Illinois Workers Compensation Fee Schedule Will Produce Insignificant Savings

Chicago - The National Council on Compensation Insurance (NCCI) estimate that implementation of Illinois' new medical fee schedule will result in overall system cost savings of only 0.2 percent highlights the importance of making significant changes to the schedule, according to the Property Casualty Insurers Association of America (PCI).

"The costs in the system have not been reduced enough to produce significant savings," said Greg LaCost, assistance vice president and regional manager for PCI. "In fact, workers compensation premiums are expected to go up to balance recent legislative changes that increased worker benefits. The concerns we expressed following last year's enactment of so-called reform legislation are coming to pass. Based on the NCCI review it is very clear that the modifications to the system did not go far enough and as a result it is difficult to see how the promised savings will be achieved. It is imperative that we improve the fee schedule sooner, rather than later."

Over the past several years workers compensation reform has been hotly debated. Legislation nearly passed in 2004 and last July a compromise proposal negotiated in the "wee" hours of a closing legislative session the Workers Compensation Reform Act of 2005 was signed into law. The Act increased benefits for workers and included the establishment of a medical fee schedule to theoretically curb costs. Effective February 1, 2006, the Illinois Workers Compensation Commission (IWCC) implemented the medical fee schedule.

The medical fee schedule adopted in Illinois is unlike the fee schedules that operate in most other states. It allows for the setting of 29 different maximum reimbursement rates around the state for the same services. However, the Illinois Medicare fee schedule only has four different rates around the state.

The new law also calls for the reimbursement for many procedures to be set at 76 percent of billed charges. Some classes of medical providers such as ambulatory surgical treatment centers, outpatient hospital services, emergency room services have all their charges paid at 76 percent of billed charges. This is a huge gap in the schedule which might make it the most expensive workers compensation system in the country.

"The fee schedule is open to abuse," said LaCost. "With 29 different rates providers may locate their services in areas that provide maximum reimbursements. The reimbursement of 76 percent of charges can easily result in providers increasing their charges to offset any intended saving from set reimbursement rate. This type of system leaves insurers with no option but to pay what ever the provider deems reasonable and that increases costs without providing any benefit to workers."

SOURCE: PCI