1997 The board set a fee schedule for physicians, but not hospitals
1998 The board adopted a 5% discount on hospital fees for bills paid within 30 days
3-5% of most hospitals' revenue represented by workers' comp cases
45% of overall costs of workers' compensation in Maine going to indemnity payments, or benefits for injured workers
55% of overall costs in Maine going to medical costs
45-60% Approximate range of those medical costs going to physicians (remainder to hospitals and health care facilities)
Source: Workers' Compensation Board, Paul Dionne and John Rohde
When St. Mary's Regional Medical Center in Lewiston billed Bath Iron Works $106,596 for treating a pair of injured workers, BIW balked, citing price caps in federal law. St. Mary's sued and in August, St. Mary's won.
Maine law says employers here have to pay a hospital's usual charges — the walk-in price — or the maximum fees set by the Workers' Compensation Board, regardless of the federal caps.
But for more than 10 years, the board has not set fees, a situation that exasperates businesses struggling to contain costs while Maine health care providers benefit from workers' comp-related revenues. Workers' comp is a $235 million industry in Maine with roughly one-quarter of that going to hospitals, according to John Rohde, the Workers' Compensation Board's general counsel.
"Health care facilities can dictate what employers must pay even if the amount being charged is significantly more than what third-party payers (like Cigna or Anthem) pay for the same services in cases involving non-occupational injuries," says BIW Vice President General Counsel Jon Fitzgerald. In its recent challenge, BIW argued that the St. Mary's charges were more than double the fees allowed under the federal Longshore and Harborworkers' Compensation Act. "That is precisely the situation the Legislature was trying to avoid when it passed the 1992 reforms," he says.
Those 1992 reforms were the result of a blue ribbon commission charged with reining in the state's workers' comp costs, which at the time, led the nation. Since then, dozens of bills have been submitted targeting the reforms. But setting a hospitals/facilities fee schedule was supposed to be done, in statute, by January 1993. Three years ago the shipyard sued the comp board to compel it to adopt a fee schedule. A comp rule-making group came out with a draft proposal last year that got its first airing before the full board two weeks ago. The new limits would rely on a "modified Medicare" structure: a version of what Medicare already pays hospitals, weighted by procedure codes and a base rate.
But not everyone's cheering. As proposed, several companies argue they'd still pay too much in higher premiums and hospital bills.
"We think the board has more work to do," says Peter Gore, vice president of governmental affairs at the Maine State Chamber of Commerce. "Money diverted away to higher premiums is being drained away from creating jobs, payment of higher wages, and that's what people need to keep in mind."
David Winslow, vice president of finance at the Maine Hospital Association, says the board did a "good job" in setting the facilities-fee schedule — even if hospitals stand to lose up to $1 million a year. But given that they earn close to $80 million a year now, the pain isn't severe.
"Losing that kind of money isn't something we're obviously too excited about," says Winslow. "We think over time it's going to make a clearer payout system for everybody."
Rohde at the comp board says the fee schedule is about striking a balance, seeing that injured workers get the best care and that businesses don't pay too little or too much. The board paid a Minnesota-based consulting firm $100,000 to run numbers and help craft the fee proposal.
"I think by doing this we've come up with a system that's as fair as we know how to make it," says Rohde.
'The debate has been hot and heavy...'
Since 1998, there's been an agreement that hospital bills associated with workers' comp injuries receive a 5% discount if paid within 30 days. That seemed to satisfy both businesses and hospitals for awhile, Rohde says. But he and Gore agree that as medical costs rose rapidly over the last five years, the absence of a fee schedule became more of an issue, prompting businesses to press for one.
Additionally, Maine Superior Court Justice Nancy Mills ruled in 2008 that the 5% discount didn't meet state statute. Under the new proposal, smaller, rural hospitals would still be subject to that discount instead of the new fee schedule, one of several issues Portland attorney John Lambert Jr. took issue with in public comments written to the board on behalf of the state chamber, BIW, S.D. Warren, Hannaford and others.
"Justice Mills was pretty clear: A program that allows the facility to control the charge, even if you discount it, that's not a schedule," Lambert says. "Basically they said, 'It's too hard to regulate them, so we're just going to leave them alone' — that's not in the law."
Another sticking point: ensuring businesses that self-insure for workers' comp pay the same amount for procedures as larger health care companies that can negotiate volume discounts with hospitals. That equity was also built into state statute.
"That's not been happening by any stretch of the imagination," Lambert says.
Comparisons have been difficult, Rohde says, for the board and the business community. When the board asked businesses to provide specific examples — a bill one company might have paid for a shoulder injury through health insurance that was lower than an on-the-job shoulder injury paid through comp insurance — nobody did, he says.
Winslow at the Maine Hospital Association allowed that sometimes self-insured businesses do pay more for injured worker's bills, but "it's not the vast 40-50% difference that the business community claims."
Paul Dionne, executive director of the Workers' Compensation Board, says he heard from a group of orthopedic doctors who said if the board made the new base fee too low, "they weren't going to treat injured workers. They're private, they can do that."
That's counter to the repeated message from the business community: Change the system, but keep up the care.
"I'm hoping both sides will see the positive aspects (of the proposed fee schedule) but ... the debate has been hot and heavy and will probably continue before the board," Dionne says. The board takes up the issue again Oct. 13.