How Does the Massachusetts Medical Fee Schedule Compare to Prices Actually Paid in Workers Compensation?

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WCRI Benchmarks

How Does the

Massachusetts

Medical Fee

Schedule Compare

to Prices Actually

Paid in Workers’

Compensation?

Stacey Eccleston

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About the Institute

The Workers Compensation Research Institute is a nonpartisan, not-for-profit research organization providing objective information about public policy issues involving workers’ compensation systems. The Institute does not take positions on the issues it researches; rather it provides information obtained through studies and data collection efforts that conform to recognized scientific methods, with objectivity further ensured through rigorous peer review procedures.

The Institute’s work helps those interested in improving workers’ compensation systems by providing new, objective, empirical infor– mation that bears on certain vital questions:

 How serious are the problems that policymakers want to

address?

 What are the consequences of proposed solutions?

 Are there alternative solutions that merit consideration? What

are their consequences?

The Institute’s work takes several forms:

 Original research studies on major issues confronting workers’

compensation systems

 Original research studies of individual state systems where

policymakers have shown an interest in reform and where there is an unmet need for objective information

 Sourcebooks that bring together information from a variety of

sources to provide unique, convenient reference works on specific issues

 Periodic research briefs that report on significant new

research, data, and issues in the field

 Benchmarking reports that identify key outcomes of state

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H

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ASSACHUSETTS

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EDICAL

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CTUALLY

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H

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D

OES THE

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ASSACHUSETTS

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EDICAL

F

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A

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W

ORKERS

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OMPENSATION

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TACEY

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CCLESTON

WC-06-27

April 2006

WORKERS COMPENSATION RESEARCH INSTITUTE CAMBRIDGE, MASSACHUSETTS

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OF THE WORKERS COMPENSATION RESEARCH INSTITUTE.

LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA

[TO COME]

PUBLICATIONS OF THE WORKERS COMPENSATION RESEARCH INSTITUTE DO NOT NECESSARILY REFLECT THE OPINIONS OR POLICIES

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ACKNOWLEDGMENTS

I would like to thank those who provided invaluable assistance throughout this study. First we wish to thank the DMBI Core Funder Group for their continued support and guidance that makes this and other related reports possible. The Technical reviewer, Dr. Jay Himmelstein, made valuable comments and suggestions that led to improvements in the study’s presentation and focus. Kevin Flynn of the Massachusetts Division of Health Care Finance and Policy also assisted along the way, answering specific questions with respect to Massachusetts’ fee schedule. Institute staff Xiaoping Zhao and Dawn Albright provided expert technical and programming assistance and Linda Carrubba, Stephanie Deeley, and Jammie Middleton provided quality administrative assistance in formatting the tables and text. Karen Holt shepherded the publication of the document through the publication process and Dr. Richard Victor provided invaluable insight and guidance throughout the process. Of course, any errors or omissions that remain are the responsibility of the author.

Stacey M. Eccleston

Cambridge, Massachusetts

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LIST OF TABLES

1 Distribution of Workers’ Compensation Medical Payments, by Type of Provider, Massachusetts / 8

2 Distribution of Workers’ Compensation Payments to Physicians, by Type of Service, Massachusetts / 9

3 Distribution of Payments to Physical/Occupational Therapists, by Type of Service, Massachusetts / 10

4 Distribution of Payments to Chiropractors, by Type of Service, Massachusetts / 10

5 Distribution of Payments to Hospitals, by Type of Service, Massachusetts / 11 6 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected

Common Medical Procedures Billed by Massachusetts Physicians / 12 7 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected

Common Medical Procedures Billed by Massachusetts Physical/Occupational Therapists / 16

8 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Chiropractors / 16 TA.1 List of Service Codes Analyzed in This Study / 21

TA.2 Percent of Services and Payments Represented by Codes Analyzed in the Study / 28

SA.1 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Physicians / 30 SA.2 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected

Common Medical Procedures Billed by Massachusetts Physicians for Major Surgery / 33

SA.3 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Physicians for Surgical Treatment / 35

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SA.4 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Physical/Occupational Therapists / 36

SA.5 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Chiropractors / 37

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HOW DOES THE MASSACHUSETTS MEDICAL FEE SCHEDULE

COMPARE TO PRICES ACTUALLY PAID IN WORKERS'

COMPENSATION?

B

ACKGROUND

This study reports the results of an analysis requested by the Commonwealth of Massachusetts (Department of Industrial Accidents and Division of Health Care Finance and Policy (DHCFP)) for descriptive information that may provide input to their decisions about a revised medical fee schedule. The information helps policymakers to assess the extent to which prices paid for medical services in 2003–2004 were the same as those listed in the fee schedule in place at the time. We do this by comparing actual payments with the fee schedule level for the most common procedure codes. The study also provides information about the extent to which payments typically are made below the fee schedule or above the fee schedule. The study examines the fee schedule in effect in 2003–2004. The current fee schedule was adopted subsequently. Like all WCRI studies, this study makes no recommendations.

The Massachusetts fee schedule is the lowest in the nation. Providers contend that this raises concerns about access to care for injured workers. Payors raise concerns about the relevance of the fee schedule, especially for surgery and specialty care, as they find they increasingly negotiate fees above the fee schedule for some providers and services.

Several prior WCRI studies are relevant to this discussion. A WCRI study of state fee schedules in 41 states (Eccleston et al., 2002) found that Massachusetts had one of the lowest fee schedules in the U.S. in 2001, raising concerns about access to care. A subsequent study of the outcomes reported by injured workers in seven states found that Massachusetts workers, on average, reported better outcomes (including access) than a number of states with higher fee schedules or no fee schedule (Fox, Victor, and Liu, 2006). Additional studies on the impact of any changes in fee schedule levels on access to care may be warranted. One explanation for the relatively good outcomes with respect to

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negotiation was common. We see evidence of this in an earlier WCRI study in two ways (Eccleston and Zhao, 2005). First, the average price paid for physician services in Massachusetts was not unusually low (86 percent of the price in the median of 12 large comparison states), despite the low fee schedule. Prices paid to surgeons were 18 percent higher than the price in the median state. Second, Massachusetts physicians bill a disproportionate number of office visits at higher revenue Current Procedural Terminology (CPT) codes—notably higher than in most other states, particularly those with higher fee schedules.

S

UMMARY OF

F

INDINGS

• Unlike most physician-billed services, major surgical procedures were often paid above the fee schedule. For many of these procedures, it was not uncommon for the median payment for a procedure to be two or three times the fee schedule amount. Typically, 50–60 percent of procedures were paid above the fee schedule level. By “major surgery” we mean services categorized in the surgical section of the CPT manual that involve invasive procedures, generally requiring anesthesia. Common examples include knee and shoulder arthroscopy and spinal laminotomies and laminectomies (see Tables 6 and SA.2).

• Among the major surgical procedures, there were some important exceptions. For hernia repairs, 84 percent were paid at or below the fee schedule level. For shoulder reconstruction and carpal tunnel surgeries, the median procedure was paid at the fee schedule level, but 42 to 51 percent were paid above the fee schedule.

