Workers' Comp Worth It? State Hopes Higher Fees Will Bring Doctors Back

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Medical Economics Feature - February 2008

  By  Ken Ortolon
Senior Editor

Between 2000 and 2004, Texas physicians fled the workers' compensation system in droves. Low fees and high hassles simply made the system untenable for many doctors.

Now, the Division of Workers' Compensation (DWC) at the Texas Department of Insurance (TDI) hopes a significant bump in physician fees adopted in January and scheduled to take effect in March will bring doctors back to the program and improve access to care for injured workers.

While Texas Medical Association leaders, who wanted even higher rates, hailed the new fees as a good "first step" toward improving access, they are not convinced the increase is enough to bring large numbers of physicians back to the workers' compensation system.

Perhaps the best that can be hoped for, some physicians say, is that those doctors who stuck with workers' compensation during the lean years will open their practices to more patients while other physicians weigh whether to give it another shot.  

Boosting the Rates

New rules approved by DWC Commissioner Albert Betts will boost physician fees in the workers' compensation system and make incentive payments to physicians who treat injured workers in critical access areas.

Fees for most services, including evaluation and management, will go from 125 percent to 140 percent of Medicare rates, while fees for surgical services performed in hospitals, ambulatory surgical centers, and other facilities will rise from 125 percent to 175 percent of Medicare.

Physician fees had been set at 125 percent of Medicare since 2003, and TMA leaders say those rates were disastrous for access within the workers' compensation system.

"There was a huge dropout of orthopedic surgeons in the state once the 125 stuck," said Beaumont orthopedic surgeon David Teuscher, MD. "And there has been a further erosion of access to care over time."

It wasn't just surgeons who left the system. The number of physicians on the workers' compensation Approved Doctor List sank from a high of roughly 30,000 in 2000 to little more than 11,000 in 2004.

"Clearly we know that 125 percent was just a disaster for patients as it has had a huge negative impact on access to care," Dr. Teuscher said.

Commissioner Betts acknowledges the review of workers' compensation rates was long overdue. State law requires DWC to review fees every two years, meaning the current adjustment was four years past due.

"I thought it was time to look at those rates and determine if 125 was still the appropriate rate to pay here in Texas, or if we needed to make some adjustments to keep the doctors in the system in the system and then, perhaps attract some new physicians to begin treating comp patients," Commissioner Betts said.

Part of the delay in reviewing rates stemmed from the workers' compensation changes the legislature approved in both 2003 and 2005. The 2005 law authorized managed care networks within the workers' compensation system, and DWC has spent a significant amount of time getting those networks approved and operating.

Michael Reed, director of TMA's Managed Care Delivery Systems Department, says Commissioner Betts assured the association's leadership that rates would be addressed as soon as the 2005 changes were in place, but the networks weren't truly up and running until September.

The new rates apply only to services provided on an out-of-network basis. Physicians and commercial health plans negotiate in-network rates. However, TMA physician leaders say they expect the higher out-of-network rates to pressure the health plans to improve in-network rates as physicians with network contracts opt to renegotiate. 

Providing an Incentive

In addition to the higher fees, DWC also approved a 10-percent incentive payment for physicians who treat workers' compensation patients in specified underserved areas. That incentive payment will apply in 122 ZIP codes scattered across the state, says Matthew Zurek, the DWC director of health care policy.       

Also, the rules include additional payments for physicians who provide workers' compensation-specific case management services. The comp system has historically not paid for these services. Five specific CPT codes are eligible for payment, including two medical conference codes and three codes relating to telephone calls between providers who discuss treatment of an injured worker.

A list of ZIP codes and payments for case management services are included in the new rules posted on the TDI Web site at

Finally, the rules require the medical fee guidelines to be updated annually based on the Medical Economic Index (MEI), which Mr. Reed says has averaged between 2 percent to 4 percent in recent years.

"Workers' comp moving to the MEI means physicians are guaranteed an objective increase, rather than a politically-driven congressional increase, annually. That's huge for physicians who are feeling the effects of dependence on the Medicare system," he said. "Plus the stakeholders don't have to go through these fights every two years to prove to TDI-DWC that physicians should be paid appropriately in workers' comp. Is it enough? No, but it's a good start." 

Who Will Take the Plunge?

While physicians applauded DWC for improving physician fees, there is still skepticism over whether the new rates will entice a large number of doctors back to the system.     

Commissioner Betts says DWC chose 140 percent of Medicare for most medical services by adding the average increase in the MEI over the past four years to the 125 percent base rates. DWC chose 175 percent of Medicare for facility surgical rates after looking at data from other states and averaging the differentials between what they pay for surgical services.

He's "optimistic" the rates will be enough to bring physicians back to workers' compensation. "For those doctors who may be pondering whether or not workers' comp is worth it, I hope this convinces them there's a little extra reimbursement there," he said. "And those doctors who have gotten out of comp in the last few years, or have not considered it, will now take a closer look at it."

TMA, however, requested a larger rate increase that would have brought Texas more in line with national averages. TMA proposed 155 percent of Medicare for most medical services and 190 percent for all surgical services, both in facilities and for minor surgeries in physician offices.

Mr. Reed says TMA chose those numbers after reviewing a study by the Workers' Compensation Research Institute that looked at average rates for 12 states that have fee guidelines similar to those used in Texas.

San Antonio occupational medicine physician Bernard T. Swift Jr., DO, MPH, says the rates approved by DWC will "come closer to getting more people interested" in workers' compensation, but he believes TMA's proposed rates would have provided a better chance of increasing access.

"I think you would have had a much greater opportunity to sign up primary care physicians, in particular," Dr. Swift said. "We are certainly hopeful that physicians will return to the system based on the new rates, but I think it remains to be seen as to whether that, in fact, will happen."

Dr. Swift, chief executive officer of Texas MedClinic, which provides occupational medicine and urgent care services at several clinics in the San Antonio area, says his group has continued to see out-of-network workers' compensation patients while holding on in anticipation of the fee increases. But Texas MedClinic's urgent care business has blossomed so rapidly that some of his doctors are questioning why they continue to see workers' compensation patients when the hassles are greater and the fees lower.

Dr. Teuscher also has doubts that more of his surgeon colleagues will be lured back into the system.

"I would call that [the new rates] a good step in the right direction," he said. "I don't know if you're going to see more surgeons come back into the market, though. You may see doors more open for those of us who still continue to see comp patients."

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at  Ken Ortolon.  

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