A recent study by the Workers Compensation Research Institute (WCRI) warns that despite a sustained decline in workers’ compensation rates Florida employers pay, a series of 2015 fee revisions are driving up medical fees for hospital outpatient/inpatient and ambulatory surgery center (ASC) services.
The study, CompScope Medical Benchmarks for Florida, compared Florida with workers’ compensation systems in 17 other states, analyzing claims from 2017-18.
It is the 20th annual review of Florida’s workers’ compensation system by WCRI, “an independent, not-for-profit research organization” based in Cambridge, Mass.
“This study found that more complex office visits with higher prices were billed more often in Florida than in other study state,’ WCRI Executive Vice President and Counsel Ramona Tanabe said. “Other WCRI studies also reported that Florida had more frequent physician dispensing of prescription drugs.”
The WCRI report said the average cost of a Florida claim with more than seven days of lost time that occurred in 2017 was $11,519, near the 16-state median at $12,167.
Medical payments per claim with more than seven days of lost time in Florida “have been typical of other states for workers’ compensation claims,” the study states, “however, this result masks several offsetting factors mainly related to fee regulations.”
In 2015, Florida lowered its Medicare Resource-Based Relative Value Scale (RBRVS) fees for hospital outpatient and inpatient, ambulatory surgery center (ASC) and non-hospital professional services.
“Prices paid for professional services by non-hospital providers were the lowest [in Florida] of all states studied, due to lower fee schedule rates,” WCRI states. “Payments per claim for ASCs and for hospital outpatient and inpatient services in Florida were higher than typical.”
Florida’s RBRVS fee schedule is among the lowest nationwide, the report notes, adding “another factor underlying the lower prices in Florida was price discounts through negotiation and network participation. For most types of professional services, the average prices paid were lower than the fee schedule rates.”
A decline in workplace injuries is among reasons cited by the Florida Office of Insurance Regulation (OIR) for approving a 7.5-percent workers’ compensation rate cut beginning Jan. 1, 2020.
The third consecutive annual decline means Florida workers’ comp rates have dipped by nearly a third since a 14.5 percent hike in 2016.
Nevertheless, the OIR, state lawmakers and businesses are concerned about the potential – some say pending – fallout from the Florida Supreme Court’s Castellanos v. Next Door Co. 2016 ruling.
The court determined state law capping attorney fees in workers’ comp cases violated constitutional due-process rights by prohibiting any challenge to the “reasonableness” of fee awards.
Despite the 2018, 2019 and 2020 decreases, the National Council on Compensation Insurance (NCCI) – which provides rating metrics on behalf of insurance companies – warned in August “the full effects of that [court] decision will still not materialize for several years as workers compensation insurance is a ‘long-tail’ line that often involves a long period of time for claims to be resolved.”
Reinstating workers’ compensation fee caps is a priority for the Florida Chamber of Commerce, Associated Industries of Florida and the National Federation of Independent Business.
The WCRI suggests the same advocates also focus 2020 legislative efforts on lobbying Florida lawmakers to review the 2015 RBRVS rate revisions.
Other WCRI study findings:
• A higher percentage of surgeries in Florida were done in ASCs than in many other study states.
• Prescription payments per claim were higher than most study states, due to higher payments per prescription, while the average number of prescriptions per claim was typical of the 18 states.
• At an average of nearly $39,000, total costs per claim with more than seven days of lost time in Florida were typical of the study states for 2015 claims with an average of 36 months of experience.
• The average indemnity benefit per claim in Florida was slightly lower than the 18-state median, mainly driven by shorter duration of temporary disability benefits and a lower average permanent partial disability and/or lump-sum settlement payment per claim.
• Florida had more frequent attorney involvement and higher defense attorney payments per claim.