• For each major surgical procedure listed, the Massachusetts fee schedule level was significantly lower than all nearby state fee schedule levels. However, the typical amount paid for the listed surgery services in Massachusetts was typical of the fee schedule levels in Vermont, Maine, and the rural areas of New York, and only somewhat lower than the fee schedule amounts found in New York City. For most services the fee schedule levels in Connecticut and Rhode Island were substantially higher than the prices typically paid in Massachusetts (Table SA.2).

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• For most nonsurgical physician services, at least 90 percent of procedures were paid at or below the fee schedule levels. There were some exceptions, but even for the exceptions, at least 75 percent of procedures were paid at or below the fee schedule levels (see Tables 6 and SA.1).

• At least 80 percent of the time, most surgical treatments (surgical CPT codes that are less invasive than those defined under major surgery, such as wound repairs, arthrocentesis, and certain injections) were paid at levels equal to or less than the fee schedule. A few exceptions were found. One was spinal injections (CPT 62331), for which 20 percent were paid above the fee schedule. Another was the removal of a deep implant, for which half were paid above the fee schedule. The fee schedule levels and prices paid for surgical treatments in Massachusetts were also generally lower compared to fee schedule levels in other nearby states except for some procedures, such as arthrocentesis, paid at levels close to the fee schedule levels in Vermont and New York (see Tables 6 and SA.3).

• The majority (90 percent or more) of payments for physical/occupational

therapists’ services were made at or below the applicable fee schedule level.

Exceptions include physical performance tests or measurements which were paid above the fee schedule level about 30 percent of the time (see Tables 7 and SA.4). • For chiropractic services, 95 percent of services were paid at or below the applicable

fee schedule level. While the vast majority were paid at the fee schedule level, payments below the fee schedule amount were common for chiropractic extraspinal manipulative treatments and manipulative treatments to multiple regions of the spine (see Tables 8 and SA.5).

O

BJECTIVES AND

S

COPE

This study examines common medical procedures delivered to injured workers and paid for under workers’ compensation in Massachusetts. Services examined include

• physician services ○ surgical

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• major surgery • surgical treatment ○ nonsurgical

• evaluation and management (e.g., office visits, emergency care) • radiology

• nerve testing

• physical/occupational therapist services • chiropractic services

In addition, the Statistical Appendix (Tables SA.1 through SA.5) presents more detailed information on a larger set of services billed by physicians, physical/occupational therapists, and chiropractors, including services such as anesthesia, mental health services, nursing, home health care, and supplies and equipment when billed by these providers. The majority of nursing, home health care services, and supplies and equipment are billed by “other providers” as defined in this report. The study does not make comparisons to fee schedule amounts for these other services since they are either not covered under the provider fee schedule or the billing involves units of time, etc., that make it difficult to compare unit level pricings (anesthesia or home health care, for example). Hospital services are included in the distribution of payments found in Tables 1 and 5. However, the billings for diverse services are done under broadly defined revenue codes. We do not report the average payments for these codes since we do not consider them as meaningful as the average payments for individual CPT codes. Pharmaceuticals are not included in the medical cost measures in this study.

Although the information contained here is useful for making inferences about access to care, such inferences should be made with care in the absence of data on worker outcomes. For example, for some procedures, namely major surgical procedures, we find that payments were often significantly above the fee schedule. One might infer that payors were negotiating higher rates with certain providers in order to obtain access to their services—and but for the higher negotiated rates, workers’ would not have access to quality care. However, it should also be noted that for these procedures, there were also a significant number of workers who got care paid for at or below the fee schedule level. It

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is unknown if the providers who delivered this care provided inferior quality care or good quality at a lower price. Without direct outcomes measures, one cannot know for certain.

O

RGANIZATION OF THE

R

EPORT

The next section describes the methods and data used. More detail is found in the Technical Appendix. Following the methods and data section, for context, is a description of the distribution of medical payments in the Massachusetts workers’ compensation system among different provider types and within the major groups of services delivered by those providers (Tables 1 through 5). The remainder of the study examines the relationship between the reimbursement rates actually paid and those listed in the fee schedule for the most common medical procedures rendered to injured workers. Tables 6 through 8 summarize the results for physicians, physical/occupational therapists, and chiropractors, respectively. The tables report the information for selected common procedures. A Statistical Appendix presents the information for a larger set of procedures billed by these providers. For surgical services, the state agencies requested that we compare the Massachusetts fee schedule to its counterparts in nearby states. This is done in Tables SA.2 and SA.3.

D

ATA AND

M

ETHODS

The data used in this study come from medical line item billings for services rendered from January 1, 2003, through June 30, 2004. Additional data cleaning and transformation is done by WCRI researchers to compensate for certain limitations in the reporting of modifiers and multiple units of service for certain types of procedures (see the Technical Appendix). The prices paid for services rendered in Massachusetts are compared to the applicable fee schedule level (the fee schedule in effect December 2002 through August 2004) as published by the DHCFP. Comparisons of those fees are also made to the current fee schedule effective September 2004 in Massachusetts. Information on fee levels in nearby states for surgery services come from the currently published fee schedules in each of those states.

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The services analyzed in this study represent the most important services billed under workers’ compensation. The request from the Division of Industrial Accidents and DHCFP specified the desire to evaluate the most frequently billed services by each individual provider type. In addition, because surgery (particularly major surgery) services are less frequently billed, but make up a significant portion of medical payments, we separately analyzed the most frequent services billed within the major surgery and surgical treatment service groups independently. See the Technical Appendix for a full description of the services specifically analyzed in this report.

The data come from bills for medical services with dates of service between January 1, 2003, and June 30, 2004, when a single Massachusetts fee schedule was in effect. There were 1,353,483 observations (individual medical services billed) within the given dates of service, representing over 53,000 workers’ compensation indemnity and medical-only claims, with injury dates from between January 1996 through October 2003 from Massachusetts insurers and self-insured employers. The data used in this study represent approximately 33 percent of the claim volume in the state from 12 claims paying organizations.1

Because this study is based on a large subset of claims in the state, we have determined that the claims used in this analysis are representative of the population of claims in the state. An earlier report based on the same data used in this study shows that, in Massachusetts, the average incurred medical payment per claim in this dataset is quite similar to that reported by the Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIBMA) (Telles, Wang, and Tanabe, 2006, Table TA.5). For example, the average incurred medical payment per indemnity claim for insured employers for 2002 claims at 12 months’ maturity was $6,510 as reported in the WCRI Detailed Benchmark/Evaluation (DBE) database, compared to $6,661 as reported by the WCRIBMA, a difference of only 2 percent.

1_{We estimate the percentage of representation by using the number of claims from the insured population}

as reported by the Workers’ Compensation Rating and Inspection Bureau of Massachusetts and the number of claims reported by self-insurers (from National Academy of Social Insurance reports) and comparing that to the number of claims in the DBE for the same time period (dates of injury). With a representative sample of 33 percent of the claims, it is expected that the volume of medical services delivered is also near 33 percent of total medical services delivered for the time period January 2002 to August 2003, since the average number of services delivered per claim is similar in the sample and in the population.

