Workers Compensation Research Institute, a not-for-profit research organization, released a new study called the Hospital Outpatient Cost Index for Workers' Compensation. They studied data across 17 states in order to provide policymakers and others affected by workers' compensation with a tool to better understand hospital costs. The 17 states included in the study represent 60 percent of all workers' compensation paid in the United States. And while Arizona was not included in this specific study, the details of the findings will still interest workers here in the state.

The period studied workers' compensation paid for hospital outpatient/ambulatory surgical center procedures from 2003 to 2009. The services they focused on are the most common surgeries performed in workers' compensation cases. Of all outpatient costs, surgery-related costs make up approximately 60 to 70 percent.

The basic conclusion of the study is that states with feed schedules have lower hospital outpatient costs for common surgeries than those without fee schedules. The costs in the states without fee schedules were anywhere from 27 to 73 percent higher than the median state with fee schedules.

Within states with fee schedules, those that were based on a percentage of charges generally had higher costs than states with other fees schedules, such as per procedure or ambulatory payment classification.

The study also found that there was huge variation across states in the area of hospital outpatient/ASC costs. The state with the lowest costs was 60 percent lower than the median state while the state with the highest costs was 45 percent higher than the median state.

When a fee schedule changed, WCRI found that costs for hospital outpatient/ASC grew at faster rates in states with percentage-of-charges fee schedules. When two states enacted fee schedule reforms around the same time, the one with the APC-based fee schedule did not experience such a dramatic increase in costs as the state with the percent-of-charge-based fee schedule.

Source: Insurance Journal, "Outpatient Costs Higher in States Without Fee Schedules: Workers' Comp Study," Jan. 11, 2012