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The workers’ compensation fee schedule and rules hearings

Colorado statutes require that the Division of Workers’ Compensation (DOWC) review the medical fee

April 15, 2021
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Colorado statutes require that the Division of Workers’ Compensation (DOWC) review the medical fee schedule on or before July 1 each year. This allows the affected health care practitioners the opportunity to be heard. All revisions take effect on Jan. 1. 

When reviewing the medical fee schedule, the DOWC staff consider how changes will affect injured workers’ access to care, employers’ premiums and Colorado’s economy. Employers pay an average of $1.01 per $100 of payroll for legally required workers’ compensation benefits.

During the fee-setting process, the DOWC staff review the payment policies for fees associated with professional services, DOWC-created Z codes, dental services, inpatient and outpatient facilities, ambulatory surgical centers, clinical pathology, durable medical equipment, home health, long-term care facilities, ambulance transportation, prescription drugs, and other services adjunct to care.

Professional fees include approximately 17,000 CPT and HCPCS codes. When conducting the analysis, the DOWC’s first goal is to identify a budget-neutral conversion factor. As an example, the 2019 conversion factor (CF) for evaluation and management (E/M) was $54.81. When applying the upcoming increases to RBRVS, unit values were calculated with utilization; a budget-neutral CF for 2020 would have been $54.38, an apparent decrease.

The DOWC staff work diligently to incorporate stakeholders in the fee schedule revision process through their annual stakeholder meetings. Working in partnership with stakeholders allows the DOWC to identify areas where costs can be reduced and to increase fees when supported by evidence. This has helped employer premiums go down for the past four years while the DOWC fee schedule has sustained a year-over-year 2% increase.

The 2020 E/M CF was increased to $56.00. Although this may appear to be a negligible increase, the anticipated impact to the workers’ compensation system was $20 million.

Because the DOWC is a government entity, the DOWC must be able to defend all the established rates. Nationally, almost all workers’ compensation rates are based on Medicare’s payment methodologies.

Just as with medical inflation, usual, customary and reasonable (UCR) rates are based on out-of-pocket fees an insurance policyholder must pay for services. As health insurance carriers increase consumers’ copays and deductibles, medical inflation percentages rise, as do UCR rates. Since consumers do not bear the weight of workers’ compensation expenses, these benchmarks are not reliable for the workers’ compensation system. The DOWC dental fee schedule is based on a percentage of UCR rates, as are other areas of the fee schedule where no other benchmark exists.

The next stakeholder meeting is scheduled for April 29, 2021. To be notified of rule hearings, subscribe to the DOWC email list here.

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