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The reader should be aware of several possible limitations in the data. First, if the WCRI data sources (insurers and self-insurers) had more sophisticated or effective medical bill review processes or higher network penetration rates than the typical payor, then the average prices paid reported in this study would understate the true average price paid. The network penetration rate for the claims and services in our database is 39 percent overall and 26 percent for only nonhospital services. Second, the payment data used in the study come from 2003 and 2004. Comments received on an earlier draft from several payors suggested that negotiated prices for surgeries have increased significantly since that time. If so, then the prices paid that are reported here understate the true prices.

The payments for the services analyzed in this study were covered by the fee schedule that was implemented in December 2002. The current fee schedule was implemented in September 2004. The later fee schedule is typically 3 to 5 percent higher than the December 2002 fee schedule for many physician nonsurgical services with the exception of nerve conduction tests, where reimbursement rates were increased 30 to 50 percent. For surgical services, the fee schedule was either increased by 3 to 5 percent on average, or decreased 5 to 10 percent depending on the surgical service. For physical medicine and chiropractic care, there was generally a 3 to 5 percent increase in fees with the exception of fees for iontophoresis, which were increased by 45 percent, and decreases of between 5 and 10 percent in certain modalities, such as whirlpool, electrical stimulation and therapeutic activities. The comparisons of the December 2002 and September 2004 fee schedule amounts can be found in each of the Statistical Appendix tables.

DISTRIBUTION OF MASSACHUSETTS WORKERS’ COMPENSATION MEDICAL PAYMENTS AMONG TYPES OF PROVIDERS AND SERVICES

Table 1 shows that 80 percent of workers’ compensation medical payments were made to either physicians or hospitals (34 percent to physicians and 46 percent to hospitals) with 8 percent going to physical or occupational therapists, 3 percent paid to chiropractors, and

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8 percent going to “other providers” defined as retail pharmacies,2 home health care providers, nurses, physicians’ assistants, psychologists, medical equipment suppliers, and radiology centers. The focus of this study is on the payments made to physicians, chiropractors, and physical/occupational therapists whose reimbursement rates were subject to the provider fee schedule.

Table 1 Distribution of Workers' Compensation Medical Payments, by Type of Provider, Massachusetts

Provider Type Percent of Total Medical Paymentsa

(excluding drugs) Physician 34.0% Hospital outpatient 32.5% Hospital inpatient 13.5% Physical/occupational therapist 8.1% Chiropractor 2.6% Other providerb 7.7% Unknown provider 1.7% Total 100.0%c a

"Total medical payments" represent total workers' compensation medical payments for services rendered and paid for from January 1, 2003, through June, 30, 2004. Pharmaceuticals are excluded from the total. The database includes a representative sample of claims from 9 individual data sources accounting for approximately 33 percent of the claims in the state. A comparison of the incurred medical cost per insured claim in the sample used for this study to the incurred medical cost per claim reported by the state rating bureau indicates that the sample is representative, at least of the insured population of claims in the state.

b

"Other providers" are primarily made up of home health care providers, medical equipment suppliers, retail pharmacies, nurses, physicians’ assistants, and radiology centers.

c

Column total may not add up to 100 percent due to rounding.

Nearly half (46 percent) of payments to physicians were for surgical services. Nearly one-fourth (22 percent) were for evaluation and management services (e.g., office visits). Most of the rest of the physician payments were distributed among radiology services (professional component), anesthesia, nerve testing, and supplies and equipment (Table 2). As would be expected, nearly all payments (91 percent) to physical/occupational therapists were made for physical medicine services. About 5 percent were made for nerve and muscle testing (Table 3). Table 4 shows that 85 percent

2_{Since drugs are not included in the analysis, the services delivered by retail pharmacies here are primarily}

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of payments made to chiropractors were for chiropractic manipulations and/or physical medicine modalities and procedures, with about 11 percent being made for evaluation and management services. Among hospital providers (both inpatient and outpatient), about 20 percent of payments were made for room and board associated with inpatient stays. Nearly 17 percent of payments were made for services defined as operating, recovery or treatment room services, while nearly 12 percent of payments were made for hospital physical medicine services. The rest of the payments were distributed among emergency services, hospital furnished supplies and/or equipment, radiology services, anesthesia, or clinic evaluation or management services (Table 5).

Table 2 Distribution of Workers' Compensation Payments to Physicians, by Type of Service, Massachusetts

Service Type Percent of Payments to Physicians

Major surgery 35.6%

Evaluation and management 22.5%

Surgical treatment 10.6%

Major radiology 9.5%

Anesthesia 6.4%

Minor radiology 3.6%

Supplies and equipment 2.2%

Neurological/neuromuscular testing 2.2%

Emergency services 1.7%

Legal and special reports 1.4%

Other servicesa 2.5%

Unknown services 1.8%

Total 100.0%

a

"Other services" include mental health services, injections, and application of casts and splints among other miscellaneous services, each making up less than 0.5 percent of total medical payments to physicians.

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Table 3 Distribution of Payments to Physical/Occupational Therapists, by Type of Service, Massachusetts

Service Type Percent of Total Medical Paymentsa to PT/OTs

Physical medicine 90.6%

Nerve and muscle testing 4.9%

Other servicesb 3.6%

Total 100.0%

a

"Total medical payments" represent total workers' compensation medical payments for services rendered and paid for from January 1, 2003, through June, 30, 2004. Pharmaceuticals are excluded from the total. The database includes a representative sample of claims from 9 individual data sources accounting for approximately 33 percent of the claims in the state. A comparison of the incurred medical dollars on the sample set of claims used for this study to the incurred medical dollars reported by the state rating bureau on all claims indicates that the sample is representative of the population of claims in the state.

b

"Other services" here include evaluations, speech therapy, and specialized home care, each making up less than 1 percent of payments to physical/occupational therapists.

Key: PT/OT: physical/occupational therapist.

Table 4 Distribution of Payments to Chiropractors, by Type of Service, Massachusetts

Service Type Percent of Total Medical Paymentsa to

Chiropractors

Physical medicine and chiropractic 84.7%

Evaluation and management 10.8%

Total 100.0%c

a

"Total medical payments" represent total workers' compensation medical payments for services rendered and paid for from January 1, 2003, through June 30, 2004. Pharmaceuticals are excluded from the total. The database includes a representative sample of claims from 9 individual data sources accounting for approximately 33 percent of the claims in the state. A comparison of the incurred medical dollars on the sample set of claims used for this study to the incurred medical dollars reported by the state rating bureau on all claims indicates that the sample is representative of the population of claims in the state.

b

"Other services" here include evaluations, non-prescription drugs, exercise equipment, and other miscellaneous services, each making up less than 1 percent of payments to

chiropractors.

c

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Table 5 Distribution of Payments to Hospitals, by Type of Service, Massachusetts

Service Type Percent of Total Medical Paymentsa to

Hospitals

Room and board 19.3%

Operating/treatment/recovery rooms 16.9%

Physical medicine 11.5%

Emergency 9.7%

Major radiology 7.5%

Clinic evaluation and management 3.2%

Anesthesia 3.8% Miscellaneous charges for ambulatory care 2.0%

Laboratory and pathology 1.9%

Unknown 7.0% Total 100.0%

a

"Total medical payments" represent total workers' compensation medical payments for services rendered and paid for from January 1, 2003, through June, 30, 2004. Pharmaceuticals are excluded from the total. The database includes a representative sample of claims from 9 individual data sources accounting for approximately 33 percent of the claims in the state. A comparison of the incurred medical dollars on the sample set of claims used for this study to the incurred medical dollars reported by the state rating bureau on all claims indicates that the sample is representative of the population of claims in the state.

b

"Other services" here include respiratory services, intravenous therapy, preventative care, and skilled nursing among other miscellaneous services, each making up less than 0.5 percent of payments to hospitals.

