by Michael Whiteley, WorkCompCentral
August 4, 2006
Less than two months before South Carolina plans to make sweeping changes to its hospital payment schedule that could trim $60 million a year out of the workers’ compensation system, the state’s hospitals are scrambling for an alternative.
The South Carolina Workers’ Compensation Commission (SCWCC) voted 3-2 in June to adopt a new payment system for hospitals serving injured workers.
The system scraps the 1997 plan that paid hospitals 87.5% of actual charges in workers’ compensation cases for inpatient treatment. A separate part of the law also triggered 87.5% payments for outpatient services.
Beginning Oct. 1, hospitals will be paid at Medicare levels for inpatient and outpatient care — plus 40%. The commission said the “Medicare-plus” system is used already in other states. Maryland pays 9% more than Medicare. Hawaii pays 10% more, California pays 20% more and New York and Tennessee pay 50% more than Medicare, according to the SCWCC.
Proponents are predicting the change will save employers as much as $60 million, at a time when a controversial proposed 32.9% hike in workers’ compensation rates awaits a judge’s decision in an administrative law court.
The South Carolina Small Business Chamber, which is leading the fight against the rate hike, has applauded the changes in hospital payments.
“It was a hole in our fee schedule,” said Frank Knapp, president of the Small Business Chamber. “It raised a big stink with the hospitals. But if we want to contain costs, this is certainly one way to do it.”
Thomas D. Cockrell, chief operating officer of the South Carolina Hospital Association, said the hospitals still are looking for an alternative they hope to submit to the commission to forestall the new fee schedule.
“We are not happy with it. It’s going to take probably $60 million out of the workers’ compensation system. That’s a lot to talk about in one swoop,” Cockrell said.
Cockrell served on an advisory panel that came up with the new schedule. But he said he voted against it, primarily because the hospitals felt the commission acted without enough analysis.
He said the hospitals have not yet built an alternative model. But they’re working on a plan.
Under the current system, he said, hospitals were falling behind in payments for inpatient care. While the 1997 change set payments at 87.5% of actual charges at the time it went into effect, the costs of those services has decreased dramatically, he said.
But tracking the experiences of Medicare isn’t the way to fix it, he said.
“The workers’ compensation population does not in anyway mirror the Medicare population. The Medicare population isn’t working,” Cockrell said. “We’re going to try to appeal to the commission to consider something different.”
In a statement supporting the new payment system, commission Chairman David W. Huffstetler said inpatient procedures for workers’ compensation injuries declined by 8% while hospital charges increased by 118.6% between 2000 and 2005.
During the same period, he said, outpatient procedures for workers’ compensation declined 9.6% and outpatient charges rose 64.2%.
–Michael Whiteley, Southeast Bureau Chief