July 20, 2011
The South Carolina Small Business Chamber of Commerce and the American Insurance Association said Tuesday they plan to oppose a regulatory change that would allow the state Workers’ Compensation Commission (WCC) to scrap its current Medicare-based fee schedule for physicians and apply multiple conversion factors to cover medical specialties.
WCC has scheduled a public hearing for Aug. 15 to consider language that would give it the authority to eliminate use of Medicare’s Resource-Based Relative Value Scale (RBRVS).
The commission said in a regulatory notice the change would allow it to reconsider a call by South Carolina’s orthopedic surgeons, pain-management doctors and radiologists to apply separate conversion factors to the Medicare schedule or to abandon the Medicare RBRVS altogether.
The doctors argued that the Medicare system favors general practitioners and has reduced payments for surgeries and some other services.
Following four months of debate, the seven-member commission voted in January 2010 to update its 2003 Medicare-based schedule to include current values and to lower the South Carolina conversion factor from $52 to $50.
But the panel also voted to review the schedule on an annual basis and asked the National Council on Compensation Insurance (NCCI) to monitor medical costs.
Last year’s changes were predicted to increase system costs by about 1.7%, but reduce fees for surgeries by an average 5.4%.
South Carolina law requires the commission to submit regulatory changes to the South Carolina Legislature, which may approve them, reject them or allow them to take effect with no action after 120 legislative days.
If approved by the commission, the regulatory change would alter Regulation 67-1302 (A), which allows the commission to set maximum allowable payments for medical services, by eliminating the phrase “based on a relative value scale and a conversion factor set by the commission.”
Gary Cannon, the commission’s executive director, said the commission has no plan to scrap the Medicare-based system.
“What we want is the flexibility to do it,” Cannon said Tuesday.
The American Insurance Association (AIA) warned in an April 26 letter to the commission that it “strongly opposes” the change. AIA sent a copy of the letter to WorkCompCentral on Tuesday.
“The viability of RBRVS depends upon maintenance of its internal consistency, which is accomplished by adhering to the relative values assigned by the Centers for Medicare and Medicaid Services (CMS) as a result of objective, scientifically-based analysis,” AIA Senior Counsel Kenneth A. Stoller said in the letter.
“Surgeons oppose Medicare-based fee schedules because they chafe at RBRVS valuation, which shifts reimbursements away from specialists and toward general medicine to correct longstanding imbalances,” Stoller said.
Fraser Cobbe, executive director of the South Carolina Orthopaedic Association, was on vacation and unavailable for comment. Dr. James O’Leary, the Association’s president, did not return a call for comment.
But former Association President Dr. Don Johnson said last year that surgeons periodically discuss pulling out of the workers’ compensation system because the Medicare payment system favors general practitioners.
Injured Workers’ Advocates, which represents the South Carolina claimants’ bar, supported the Medicare-based system and opposed the use of multiple conversion factors last year. The attorneys’ group said Tuesday it has not yet taken a position on the proposed regulatory changes.
“We have not decided on our response yet, but we are working on it,” said Clara Smith, the group’s executive director.
South Carolina Small Business Chamber of Commerce President Frank Knapp Jr. said his group will oppose the change.
“By deleting the value rating, it basically opens the window for special interests coming in and jacking up the rates on certain services,” Knapp said. “We have a good system based on a national analysis of medical costs. That’s something we can’t duplicate unless someone is planning to staff up our Workers’ Compensation Commission.”
The 2010 fee schedule took effect in July 2010. Cannon said current commission statistics don’t reflect the impact of the changes.
Driven primarily by adoption of a 2006 hospital fee schedule that set maximum payments at Medicare rates plus 40%, the commission said in its annual report that total medical costs in the workers’ compensation system dropped from $422.4 million in fiscal 2008-2009 to $296 million in fiscal 2009-2010.
In a report on South Carolina’s workers’ compensation system issued in March, NCCI reported the state’s average medical costs per case were $24,000, compared to a national average medical cost of $27,000. NCCI’s figures covered the years 2005 through 2009.
NCCI said in a report issued prior to the commission’s adoption of the 2010 fee schedule that South Carolina was paying a little more than 150% of Medicare for surgeries and a little less than 150% of Medicare based on a comparison of all physician’s fees.
The commission reported that medical costs accounted for 36% of total costs for fiscal 2009-2010.
Along with an annual review of doctors’ fees, the commission called last year for further research into continued use of the RBRVS system and of South Carolina-specific conversion factors.
The South Carolina Medical Association did not return a call requesting comment.
The public hearing is scheduled to begin at 10:30 a.m. (EDT) in Hearing Room A at the Workers’ Compensation Commission, 1333 Main St. in Columbia.