COMPARISON OF FEE SCHEDULE AMOUNTS AND PRICES ACTUALLY PAID FOR COMMON WORKERS’ COMPENSATION MEDICAL PROCEDURES

Physician Services

Table 6 compares the fee schedule and prices paid to physicians. The services were broken into seven major service categories billed by physicians. The majority of services

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this include major surgical services which were more often paid above the fee schedule, and a few services listed under “other services” (psychotherapy and special reports), paid at levels below the fee schedule. In fact, the median payment for most nonsurgical physician services was most often at the fee schedule level. Table SA.1 shows that the same is true for a much larger set of physician services.

Table 6 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Physicians

Service Code (including modifiers)

Service Description Percent Paid

below Fee Schedule Percent Paid at Fee Schedule Percent Paid above Fee Schedule Median Payment as Percent of Fee Schedule Amount

Evaluation and management

99212

Office or other outpatient visit of an established

patient, problem-focused history 17 78 5 100%

99213

patient, expanded 21 75 3 100%

99214

patient, detailed 22 75 3 100%

99283

Emergency department visit for the evaluation of a patient with an expanded history and exam and

moderate complexity 15 83 2 100%

X9157 Initial/comprehensive office visit, new patient 23 70 7 100%

Nerve testing

95903 Nerve conduction, motor, with F-wave study 41 55 4 100% 95903_26

Nerve conduction, motor, with F-wave study–

professional component 9 85 6 100%

95904 Nerve conduction, sensory 14 86 0 100%

95904_26

Nerve conduction, sensory–professional

component 10 87 3 100%

95860 Needle electromyography 22 76 2 100%

95900 Nerve conduction, amplitude and latency 14 80 6 100%

Major radiology

70450_26

Computed tomography, head or brain–professional

72148_26

Magnetic resonance imaging, spinal canal and

contents–professional component 14 80 6 100%

72148

Magnetic resonance imaging, spinal canal and

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Table 6 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Physicians (continued)

below Fee Schedule Percent Paid at Fee Schedule Percent Paid above Fee Schedule Median Payment as Percent of Fee Schedule Amount 73221_26

Magnetic resonance imaging, any joint of upper

extremity–professional component 15 81 4 100%

73721_26

Magnetic resonance angiography–professional

Minor radiology

72100_26

Radiologic exam, spine, two or three views–

73130_26

Radiologic exam, hand, minimum of three views–

73140_26 Radiologic exam, finger–professional component 2 96 2 100% 73610_26

Radiologic exam, complete, minimum of three

views–professional component 2 96 2 100%

76005_26 Fluoroscopic guidance–professional component 15 75 10 100%

Major surgery

22851 Application of intervertebral biomechanical device 9 26 64 303% 23420 Reconstruction of complete shoulder 13 45 42 100% 29826 Arthroscopy, decompression of subacromial space 13 19 68 240% 29877

Arthroscopy, debridement/shaving of articular

cartilage 12 20 68 247%

29881 Arthroscopy, with meniscectomy 10 28 62 238%

29888

Arthroscopically aided anterior cruciate ligament

repair 10 28 62 202%

49505 Repair initial inguinal hernia, age 5 or over 21 63 16 100% 63030

Laminotomy with decompression of nerve roots,

one interspace 9 33 58 287%

64721

Neuroplasty and/or transposition, median nerve at

carpal tunnel 11 39 51 100%

69990 Microsurgical techniques 5 42 53 153%

Surgical treatment

12001

Simple repair of superficial wounds of scalp,

2.5 cm 27 72 1 100%

12002

Simple repair of superficial wounds of scalp, 2.6–

7.5 cm 18 81 1 100%

20550 Injection, single tendon sheath 11 79 9 100%

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Table 6 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Physicians (continued)

below Fee Schedule Percent Paid at Fee Schedule Percent Paid above Fee Schedule Median Payment as Percent of Fee Schedule Amount

20610 Arthrocentesis, major joint or bursa 13 78 8 100%

62311 Injection, lumbar, sacral 12 68 20 100%

Other physician billed services

90806 Individual psychotherapy, insight oriented 42 49 8 100% 93010 Electrocardiogram, interpretation and report only 1 94 4 100% 99080 Special reports such as insurance forms 81 15 3 81% 99232 Subsequent hospital care, per day, expanded 17 76 8 100%

A4556 Electrodes, per pair 4 87 9 100%

Major Surgery

For most major surgical services, payments were typically made above the fee schedule. For example, 62 percent of knee arthroscopies (CPT 29881) were paid at levels higher than the fee schedule and 28 percent were paid at the fee schedule level. The median price paid was more than double the applicable fee schedule rate (Table 6). Table SA.2 shows that the average price paid for this procedure was $1,533 and the median price paid was $1,607, while the fee schedule amount was $663. By comparison, the fee schedule rates in nearby states ranged from $1,043 in Maine to $2,885 in Connecticut.

The disparities in payment above the fee schedule likely reflect a number of factors. First, some surgeons may be seen by payors as especially effective in treatment and facilitating return to work. Payors would likely pay a premium to such surgeons to induce them to see the payors’ patients. Some surgeons may have unusual bargaining power due to reputation or unique capabilities and may be able to extract higher payments. Other providers may be seen by payors as providing lower quality care. Such providers would likely limit their fees to the fee schedule or lower network negotiated rates.

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Surgical Treatment

Like the majority of physician services, surgical treatment was most often paid at levels equal to, or lower than, the fee schedule amount. Table SA.3 shows this was true of most surgical treatment services with the exception of certain injection procedures where services were paid at levels above the fee schedule 20 to 30 percent of the time, and for removal of an implant (CPT 20680) which was paid at levels above the fee schedule more than 50 percent of the time.

Physical/Occupational Therapist Services

Table 7 compares the fee schedule amounts and actual prices paid for common procedures billed by Massachusetts physical and occupational therapists. More than 95 percent of the time services were paid at levels at or below the fee schedule, and the median payment was equal to the fee schedule level. Table SA.4 shows this was true of the larger group of physical therapists’ services. In most cases, services were paid at the fee schedule level; however, for some services as many as 20 to 30 percent of the procedures were paid at levels lower than the fee schedule amount. For example, the most commonly billed procedure (CPT 97110) was paid at the fee schedule level 75 percent of the time and was paid at rates lower than the fee schedule 25 percent of the time (Table 7). For work hardening, payment below the fee schedule was not uncommon. Table SA.4 shows that there were other exceptions where 20 to 30 percent of the time the physical medicine procedure was paid at a level higher than the fee schedule. For example, physical performance tests or measurements were paid above the fee schedule level nearly 30 percent of the time.

