Fee Schedules and Workers’ Compensation Case Shifting

At the 2016 WCRI Annual Issues & Research Conference, Dr. John Ruser and Dr. Olesya Formenko from WCRI discussed a not-yet published study on the impact that medical fee schedules can have on case-shifting in workers’ compensation.

Studies have shown that a fee schedule changes not only change the price paid for services, but it also impacts the utilization of services and the shifting of claims in and out of workers’ compensation. The fundamental purpose of this study was to see to what extent higher workers’ compensation fee schedules influenced a provider’s decision to classify a back injury as work related.

In most states, workers’ compensation reimbursement rates are higher than group health. In some states, this can be a significant difference. With soft tissue injuries, providers have substantial influence over the decision of whether or not the condition is work related. There are financial incentives for both providers and injured workers to shift conditions to workers’ compensation when possible.

The study showed a 20% growth in workers’ compensation reimbursement rates for physician services increased the odds of a soft tissue injury being called work related by 6%. This 6% increase led to a 1.5% increase in workers’ compensation costs. This variation was not present with trauma-related injury cases.