Adopting Medicare Fee Schedules

Considerations for the California Workers' Compensation Program

by Barbara O. Wynn

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Medical costs have become the fastest-growing component of the California workers' compensation program, increasing from 45 percent of benefit costs in the mid-1990s to an estimated 55 percent of benefit costs in 2003. In response to concerns about these rapidly increasing costs, the California Commission on Health and Safety and Workers' Compensation is recommending changes in the current Division of Workers' Compensation Official Medical Fee Schedule (OMFS) that determines the amount health care providers are paid for their medical services to the state's injured workers. Specifically, the Commission proposes that the OMFS be linked to Medicare fee schedules for all services other than pharmaceutical services. This study examines areas that must be addressed if such a link were to occur, including policy issues arising from the differences between the OMFS and the Medicare fee schedules, modifications that are likely to be necessary to tailor the Medicare fee schedules to California's injured workers, and the implications of automatic annual updates to the schedules.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Hospital Inpatient Fee Schedule

  • Chapter Three

    Physician and Other Professional Services

  • Chapter Four

    Hospital Outpatient and Ambulatory Surgery Center Facility Services

  • Chapter Five

    Other Items and Services

  • Chapter Six

    Findings and Areas for Further Consideration

  • Appendix A

    DRG Classification Changes Affecting the Payment Simulations in Chapter 2

  • Appendix B

    Payment-To-Cost Ratios and Outlier Payments for CWCP Patients

  • Appendix C

    Medicare 2003 National Physician Fee Schedule Relative Value Units

  • Appendix D

    Schedule of Payments for High-Volume Workers' Compensation Ambulatory Procedures

The research presented in this report was prepared for the California Commissionon Health and Safety and Workers' Compensation. This research was conducted bythe RAND Institute for Civil Justice.

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