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Table 7 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Physical/Occupational Therapists

Service Code (including modifiers)

below Fee Schedule Percent Paid at Fee Schedule Percent Paid above Fee Schedule Median Payment as Percent of Fee Schedule 97035

Application of a modality, ultrasound, each

15 minutes 9 90 1 100%

97010

Application of a modality, one or more

areas, hot or cold packs 0 100 0 100%

97110

Therapeutic procedure, one or more

areas, 15 minutes 25 75 0 100%

97140

Manual therapy techniques

mobilization/manipulation 17 83 0 100%

97530

Therapeutic activities, direct patient

contact by the provider 26 74 0 100%

Chiropractic Services

Table 8 compares the fee schedule amounts and actual prices paid for common procedures billed by Massachusetts chiropractors. As with other providers, the majority of payments were made at levels equal to, or lower than, the fee schedule levels. There were a few exceptions. Payments below the fee schedule amount were common for chiropractic extraspinal manipulative treatments and manipulative treatments to multiple regions of the spine (see Table SA.5).

Table 8 Comparison of Fee Schedule Amounts and Prices Actually Paid for Selected Common Medical Procedures Billed by Massachusetts Chiropractors

Service Code (including modifiers)

below Fee Schedule Percent Paid at Fee Schedule Percent Paid above Fee Schedule Median Payment as Percent of Fee Schedule 97010

Application of a modality, one or more

areas, hot or cold packs 0 100 0 100%

97014

Application of a modality, electrical

stimulation 14 86 0 100%

97032

Application of a modality to one or more

areas 32 67 1 100%

98940

Chiropractic manipulative treatment, spinal,

one or two regions 16 84 0 100%

(27)

TECHNICAL APPENDIX

D

ATA

The data used in this study come from medical line item billings for services rendered from January 1, 2003 through June 30, 2004. Additional data cleaning and transformation is done by WCRI researchers to compensate for certain limitations in the reporting of modifiers and multiple units of service for certain types of procedures.

REPRESENTATIVENESS OF DATA

The data used come from WCRI’s Detailed Benchmark/Evaluation (DBE) database which includes detailed line item medical bills for services rendered to injured workers with dates of injury between 1996 and 2003. The data used in this analysis relies on bills and medical services with dates of service between January 1, 2003, and June 30, 2004, when a single Massachusetts fee schedule was in effect. There were 1,353,483 observations (individual medical services billed) within the given dates of service, representing over 53,000 workers’ compensation indemnity and medical only claims with injury dates from between January 1996 through October 2003 from Massachusetts insurers and self-insured employers. The data used in this study represent approximately 33 percent of the claim volume in the state.3 Although this study is based on a subset of claims in the state, we believe the claims used in this analysis are representative of the population of claims in the state. An earlier report based on the same data used in this study shows that in Massachusetts, the average incurred benefit payment and average incurred medical payment per claim in this dataset is quite similar to that reported by the Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIBMA)

3_{We estimate the percentage representation by using the number of claims from the insured population as}

reported by the Workers’ Compensation Rating and Inspection Bureau of Massachusetts and the number of claims reported by self-insurers (from National Academy of Social Insurance reports) and comparing that to the number of claims in the DBE for the same time period (dates of injury). With a representative sample of 33 percent of the claims, it is expected that the volume of medical services delivered is also near 33

(28)

(Telles, Wang, and Tanabe, 2006, Table TA.5). For example, the average incurred medical payment per indemnity claim for insured employers for 2002 claims at 12 months’ maturity was $6,510 as reported in the WCRI DBE database compared to $6,661 as reported by the WCRIBMA, a difference of only 2 percent.

One possible distortion might occur if the WCRI data sources (insurers and self-insurers) had more sophisticated or effective medical bill review processes or had higher network penetration rates than the typical payor. If so, then the average prices paid reported in this study would understate the true price paid. The network penetration rate for the claims in our database is 39 percent overall, and 26 percent for just nonhospital services.

SERVICES (CPT CODES) ANALYZED IN THIS STUDY

The services analyzed in this study represent the most important services billed under workers’ compensation. The request from the Division of Industrial Accidents and Division of Health Care Finance and Policy specified the desire to evaluate the most frequently billed services by each individual provider type. In addition, because surgery (particularly major surgery) services are less frequently billed, but make up a significant portion of medical payments, we separately analyzed the most frequent services billed within the major surgery and surgical treatment service groups independently. Table TA.1 lists all the CPT codes and abbreviated definitions that are analyzed in this report. There are 155 unique CPT codes analyzed in this study (187 codes when considering the modified codes individually). Additionally, Table TA.1 shows the percentage of nonhospital services and payments that each code represents and the total for all codes together. These 187 codes make up the majority of all services (85 percent) billed by nonhospital providers and the majority (64 percent) of all payments made to nonhospital providers. Table TA.2 summarizes the percentage of services and dollars that are represented in the analysis for each provider type and/or service group found in Tables SA.1 through SA.5. It shows that the 187 services individually analyzed in this report cover 65 percent of physician expenditures (surgical and nonsurgical together); 80 percent of the payments made to physical/occupational therapists, and 81 percent of the payments to chiropractors.

(29)

DATA CLEANING METHODS

Correcting for Multiple Units Billed as Single Unit

WCRI identified that many paid amounts for CPT codes for certain supplies and equipment, neurological testing or physical medicine services were being billed in multiple units, but the number of units billed was not included in the data. For example, the most commonly paid amount for A4556, a pair of electrodes, is $10.27, but there were also many instances of $20.54 in the data. Clearly, that represented two pairs of electrodes and not a disparate payment amount. To correct for the multiple units in the majority of instances, WCRI identified the ten most frequently paid amounts and then looked for exact multiples of those amounts. Then WCRI replaced the aggregate cost of the multiple units with the correct number of individual services, and unit prices were then calculated. In our example, we would count that line as two pairs of electrodes with an amount paid of $10.27 each.

Correcting for Missing Modifiers

Some of the variation in the payments for an individual code can be explained by modifiers to that code, particularly for radiology services where there may be a separate technical and professional component. This analysis uses the CPT code plus the modifier as the basic unit of comparison, so that comparisons are made across the same medical procedure. However, the modifier does not always appear in the data. In order to correct for missing modifiers, we compared the prices paid for services where the modifier was present to the group of services that did not contain a modifier. If an unmodified service was paid at a level that matched the modified service, we assumed that the modifier was missing and reassigned that service and its payments to the modified service. For example, the professional component of radiology service 72141 (CPT 72141_26) has a fee schedule rate of $83.37. The fee schedule rate for the unmodified service (or whole procedure) is $532.12. If the amount paid on services grouped under 72141 (unmodified) was $83.37, that service and its payments were reclassified to 72141_26. WCRI performed this correction for modifiers 26 and 27 for the major and minor radiology groups, and for modifiers 50, 51, 59, 80, and 81 for the surgery and treatment surgery

(30)

service groups. These modifiers were chosen because they are common in their service category, and they represent a difference in price that was large enough to distinguish from the unmodified service.

