The Indiana General Assembly passed and Gov. Pence has signed into law HB 1320, which introduces a fee schedule into Indiana’s workers’ compensation statute. Over 25 states have enacted fee schedule legislation since the mid-1990s to impose a limit or cap on medical reimbursement. Insurers generally favor fee schedules while medical providers generally oppose it. Indiana will now have a schedule set at 200% of Medicare reimbursement levels.
Prior to this passing, Indiana had relied on a “usual and customary” method, which had many pitfalls. Both the Workers’ Compensation Research Institute (WCRI) and theNational Council on Compensation Insurance (NCCI) have published studies showing how, overall, “usual and customary” states had higher comparable medical costs and higher rates of increases in cost.
In a recent study on the states with a lack of any form of fee schedule legislation, of which Indiana was a member, medical service prices increased from 32% to 38% from 2002 to 2011 compared to a median growth rate of 14% for states with fee schedules.
Some argue, however, that focusing on reimbursement of medical care distracts the workers’ compensation industry from a larger problem: utilization. Research suggests that a comparable medical condition tends to be more expensive in the workers’ compensation system than in health insurance because of higher utilization – more tests, surgeries, and physical therapy are performed on injured workers. The new law doesn’t go into full effect until 2014, so it will be some time yet before its effectiveness is understood.
