State, Surgery Centers at Odds Over Proposed Fee Schedule Changes

The California Division of Workers Compensation has proposed changing the workers' compensation fee schedule for independent outpatient surgery centers to align more closely with Medicare rates, the Sacramento Business Journal reports.

Under the proposal, the state would pay nonhospital outpatient surgery centers at a rate significantly lower than the rate paid to hospital-owned centers.

According to a 2009 RAND study, the change would link payment levels to the cost of providing services in hospitals and nonhospital outpatient surgery centers. RAND found that the change could reduce state spending by $70 million annually.

Background

In 2004, DWC adopted a new medical fee schedule that aligned all fees with Medicare rates, with the exception of fees paid directly to physicians.

However, DWC decided to pay independent outpatient surgery centers at the same rate as hospital-run surgery centers because the agency determined that Medicare's outpatient surgery center fees were outdated.

In 2008, Medicare adopted a new fee schedule for independent outpatient surgery centers. According to the RAND study, Medicare currently pays nonhospital surgery centers about 67% less than hospital-run centers.

Proposals, Reaction

In May, California regulators proposed applying 120% of the 2008 Medicare formula to independent outpatient surgery centers.

Independent outpatient surgery center advocates and owners said the change would:

• Reduce their fees by 40% to 50%;
• Create a two-tiered system in which hospitals receive higher payments; and
• Hinder access to services (Robertson, Sacramento Business Journal, 6/4).