Other Issues

Many types of services are billed on a time unit measure, such as charges per fifteen minutes of services. Such services include anesthesia and home health care. Since the units are typically not reported in the data, we are unable to accurately compare the fee schedule amounts and actual prices for a unit. Some physical medicine codes used by chiropractors and/or physical therapists are also based on fifteen minute intervals; however, these are far more likely to represent even multiples of fifteen minutes and so are corrected by the multiple units correction described above. The time units in anesthesia are more likely to be linear; e.g., to represent twelve minutes or nineteen minutes instead of an even multiple of fifteen. WCRI’s algorithm to correct for multiple units was applied to physical medicine codes, but could not be applied to anesthesiology or home health for this reason. This study does not attempt to make price comparisons for anesthesia, home health care, and certain other procedures, such as broadly defined supplies, which together make up only 6.9 percent of total medical payments to nonhospital providers.

Correcting for Outliers

Any data set has outlier values, sometimes from data entry errors by the payors or their vendors. These extreme values contribute disproportionately to the average due to the skewed distribution. To mitigate the influence of the extreme values on our calculations of average medical payments per CPT code, we applied data capping. For each CPT code, we identified and examined highly unusual payment amounts. We applied an algorithm that we developed to flag likely data entry errors. In all, we flagged about 3 percent of the payments as likely data entry errors. We applied a data capping algorithm that eliminated the outliers at the high and low extremes of the price distribution. The algorithm basically identified implausible increases from one percentile to the next and capped the lines with amounts beyond the point of the increases. The upper bound starts

(31)

at the 90th percentile of the price distribution for a unique procedure and searches upwards through percentiles. The upper bound is set to 120 percent of Pi if the ratio of Pi+1 to Pi is greater than 1.5. The lower bound starts at 10th percentile and search downward through percentiles. The lower bound is set to 80 percent of Pi if the ratio of Pi to Pi-1 is greater than 2.

Computations of Prices Paid and Fee Schedule Amounts

For all analyses, the data were separated into different provider groups. Within each provider group, we chose the CPT codes with the highest frequency to include in the study. These codes typically also make up the highest percent of expenditures for each provider with the exception of some surgery codes that are less frequently billed, but represent a high proportion of dollars. We did a separate ranking within the surgery categories to additionally capture and analyze these important codes. For each code chosen within the provider group, WCRI computed the mean, median, and mode of the amount paid. The prices were then compared to the fee schedule, and we presented the percent of services that were paid at levels at, above, and below the fee schedule.

For most services, the mode (most frequent price) was the fee schedule amount— but not for most major surgical services. For major surgeries, we do not report the mode as it was not a meaningful value. The prices for major surgeries are very often negotiated either below or above the fee schedule at various levels, resulting in a wide variety of payment amounts, and the fee schedule amount is less often the amount paid.

TA.1 List of Service Codes Analyzed in This Study

CPT Code Number of Servicesa Definition Percent of Nonhospital Services Percent of Nonhospital Expenditures

Top services included in analysis

97110 177,300 Therapeutic procedure, one or more areas, each 15 minutes 18.98 6.46 97010 69,611 Application of a modality to one or more areas, hot or cold packs 7.45 0.46 97140 58,483 Manual therapy techniques, mobilization/manipulation 6.09 1.93 99213 49,489 Office or other outpatient visit of an established patient, expanded 5.15 4.31 97530 37,510 Therapeutic activities, direct patient contact by the provider 4.02 1.66 97014 36,297 Application of a modality, electrical stimulation 3.89 0.71

(32)

TA.1 List of Service Codes Analyzed in This Study (continued) CPT Code Number of Servicesa Definition Percent of Nonhospital Services Percent of Nonhospital Expenditures

97035 31,405 Application of a modality, ultrasound, each 15 minutes 3.30 0.46 97032 27,235

Application of a modality to one or more areas, electrical

stimulation, 15 minutes 2.92 0.62

98940 23,820 Chiropractic manipulative treatment, spinal, one or two regions 2.55 1.14 98941 21,912 Chiropractic manipulative treatment, spinal 2.35 1.34 97112 18,418 Therapeutic procedure, neuromuscular re-education of movement 1.97 0.68

97124 16,383 Therapeutic procedure, massage 1.75 0.46

99212 14,337

Office or other outpatient visit of an established patient, problem

focused history 1.49 0.89

X9157 12,673 Initial/comprehensive office visit 1.36 2.49 97012 9,302

Application of a modality to one or more areas, traction,

mechanical 1.00 0.18

97140_59 6,913

Manual therapy techniques, mobilization/manipulation–distinct

procedural service 0.72 0.23

97799 6,653 Unlisted physical medicine 0.71 0.38

97002 6,581 Physical therapy re-evaluation 0.70 0.32

97001 5,725 Physical therapy evaluation 0.61 0.52

99283 5,057

Emergency department visit for the evaluation of a patient with an

expanded history and exam and moderate complexity 0.53 0.50 97535 4,754 Self-care/home management training 0.51 0.82 97113 4,728 Therapeutic procedure, aquatic therapy 0.51 0.20 99204 4,058

Office or other outpatient visit of a new patient, comprehensive

history, moderate complexity 0.43 0.87

95904 2,895 Nerve conduction, sensory 0.30 0.22

97033 2,781

Application of a modality to one or more areas, iontophoresis, each

15 minutes 0.30 0.06

99244 2,718

Office consultation for new or established patient with

comprehensive history and exam with moderate complexity 0.29 0.80 97532 2,643 Development of cognitive skills to improve attention 0.28 0.08 99215 2,636

Office or other outpatient visit of an established patient,

comprehensive 0.28 0.48

99211 2,571

Office or other outpatient visit of an established patient, may not

require the presence of a physician 0.28 0.06 98942 2,558 Chiropractic manipulative treatment, spinal, five regions 0.27 0.19 99203 2,544

Office or other outpatient visit of a new patient, detailed history, low

complexity 0.27 0.40

99243 2,487

Office consultation for new or established patient with detailed

(33)

TA.1 List of Service Codes Analyzed in This Study (continued) CPT Code Number of Servicesa Definition Percent of Nonhospital Services Percent of Nonhospital Expenditures 98943 2,379

Chiropractic manipulative treatment, extraspinal, one or more

regions 0.25 0.07

20610 2,372 Arthrocentesis, major joint or bursa 0.25 0.31

99213_25 2,249

Office or other outpatient visit of an established patient, expanded– significant, separately identifiable evaluation and management

service by the same physician on the same day 0.23 0.17 97022 2,212 Application of a modality to one or more areas, whirlpool 0.24 0.05 99282 2,207

Emergency department visit for the evaluation of a patient with an

expanded history and exam and low complexity 0.24 0.11

90806 2,135 Individual psychotherapy, insight oriented 0.23 0.29

95904_26 1,819 Nerve conduction, sensory–professional component 0.19 0.08 97750 1,793 Physical performance test or measurement 0.19 0.15 97537 1,701 Community/work reintegration training 0.18 0.06 97116 1,631 Therapeutic procedure, gait training 0.17 0.05 76005_26 1,596 Fluoroscopic guidance–professional component 0.17 0.10

