Impacts to Work Comp and VA Claims Since Passing the Federal Spending Bill (HR2617)
By: Zachary Schultz, Director of Managed Care and Gov’t Relations
Unless you spent your holiday season reading the almost 4200-page appropriations bill that Congress passed in December 2022, you may have missed the changes soon to be impacting your Work Comp and VA reimbursement. Nestled between funding all Federal Agencies and the whole of our government are provisions directly affecting providers that receive Work Comp and VA reimbursement. Specifically, the following bullets are now law:
- A Medicare reduction schedule for this year was postponed until 2025
- Medicare states especially would be impacted by the reduction
- Decision makers can adjust the uplifts to accommodate the potential drop before 2025
Let’s take a deeper dive into the implications for each service line and what providers should potentially prepare for:
Workers’ Compensation Reimbursement
Critical provisions in the bill delayed cuts scheduled for 2023. These cuts were specifically targeted for Workers’ Compensation reimbursement in states with Medicare based fee schedules. A scheduled 4% (8.5% for Physicians) Medicare payment adjustment was postponed until at least 2025. States like California or Texas, who use Medicare as its base for Work Comp reimbursement, would have been directly impacted by this Medicare payment adjustment. In most cases, Medicare based states are on the lower end nationally for Work Comp reimbursement, making the average margins on these types of claims very small.
Using California as an example, we can see how this adjustment could greatly impact revenue. Outpatient Work Comp claims in California are calculated via Medicare rates, with and around an 18% uplift, which is one of the lowest nationally. In 2019, the average payment in California for an outpatient Work Comp claim was under $3k compared to over $10k in other states (Louisiana and Wisconsin for example). Texas, another Medicare based state, was under $4k. In states like these, it is already difficult to cover the cost of treating a Work Comp patient, especially OP/PT/OT, and an additional decrease only magnifies the issue. The well-timed delay could allow decision makers in these types of states to adjust to their fee schedules to mitigate the impact.
On a positive note, there are waivers within this appropriations bill that extend Work Comp telehealth services and hospital-at-home programs for an additional two years. Telehealth usage in Work Comp skyrocketed during the pandemic. According to the state of Florida, the state treated 116,427 Work Comp claims via telehealth services between 2019 and 2022. This is more than a 4,500% increase compared to less than 2,500 total the three years prior.
Year over year, the rise of virtual care has proven to not only help drive down healthcare costs, but it has also simultaneously aided in the increase of overall patient satisfaction. Telehealth has paved the way for other programs to emerge. Nationally, many providers expanded upon their virtual care programs, experimenting with “hospital at home,” as well as allowing patients to receive a wider range of care via telemedicine – for the same cost as an in-person visit. While telehealth usage normalizes across the country, the extension of these waivers will continue to encourage virtual healthcare and allow the hospital industry more time to innovate within the virtual healthcare field.
For the Workers’ Compensation world, knowing your state’s rules and regulations around telehealth will be important over the next few years, and beyond, as it becomes more of a standardized form of treatment.
With today’s reimbursement for Veterans Administration claims, which are based off CMS rates (100% of Medicare in most cases/70% of Medicare for Millennium Bill claims), hospitals and healthcare systems dodged another bullet in payment reduction. We will continue to see increased volumes from the PACT Act (passed in late 2022), but we should not see a reduction in reimbursement until 2025. While the VA is used to CMS rates fluctuating, the magnitude of this reduction should be on every provider’s radar as we approach 2025. The pandemic waiver extensions should impact VA as well. Since the pandemic, the VA has slowly made attempts to integrate telehealth into its programs. The extension will hopefully allow Veterans and the VA the opportunity to utilize and expand on telehealth services over the next few years.
While this bill relief is something to celebrate for hospitals, we have found that many are not prepared for the 2025 proposed cuts in regard to complex claims. Work Comp and VA are often an afterthought when it comes to legislation like this, but the impact targets places that you least expect. Awareness is key! Tracking these bills and working with decision makers in your state could be vital to your success and profitability.
With staffing struggles being a real challenge for hospitals and health systems nationwide, we understand how managing all these evolving processes and government mandated changes can be extremely tedious. Having a business partner with a dedicated Managed Care team that understands these legislative changes, and the impact to the bottom line, may make the most sense. Our proprietary software, Enforcer360, is the most efficient provider-based comprehensive workflow engine in the marketplace. Each additional claim makes our AI smarter and enhances our data-driven RPA that helps our team provide you the highest yield and best-in-class outcomes in less time.
Vice President, Client Services