04 NCAC 10F .0102           BACKGROUND

(a)  In revising the medical fee schedule the Industrial Commission was guided by the three principles contained in its statutory mandate:  setting fees adequate to ensure:

(1)           that injured workers are provided the standard of services and care intended by the Workers' Compensation Act,

(2)           that providers of medical services are reimbursed reasonable fees for providing these services, and

(3)           that medical costs are adequately contained. G.S. 97-26.

(b)  Benchmarking studies by the Workers' Compensation Research Institute of Cambridge, Massachusetts, have shown that the North Carolina Workers' Compensation 1993 Medical Fee Schedule was the third highest in the nation in 1993, and, in 1995, was the fifth highest among states having Workers' Compensation medical fee schedules.  Yet those same studies indicate that two adjoining states, South Carolina and Georgia, have Workers' Compensation medical fee schedules 12 to 16% lower than North Carolina's; six states with similar costs of producing medical services have schedules 13 to 27% lower than North Carolina's; two major private payers in North Carolina have schedules that average 14% lower; and six states that have adopted Resource Based Relative Value System fee schedules have schedules that are 27 to 34% lower.

(c)  The Medicare fee schedule presently in effect in North Carolina is a Resource Based Relative Value System (RBRVS) fee schedule.  Comparing the 1993 North Carolina Workers' compensation medical fee schedule to the North Carolina Medicare fee schedule yields the following:  Overall, the 1993 Fee Schedule is 91% greater than the 1995 Medicare schedule; general medicine is 58% greater; surgery is 124% greater; radiology is 145% greater and physical medicine is 105% greater.

(d)  The Industrial Commission believes that basing the revised Workers' Compensation Medical Fee Schedule on multipliers of the North Carolina Medicare fee schedule will yield the results sought.  That is, such a fee schedule will yield ready access to good medical care for North Carolina's injured workers and will result in a lower medical cost and a lower overall cost while still getting injured workers well and back to work on a timely basis.

(e)  The Commission believes that the 1996 Fee Schedule will result in an overall lowering of medical fees by 11%, which will place it in line generally with what is being paid by two major private payers in North Carolina and in line generally with what is being paid in South Carolina and Georgia as well as in line generally with the six RBRVS states and the six states with similar costs of providing medical services.

(f)  The multiplier of 1.58 for General Medicine leaves General Medicine at about the same level of fees under the 1996 Fee Schedule as under the 1993 Fee Schedule.

(g)  The multiplier of 1.30 for Physical Medicine would yield a slight reduction.  The Commission had originally proposed a multiplier of 1.60 which would have yielded rates higher than the 1993 Fee Schedule.

(h)  The multiplier of 2.06 for Surgery will yield an 8% reduction.  The Commission had originally proposed a multiplier of 2.02, which would have yielded a 10% reduction.  The higher multiplier, and consequently the lower percentage reduction, gives recognition to the fact that the early intervention of good surgery is often what is needed for good results in difficult workers' compensation injury situations.

The 1.96 multiplier for Radiology will yield a 20% reduction in that schedule rather than the 34% reduction using a multiplier of 1.60 that the Commission had originally proposed.  The change from the 1.60 multiplier to the 1.96 multiplier was made by the Commission to give recognition to the fact that the Radiology schedule got "short changed" by the Medicare RBRVS system when it was first set up and has not be rectified by the Medicare RBRVS system in the intervening years.

(i)  No change was made in the chiropractic fee schedule and in the dental fee schedule for a number of reasons:  the overall amount paid under these schedules is small in comparison to all medical fees, and, the charges allowed under the schedules are relatively low compared with what other licensed physicians and medical care providers are allowed, among other reasons.

(j)  The Industrial Commission intends to monitor behavior resulting from changes to the medical fee schedule to determine if the changes result in problems with access to quality medical care for injured workers and to determine if savings result from the changes.

History Note:        Authority G.S. 97-26;

Eff. January 1, 1996.