99212_25 1,509

Office or other outpatient visit of an established patient, problem focused history–significant, separately identifiable evaluation and

management service by the same physician on the same day 0.16 0.06 97545 1,494 Work hardening/conditioning, initial 2 hours 0.16 0.27

73140_26 1,460 Radiologic exam, finger–professional component 0.15 0.02 72100_26 1,454

Radiologic exam, spine, two or three views–professional

component 0.15 0.03

95903 1,454 Nerve conduction, motor, with F-wave study 0.15 0.16 73130_26 1,396

Radiologic exam, hand, minimum of three views–professional

component 0.15 0.02

12001 1,324 Simple repair of superficial wounds of scalp, 2.5cm 0.14 0.33 73030 1,321 Radiologic exam, wrist, two views 0.14 0.07 73610_26 1,285

Radiologic exam, complete, minimum of three views–professional

component 0.13 0.02

62311 1,239 Injection, lumbar, sacral 0.13 0.58

73030_26 1,230 Radiologic exam, wrist, two views–professional component 0.13 0.02 99284 1,230

Emergency department visit for the evaluation of a patient with a

detailed history and exam and moderate complexity 0.13 0.19 99232 1,197 Subsequent hospital care, per day, expanded 0.13 0.12 73110_26 1,182 Radiologic exam, wrist, three views–professional component 0.12 0.02 93010 1,166 Electrocardiogram, interpretation and report only 0.12 0.02

(34)

72100 1,112 Radiologic exam, spine, two or three views 0.12 0.07

99214_25 1,038

Office or other outpatient visit of an established patient, detailed– significant, separately identifiable evaluation and management

service by the same physician on the same day 0.11 0.12

20550 1,034 Injection, single tendon sheath 0.11 0.12

95860 1,007 Needle electromyography 0.11 0.14

99205 993

Office or other outpatient visit of a new patient, comprehensive

history, high complexity 0.11 0.27

72148_26 990

Magnetic resonance imaging, spinal canal and contents–

professional component 0.11 0.14

99080 988 Special reports such as insurance forms 0.11 0.04 73630_26 961 Radiologic exam, complete–professional component 0.10 0.02 71020_26 958 Radiologic exam, spine, single view–professional component 0.10 0.02 73221 932 Magnetic resonance imaging, any joint of upper extremity 0.10 0.80 95903_26 932

Nerve conduction, motor, with F-wave study–professional

component 0.10 0.07

99456 911

Work related or medical disability exam, by other than the treating

physician 0.10 0.73

73110 909 Radiologic exam, wrist, three views 0.09 0.05 73610 903 Radiologic exam, complete, minimum of three views 0.09 0.05 88304_26 862 Level 3, surgical pathology–professional component 0.09 0.04 97018 859 Application of a modality to one or more areas, paraffin bath 0.09 0.01

73721 852 Magnetic resonance angiography 0.09 0.72

97039 842 Unlisted modality 0.09 0.02

73140 839 Radiologic exam, finger 0.09 0.03

99245 803

Office consultation for new or established patient with

comprehensive history and exam with high complexity 0.09 0.31 99202 789

Office or other outpatient visit of a new patient, expanded history,

straightforward complexity 0.08 0.08

99242 789

Office consultation for new or established patient with expanded

history and exam with straightforward complexity 0.08 0.13 73221_26 779

Magnetic resonance imaging, any joint of upper extremity–

professional component 0.08 0.10

99231 765 Subsequent hospital care, per day, problem-focused interval 0.08 0.05 73721_26 758 Magnetic resonance angiography–professional component 0.08 0.10 29826 742 Arthroscopy, decompression of subacromial space 0.08 1.88

(35)

73560 718 Radiologic exam, one view 0.07 0.04

97003 683 Occupational therapy evaluation 0.07 0.06

29881 682 Arthroscopy, with meniscectomy 0.07 1.62

76375_26 682 Coronal, oblique, 3 dimensional–professional component 0.07 0.02 73562_26 668 Radiologic exam, three views–professional component 0.07 0.01 72020_26 665 Radiologic exam, spine, single view–professional component 0.07 0.01 71010_26 657 Radiologic exam, chest, single view–professional component 0.07 0.01 20605 656 Arthrocentesis, intermediate joint or bursa 0.07 0.07 64475 643 Injection, paravertebral joint, lumbar or sacral, single level 0.07 0.23 97004 637 Occupational therapy re-evaluation 0.07 0.04

73630 632 Radiologic exam, complete 0.07 0.03

95900 620 Nerve conduction, amplitude and latency 0.06 0.06 64483 595 Injection, transforaminal, lumbar or sacral, single level 0.06 0.31 70450_26 591 Computed tomography, head or brain–professional component 0.06 0.05 97546 580 Work hardening/conditioning, each additional hour 0.06 0.04

99283_25 572

Emergency department visit for the evaluation of a patient with an expanded history and exam and moderate complexity–significant, separately identifiable evaluation and management service by the

same physician on the same day 0.06 0.06

72050_26 553

Radiologic exam, spine, minimum of four views–professional

component 0.06 0.02

73130 549 Radiologic exam, hand, minimum of three views 0.06 0.03 73080_26 540 Radiologic exam, wrist, three views–professional component 0.06 0.01 73590_26 521 Radiologic exam, tibia and fibula–professional component 0.05 0.01 12002 513 Simple repair of superficial wounds of scalp, 2.6–7.5 cm 0.05 0.14 95900_26 513 Nerve conduction, amplitude and latency–professional component 0.05 0.03

73100 505 Radiologic exam, wrist, two views 0.05 0.03

73564_26 505

Individual psychotherapy, with medical evaluation and

management services–professional component 0.05 0.01

73562 486 Radiologic exam, three views 0.05 0.03

29125 479 Application of short arm splint, static 0.05 0.05 72170_26 474 Radiologic exam, pelvis, one or two views–professional component 0.05 0.01 90807 473 Psychotherapy with evaluation and management services 0.05 0.09 72141 471 Magnetic resonance imaging, spinal canal 0.05 0.42 72040_26 468

Radiologic exam, spine, cervical, two or three views–professional

(36)

TA.1 List of Service Codes Analyzed in This Study (continued) CPT Code Number of Servicesa Definition Percent of Nonhospital Services Percent of Nonhospital Expenditures 72141_26 467

Magnetic resonance imaging, spinal canal–professional

component 0.05 0.71

76005 466

Fluoroscopic guidance and localization of needle or catheter tip for

spine 0.05 0.08

72110_26 452

Radiologic exam, spine, minimum of four views–professional

component 0.05 0.01

73560_26 442 Radiologic exam, knee, one or two views–professional component 0.05 0.01 63030 421 Laminotomy with decompression of nerve roots, one interspace 0.05 1.42 64721 407 Neuroplasty and/or transposition; median nerve at carpal tunnel 0.04 0.61 73090_26 400 Radiologic exam, forearm, two views–professional component 0.04 0.01 20552 390 Injection, single or multiple trigger point 0.04 0.04 99455 390

Work related or medical disability exam, completion of medical

history commensurate 0.04 0.10

88311_26 374 Decalcification procedure–professional component 0.04 0.01 27096 351 Injection procedure for sacroiliac joint 0.04 0.25 20553 328 Injection, single or multiple trigger point, three or more muscles 0.04 0.04 29877 321 Arthroscopy, debridement/shaving of articular cartilage 0.03 0.73

