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 Government Affairs Newsletter July 2011

AMA supports IPAB repeal bills; cites 'double jeopardy' with SGR target - from AMA
In letters sent to both chambers of Congress, the AMA voiced its support for legislation that would repeal the Medicare Independent Payment Advisory Board (IPAB). Legislation that would repeal the IPAB was introduced in both the U.S. House of Representatives and the Senate earlier this year. Authorized by the Affordable Care Act, the IPAB is a 15-member board aimed at cutting costs when the program's per capita growth rate exceeds a specified target. Read more
Justices rule for drugmakers in 2 high-profile cases - from AMA
Brand-name and generic drug manufacturers have prevailed in two U.S. Supreme Court cases that could have wide-reaching effects on physicians who prescribe drugs and the patients who take them. In William Sorrell v. IMS Health Inc., the Supreme Court ruled June 23 that data firms can sell information on a physician's prescribing history, and drug companies can use the information without a doctor's consent unless he or she explicitly opts out of the process. The transmission of the information is protected by free speech laws, the court said. Read more
Damage Caps Upheld in West Virginia - from ACS
Last week, the West Virginia Supreme Court of Appeals upheld the state’s cap on noneconomic damage awards in medical liability lawsuits. Under a law enacted in 2003, West Virginia’s cap is set at $250,000 in most cases, with the few exceptions topping out at $500,000. Since the legislation went into effect, the state Board of Medicine has reported that record numbers of new physicians are becoming licensed in the state, and the Office of the Insurance Commissioner reported a 50 percent drop in the number of lawsuits filed. For more information, go to
ASPS Submits Comments to Medicare on Shared Savings/ACO Proposal
In a June 3, 2011 letter to the Centers for Medicare and Medicaid Services (CMS), ASPS requested revisions to the proposed Medicare Shared Savings/Accountable Care Organizations program. Although ASPS supports the aims of the program to provide better care for individuals, better health for populations, and lower growth in expenditures by eliminating waste and inefficiencies, the Society echoed concerns expressed by numerous other organizations that the current proposal is unworkable and provides inadequate financial incentives to encourage widespread implementation. ASPS also recommended that the Agency make it easier for interested physician practices to participate. For additional information, view the complete letter to the Centers for Medicare and Medicaid Services.
Benchmarks for Designing Workers’ Compensation Medical Fee Schedules: 2009
Introduction by Edward Diao, MD, San Francisco, CA
A report from the Workers Compensation Research Institute
There are wide variations in how Workman’s compensation medical care is administered and paid for from state to state.  This has a great impact on the practices of our ASSH membership.  Recently, an organization, the Worker’s Compensation Research Institute of Cambridge, Massachusetts performed a benchmark study looking at workers' compensation fee schedules amongst the various states.  Of the states, there are two (Illinois and Alaska) that have fee schedule rates for major surgical procedures that are approximately six times the corresponding Medicare rate.  We have reproduced several tables and graphs that illustrate the variations between the studies.

Principal Findings

  • There are significant differences in workers’ compensation fee schedule levels compared to Medicare fee schedule levels across the states. The premium over Medicare varied widely from 8 percent above Medicare in Massachusetts to 215 percent above Medicare in Alaska.

  • Three states, California, Florida, and Massachusetts, set workers’ compensation fee schedule rates, on average across all nonhospital service groups, to be within 20 percent of Medicare rates in those states. 

  • Just over half of the states set the workers’ compensation fee schedule rates between 50 and 100 percent above Medicare at the state level.

  • Six states, Alaska, Delaware, Idaho, Illinois, Nevada, and Oregon, set the workers’ compensation fee schedule rates at levels more than double Medicare at the state level.

  • Nine states, Maryland, Michigan, Montana, North Dakota, South Carolina, Texas, Utah, Washington, and West Virginia, set rates that result in the premium over Medicare being relatively the same for each of the service groups, which may neutralize incentives for over-utilization of specialty and invasive care.1 2 

  • Nine states, Alabama, Alaska, Arizona, Connecticut, Delaware, Idaho, Illinois, Nevada, and Rhode Island, set fee schedule reimbursement rates where the difference between the highest premium over Medicare and the lowest for the eight service groups was more than 200 percentage points, which may result in distorted utilization incentives.

  • Higher workers’ compensation rates are not necessarily correlated with higher provider expenses of delivering medical services.

  • In 2009 more than half of the 43 states, 25, based their workers’ compensation fee schedule on the Medicare RBRVS system in some way. Seven states used some other form of relative value units and 25 of these 32 states with relative value systems used more than one conversion factor across service groups.

  • Thirty-three of the 43 states, well over one-half, had premiums of 100 percent above Medicare or greater for at least one service group. 

  • Nine of the 43 states, Alabama, California, Florida, Hawaii, Massachusetts, New York, North Carolina, Pennsylvania, and South Dakota, had workers’ compensation fee schedule rates within 10 percent of Medicare for at least one service group.

  • Four of the 43 states, California, Florida, Massachusetts, and New York, had workers’ compensation fee schedule rates more than 10 percent below Medicare for at least one service group.

1.  The percentage point difference between the service group with the highest premium over Medicare and the service group with the lowest premium over Medicare in these nine states is less than or equal to 45.
2.  In Washington workers’ compensation regulations impose a daily maximum of $118.07 for physical medicine reimbursement. This limit may affect incentives for the use of specialty and invasive care.

Figure 1: Workers' Compensation Premium Over Medicare, December 2009

Table 1: Workers' Compensation Premium Over Medicare, December 2009

Figure 10: Workers' Compensation Fee Schedule Index Compared to Provider Expense Index, December 2009

Table 4: States with Workers' Compensation Fee Schedule Levels that are Double Medicare Fee Schedule Levels or Greater, December 2009

Editor's comment: After the Workers Compensation Research Institute report came out, Illinois Governor Pat Quinn signed legislation that would decrease the W/C fees paid by Illinois businesses. As a result of that legislation medical reimbursement for W/C patients was cut by approximately 30%. This decrease is not reflected in the data summarized by Dr. Diao.

The full report can be purchased on the WCRI website:  Copyright Workers Compensation Institute