Published August 17, 2011
By Michael Whiteley, WorkCompCentral
The chairman of a South Carolina committee established to protect small businesses in the state said Tuesday his panel may require the state Workers’ Compensation Commission to file impact statements before going forward with a regulation that would allow it to break ties with the Medicare Resource-Based Relative Value Scale (RBRVS) for setting doctors’ fees.
Monty Felix, chairman of the South Carolina Small Business Regulatory Review Committee, said in an interview that the proposed regulation has “kicked up some hackles.”
“What the commission wants to do is take away the baseline Medicare calculation without having a vetted alternative,” Felix said. “Workers’ compensation has become a hindrance for
small and large manufacturers in South Carolina.”
The Workers’ Compensation Commission held a public hearing on Monday on a regulation that
would give it future discretion to abandon its RBRVS-based fee schedule or create multiple conversion factors to address concerns voiced by surgeons and other specialists that reductions in their fees from the schedule adopted in 2010 went too far.
If the commission passes the rules change, it must submit the proposal to the state Legislature during the 2012 session. The Legislature will then have 120 legislative days to approve it or deny it. Lawmakers also may allow the regulation to take effect without taking action.
Felix was one of nine witnesses who testified at Monday’s hearing. The regulation won full support from the South Carolina Orthopaedic Association and limited support from the state Medical Association.
Felix’s 11-member committee is part of the state’s regulatory review process. The committee consists of five members appointed by the governor and three members each appointed by the speaker of the South Carolina House of Representatives and the president pro tem of the Senate.
The committee reviews proposed regulations on a monthly basis and will decide early next week whether to exercise its authority to require the commission to prepare a statement of economic impact and a separate report on the regulation’s impact on small business flexibility.
The committee makes recommendations to the Legislature but does not have the power to approve them. State rules are considered by committees in the Legislature and then by the House and Senate.
The reports would be reviewed by the South Carolina Department of Commerce and submitted to lawmakers next session for further review. Felix said he had not decided what to recommend to his panel.
“I want to make sure small market economics apply across the board,” he said.
Monday’s hearing follows nearly two years of debate over how South Carolina sets medical fees in the workers’ compensation system. The state’s surgeons contend that the Medicare-based system favors general practitioners and pays low fees to specialists.
WCC rejected calls by specialists to apply multiple conversion factors when it adopted the medical fee schedule in January 2010.
The commission adopted 2010 relative values established by Medicare and applied a $50 conversion fee for all providers except anesthesiologists. The conversion factor for anesthesiologists is set at $30, because their services are calculated on a per-unit basis and are handled differently than other providers in the system.
The changes to Regulation 67-1302 (A) proposed by the commission would strike the requirement that doctors’ fees be “based on a relative value scale and a conversation factor set by the commission.” The commission could then act later to eliminate the RBRVS component of the fee schedule.
Scott Hultstrand, general counsel for the South Carolina Medical Association, said the doctors’ group wants to retain the Medicare RBRVS schedule, but also give the commission the power to adopt multiple conversion factors.
“I think there is enough disagreement about the flexibility of the conversation factors that the commission needs that discretion,” he said in an interview Tuesday. “We feel that RBRVS does provide a structure and framework for setting medical fees.”
The Orthopedic Association estimated the schedule last year decreased surgery fees in some cases by just under 10%.
Dr. James O’Leary, the association’s president, said in written comments to the commission that the workers’ compensation system prioritizes rapid referral so specialists can get injured workers back on the job.
“Given the unique nature of the system and patient population, we firmly believe the commission needs the flexibility to make targeted changes in the valuation of services to align resources in the system to meet the goal of rapid return to function,” O’Leary wrote.
But Ken Stoller, senior counsel for the American Insurance Association (AIA), warned the WCC that giving special conversion factors to “politically favored” medical specialties will boost costs
and increase utilization.
Stoller said in an interview that regulators in Florida, Maryland and Tennessee have adopted multiple conversion factors to increase the fees paid for surgeries. AIA opposes multiple conversion factors and argues they remove the internal consistency of the Medicare schedule.
Stoller said 28 states have adopted Medicare’s RBRVS schedule as a basis for medical fees in the workers’ compensation system.
“Medicare continues to update the prices appropriately among specialties,” Stoller said. “Most states have a pretty healthy premium on the top of the Medicare system. In South Carolina, it comes out about 147% of Medicare,” he said.
The proposed change also has drawn opposition from the South Carolina Small Business Chamber of Commerce. President and Chief Executive Officer Frank Knapp said the Workers’ Compensation Commission has no national data on which to base an alternative fee schedule.
He warned the commission in written comments that scrapping its ties to Medicare “is a recipe
for an all-out assault on the limited-resourced commission by well-financed special interests seeking to increase their compensation.”
WCC Executive Director Gary Cannon said state law gives the commission 20 days in which to
announce a decision following a public hearing. Cannon said the commission is not advocating changing the system but wants the flexibility to do so.