Ill. Workers Comp Fee Schedule Open to Abuse, Insurer Group Says

The Property Casualty Insurers Association of America has concerns based on a National Council on Compensation Insurance’s estimate that implementation of Illinois’ new medical fee schedule will result in overall system cost savings of only 0.2 percent.

PCI, based in Chicago, said in its written statement that the costs in the system have not been reduced enough and the fee schedule is open to abuse.

“The costs in the system have not been reduced enough to produce significant savings,” said Greg LaCost, assistance vice president and regional manager for PCI. “In fact, workers compensation premiums are expected to go up to balance recent legislative changes that increased worker benefits.”

According to LaCost, the medical fee schedule adopted in Illinois is unlike the fee schedules that operate in most other states. It allows for the setting of 29 different maximum reimbursement rates around the state for the same services. However, this compares to the Illinois Medicare fee schedule which only has four different rates around the state.

The new law also calls for the reimbursement for many procedures to be set at 76 percent of billed charges. Some classes of medical providers such as ambulatory surgical treatment centers, outpatient hospital services, emergency room services have all their charges paid at 76 percent of billed charges. This is a huge gap in the schedule which might make it the most expensive workers’ compensation system in the country.

“The fee schedule is open to abuse,” said LaCost. “With 29 different rates providers may locate their services in areas that provide maximum reimbursements. The reimbursement of 76 percent of charges can easily result in providers increasing their charges to offset any intended saving from set reimbursement rate. This type of system leaves insurers with no option but to pay whatever the provider deems reasonable, and that increases costs without providing any benefit to workers.

Based on the NCCI review, it is very clear that the modifications to the system did not go far enough and as a result it is difficult to see how the promised savings will be achieved. It is imperative that we improve the fee schedule sooner, rather than later, LaCost added.

Source: Property Casualty Insurers Association of America