20680 319 Removal of implant, deep 0.03 0.32

69990 293 Microsurgical techniques 0.03 0.26

65222 281 Removal of foreign body, corneal, with slit lamp 0.03 0.03

62310 243 Injection, single 0.03 0.10

62290 239 Injection procedure for diskography 0.03 0.16

90471 226 Immunization administration 0.02 0.00

29823 224 Arthroscopy, debridement, extensive 0.02 0.53 23350 218 Injection procedure for shoulder arthrography 0.02 0.08 49505 196 Repair initial inguinal hernia, age 5 or over 0.02 0.18 22851 193 Application of intervertebral biomechanical device 0.02 0.39 12011 183 Simple repair of superficial wounds of face 0.02 0.05 62284 179 Injection procedure for myelography 0.02 0.10 29807 178 Arthroscopy, shoulder, repair of SLAP lesion 0.02 0.50 29827 172 Arthroscopy, shoulder, surgical, with rotator cuff repair 0.02 0.78

22612 165 Arthrodesis, lumbar 0.02 0.68

29888 165 Arthroscopically aided anterior cruciate ligament repair 0.02 0.57

22554 162 Arthrodesis, anterior interbody 0.02 0.55

23420 151 Reconstruction of complete shoulder 0.02 0.43 63075 145 Diskectomy, anterior, with decompression of spinal cord 0.02 0.52

(37)

22845 142 Anterior instrumentation, 2 to 3 vertebral segments 0.02 0.29

20526 139 Injection, therapeutic 0.01 0.02

20937 138 Autograft for spine surgery only, morselized 0.01 0.09 29880 133 Arthroscopy, with meniscectomy, and lateral 0.01 0.32 23412 128 Repair of ruptured musculotendinous cuff, chronic 0.01 0.34 20551 127 Injection, single tendon sheath, insertion 0.01 0.02 20600 126 Arthrocentesis, aspiration and/or injection 0.01 0.01

63047 119 Laminotomy, facetectomy and framinotomy, lumbar 0.01 0.41 64623 111 Destruction by neurolytic agent, lumbar or sacral 0.01 0.04

11040 103 Debridement, skin, partial thickness 0.01 0.01

20670 102 Removal of implant, superficial 0.01 0.05

29806 100 Arthroscopy, shoulder 0.01 0.30

22585 99 Arthrodesis, each additional interspace 0.01 0.16

22840 97 Posterior non-segmental instrumentation 0.01 0.23

64622 97 Destruction by neurolytic agent 0.01 0.05

29826_51 96

Arthroscopy, decompression of subacromial space–multiple

procedures 0.01 0.19

29826_59 95

Arthroscopy, decompression of subacromial space–distinct

22842 92 Posterior segmental intrumentation 0.01 0.28

20931 91 Allograft for spine surgery, structural 0.01 0.06 20550_50 90 Injection, single tendon sheath–bilateral procedure 0.01 0.01 11042 85 Debridement, skin, subcutaneous tissue 0.01 0.01

49650 84 Laparoscopy, surgical, repair 0.01 0.07

29877_59 79

Arthroscopy, debridement/shaving of articular cartilage–distinct

64718 77 Neuroplasty and/or transposition, ulnar nerve at elbow 0.01 0.15

10060 75 Incision and drainage of abscess 0.01 0.01

10120 74 Incision and removal of foreign body 0.01 0.01 22558_62 74 Arthrodesis, lumbar–two surgeons 0.01 0.32 28470 73 Closed treatment of metatarsal fracture 0.01 0.03 12041 69 Layer closure of wounds of neck, hands 0.01 0.02 27096_50 65 Injection procedure for sacroiliac joint–bilateral procedure 0.01 0.04 27786 65 Closed treatment of distal fibular fracture 0.01 0.04 29823_51 65 Arthroscopy, debridement, extensive–multiple procedures 0.01 0.10

(38)

25600 61 Closed treatment of distal radial fracture 0.01 0.03 29877_51 61

Arthroscopy, debridement/shaving of articular cartilage–multiple

procedures 0.01 0.06

63030_80 61

Laminotomy with decompression of nerve roots, one interspace–

assistant surgeon 0.01 0.05

29823_59 54 Arthroscopy, debridement, extensive–distinct procedural service 0.01 0.18 29824_51 53 Arthroscopy, distal claviculectomy–multiple procedures 0.01 0.07

Total 85 64

Top services not included in analysis

A4556 9,518 Electrodes, per pair 1.02 0.38

99070 8,778 Supplies and materials 0.94 0.95

01810 997 Anesthesia for all procedures on nerves 0.11 0.25 01630 668 Anesthesia for open or surgical arthroscopic procedures 0.07 0.30 01400 664

Anesthesia for open or surgical arthroscopic procedures, not

otherwise specified 0.07 0.24

00630 658

Anesthesia for procedures in lumbar region, not otherwise

specified 0.07 0.43

J1030 526 Injection, methylprednisolone acetate, 20mg 0.06 0.02 J3301 521 Injection, triamcinolone acetonide, per 10mg 0.06 0.01 01830 422

Anesthesia for open or surgical arthroscopic/endoscopic

procedures on distal radius 0.05 0.18

a

These are services billed during January 2003 through June 2004 on the set of claims in our sample. Since our claims represent approximately 33 percent of claims in the state, one can estimate the number of total services expected by multiplying the number of services by 1.77 to get the full number of services in the state for the 18 month period and then multiply that number by .67 to get an estimate for 12 months.

Key: CPT: current procedural terminology.

TA.2 Percent of Services and Payments Represented by Codes Analyzed in the Study

All Nonhospital Providers Physiciansa Physical/Occupational Therapists Chiropractors Percent of Services Billed Percent of Expenditures Percent of Services Billed Percent of Expenditures Percent of Services Billed Percent of Expenditures Percent of Services Billed Percent of Expenditures Codes highlighted in study 85.1 63.9 76.9 65.3 94.2 80.4 86.7 80.5 a

(39)

How Does the Massachusetts Medical Fee Schedule Compare to Prices Actually Paid in Workers Compensation?

WCRI Benchmarks

How Does the

Massachusetts

Medical Fee

Schedule Compare

to Prices Actually

Paid in Workers’

Compensation?

Stacey Eccleston

H

OW

D

OES THE

M

ASSACHUSETTS

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EDICAL

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CHEDULE

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OMPARE TO

P

RICES

A

CTUALLY

P

AID

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OW

D

OES THE

M

ASSACHUSETTS

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F

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S

CHEDULE

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OMPARE TO

P

RICES

A

CTUALLY

P

AID

IN

W

ORKERS

'

C

OMPENSATION

?

S

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ACKNOWLEDGMENTS

TABLE OF CONTENTS

LIST OF TABLES

HOW DOES THE MASSACHUSETTS MEDICAL FEE SCHEDULE

COMPARE TO PRICES ACTUALLY PAID IN WORKERS'

COMPENSATION?

B

S

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TECHNICAL APPENDIX

D