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Hospital payment system expected to save employers up to $60 million annually


On June 26, 2006, the South Carolina Workers’ Compensation Commission approved a new payment system for healthcare facilities treating workers’ compensation patients. Effective October 1, 2006, healthcare facilities will be paid 40% more than what the Medicare program pays for inpatient and outpatient services.

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 Maryland pays 9% more than Medicare, Hawaii pays 10% more, California pays 20% more, and New York and Tennessee pay 50% more than Medicare.

“The new payment system is a meaningful step towards moderating health care costs in workers’ compensation,” says David W. Huffstetler, chairman of the Commission.  He notes that between 2000-2005, inpatient procedures for workers’ compensation injuries declined by 8.0% but hospital charges increased 118.6%.  Over the same period, outpatient procedures in workers’ compensation declined 9.6% and outpatient charges rose 64.2%. 

The new payment system was recommended by the Commission’s Hospital Advisory Committee, which consisted of the following:

  • David F. Adcock, MD, MPH, medical consultant to the Commission
  • Jeri Boysia, Companion Property & Casualty Insurance Co.
  • William R. Calamas, Capital City Insurance Company
  • Thomas D. Cockrell, SC Hospital Association
  • Lewis Creel, Alcoa Primary Metals
  • William Floyd, MD, SC Medical Association
  • Leonard E. Forrest, MD, SC Medical Association
  • Jerry Johnson, SC Self-Insurers Association
  • Jerry Parrish, Anderson Area Medical Center
  • Thomas C. Salane, Turner, Padget, Graham & Laney
  • Robin E. Tester, SC Budget & Control Board
  • Gary R. Thibault, SC Workers’ Compensation Commission