of the report and a WCRI economist, in a statement.

In California, hospitals have received double billings for some surgical procedures performed on workers' compensation patients. That comes in the form of "pass-through" payments that add $20,000 to the cost of every workers' compensation-related spinal fusion surgery performed in the Golden State, FierceHealthFinance previously reported. 

In South Carolina from 2006 to 2013, there was a 31 percent reduction in surgical payments to hospitals, according to the study statement. But in Alabama, the average payment to a hospital per surgical episode rose by 81 percent during that same time period. In Alabama, the payments are 115 percent above the median for all the states, according to the WCRI report. By comparison, New York is the least expensive state, at 71 percent below the median for all of the states measured, the report said.

The study covers 33 states and represents about 86 percent of all the workers' compensation benefits, according to the study abstract.

To learn more:
- read the Workers' Compensation Research Institute announcement
- check out the Workers' Compensation Institute article 
- here's the WCRI report abstract