Commission to help employers transition to new payment system

The South Carolina Workers’ Compensation Commission will assist insurance carriers, self-insured funds, and self-insured employers in making the transition to the new hospital payment system, set to become effective October 1, 2006.  The Commission will price any hospital inpatient, outpatient or ambulatory surgery center bill at no charge.

These bills, which should be sent to the Commission’s Medical Services Division, will be re-priced according to Medicare’s current rate plus 40 percent.  In case of a disagreement  between parties concerning the payment for service, the provider or payor may request administrative review by the Commission’s Medical Services Division.  The Commission will conduct the review according to its established process for reviewing disputed payments.

The Commission approved the new payment system  - Medicare plus 40 percent – on June 26, 2006.   The Commission’s decision, taken in response to rapidly rising health care charges for workers’ compensation, is expected to save employers as much as $60 million a year.  Virtually every state is grappling with steep increases in health care charges and in response most states have been adjusting their payment systems.  South Carolina is one of several states that have adopted a “Medicare plus” model.  Thus, for inpatient care  Hawaii pays 10% more than Medicare, Ohio pays 15% more, California pays 20% more, and New York and Tennessee pay 50% more than Medicare.

Since 1996, inpatient and outpatient charges for workers’ compensation in South Carolina have increased 209% and 221% respectively.  With inpatient discharges declining, the results over the past five years, on a per claim basis, have been worse.  The average inpatient per claim charge has increased 27.5% annually since 2000.  The average charge for outpatient claims has increased 16.3% over the same period.

The Commission expects the changes to establish prices that more closely reflect the cost of medical services, and to establish prices that are more competitive with those paid by large group health insurance companies – considering that workers’ compensation provides for a single source of payment with little or no bad debt for compensable claims.