The study, CompScopeTM Medical Benchmarks for Massachusetts, 9th Edition, reported that employers in Massachusetts paid an average of just over $5,100 for 2006 claims with experience through March 2007.
A key driver of the lower medical payments was the lower prices paid for nonsurgical services, which were related to the lowest non-hospital provider fee schedule in the nation, according to Cambridge, Mass.-based WCRI.
Despite lower-than-typical fee schedule rates for all service categories including surgery, the study found that prices paid for surgeries were higher in Massachusetts compared to other study states. Massachusetts employers and insurers often negotiated surgery prices higher than what the fee schedule dictated, particularly for orthopedic surgeries.
WCRI observed that recent regulations in the form of fee schedule changes that became effective April 1, 2009, focused on this issue. Fees for many surgical procedures were increased to reflect current rates being paid, raising fees in some cases two to three times above the 2004 fee schedule rates.
Another provision of the revised fee schedule increased physician fees by 10 to 20 percent, except for anesthesia and surgery, which were the subject of larger increases. At the same time, hospital reimbursement rates were generally decreased.
The study found that medical payments per claim in Massachusetts were lower for nearly all providers—both non-hospital and hospital—compared to the typical study state.
For example, payments to physicians were 42 percent lower than the median of the 14 states, mainly due to fewer physician visits and fewer services per visit. Utilization for non-hospital providers in Massachusetts was the lowest among the study states.
In addition, fewer claims received specialty services, such as minor radiology and physical medicine from non-hospital providers. Conversely, these services (and evaluation and management) were provided more often in a hospital outpatient setting in Massachusetts than in the typical study state.
Payments per claim for hospital outpatient services in Massachusetts were about half the amount paid in the typical study state. The lower payments per claim for hospital outpatient services may be partially due to the fact that a higher percentage of general outpatient care was billed by hospitals in Massachusetts compared to other study states, services that would likely be billed as non-hospital services in other states. As a result, the mix of services provided in the hospital outpatient setting was less intense in Massachusetts than in the typical study state.
The lower payments per service for hospital outpatient services are likely due to the fact that the provider fee schedule applies to hospital outpatient services when it is determined that the service can be safely provided outside the hospital setting. Hospital inpatient payments per claim were lower than typical of the study states, and a lower percentage of cases involved an inpatient stay.
The study also found that medical payments per claim in Massachusetts have been steadily increasing—9 to 12 percent per year from 2001 to 2005 and at a slightly slower rate, 7 percent, in 2006 for claims with 12 months of experience.
In 2006, payments per claim to nonhospital providers were stable or falling, due mainly to fewer visits per claim; prices paid were stable. The payments per claim for hospital outpatient services had moderate growth since 2004, mainly driven by increases in payments per service for hospital outpatient services.
To order this report, go to the WCRI Web site: www.wcrinet.org.