Medical care and benefits

Highlights

• In 2017, an estimated $322.2 million was spent on medical services.
• Physician services made up the largest category of medical services in the workers’ compensation system. About 54 percent of the medical dollars spent in 2017 went to physician services. Physical medicine, which includes physical therapy, wound care management, and osteopathic manipulation, was the largest sub-category within physician services.
• Facility services made up the second largest service category of medical services at 24 percent of total payments.

Medical benefits

Insurers and self-insured employers are required to pay the cost of medical services for compensable claims. Workers can use a medical facility or doctor of their choice. Employers cannot direct workers to use a particular provider or service, or to get or not get any particular treatment. However, if a worker’s claim is enrolled in a managed care organization (MCO), the MCO can direct the worker to choose a provider from its panel or it can add the worker’s existing provider to its panel.

Managed care organizations

In 1990, Senate Bill 1197 established regulations on workers’ compensation insurers’ contracts with department-certified managed care organizations, and it set the rules under which covered workers obtain treatment from MCO-affiliated providers. MCOs contract with medical providers and, in return, MCO-covered workers are directed to those providers for treatment. The terms and conditions differ by MCO, but they must include treatment and utilization standards and peer review. An MCO must maintain a panel that includes at least three of each of eight types of medical service providers (chiropractors, naturopaths, acupuncturists, osteopaths, dentists, optometrists, podiatrists, and physicians) within the eight regional geographic service areas.

In 2005, SB 670 made revisions to the statute regarding MCOs. The bill clarified that in order for an MCO to be certified, the Department of Consumer and Business Services director must review and approve the standards contained in the MCO’s plan. The bill also stipulated that the managed care plan cannot prohibit an injured worker’s attending physician from advocating medical services and temporary disability benefits supported by the medical record. This provision addressed concerns that some managed care contracts contained provisions limiting the attending physician’s role.

Care providers

After a 2006 study of care providers, the 2007 Legislature passed House Bill 2756, which expanded the roles and responsibilities of certain provider types. The new law increased the role of chiropractors, nurse practitioners, podiatrists, naturopaths, and physician assistants to act as an attending physician for injured workers. The time limit for these providers to act as an attending physician was set at 18 visits or 60 days from the first date of service, whichever comes first. These providers were also allowed to authorize temporary disability for up to 30 days.

The new law also allowed a medical provider who did not qualify to be an attending physician to provide compensable services for the first 30 days or up to 12 visits, whichever comes first. Beyond this, only a doctor of medicine, osteopathy, or maxillofacial surgery can act as an attending physician.

Fee schedules

The first fee schedules for medical services in Oregon were implemented in 1982. Fee schedules now exist for eight physician service categories: pharmacy services; ambulatory surgery centers; durable medical equipment, prosthetics, orthotics, and medical supplies (DMEPOS); transportation (ambulance services); interpreter services; dental services; multi-disciplinary services; and other Oregon-specific service codes. Insurers pay for injured workers’ medical services at the lesser of the fee schedule or the billed amount. Nearly all payments for medical services provided to injured workers are subject to a fee schedule.

Fee schedule summary features

• Until Jan. 1, 2011, all services and products that did not fall under one of the applicable fee schedules were to be paid at 100 percent of the billed amount. As of Jan. 1, 2011, compensable services and products not listed in one of the fee schedules are paid at 80 percent of the provider’s usual fee.
• DMEPOS products that can be purchased used are paid at 75 percent of the fee schedule amount. For DMEPOS products that can be rented, the monthly rental fee is 10 percent of the new purchase price.
• Seven services relating to transportation are paid at 100 percent of charges.
• Medical implants are paid at 110 percent of an ambulatory surgery center’s (ASC) actual cost for the implant.
• Dental services are paid at 90 percent of the provider’s usual fee.
• The pharmaceutical fee schedule sets maximum allowable payments (MAP) for most pharmaceuticals at 83.5 percent of the average wholesale price (AWP) effective on the date the prescription is filled, listed in Medi-Span or another nationally published prescription pricing guide, plus a $2 dispensing fee. Compounding pharmacies must separately list each ingredient in the compound and are paid at 83.5 percent of AWP for each, plus a $10 compounding and dispensing fee.
• Insurers pay the full retail price for over-the-counter medications.

Starting in 1997, the department adopted the Federal Resource-Based Relative Value Schedule (RBRVS) method for determining the maximum payment for the physician service categories. A maximum allowable payment for each service is published annually in OAR 436-009 according to its Current Procedural Terminology (CPT) code.

A new fee schedule methodology for DMEPOS was adopted July 1, 2011. Among the products and services included in the DMEPOS fee schedule are mobility aids, oxygen delivery systems, and hearing aids. Providers are paid the lesser of the fee schedule amount or the provider’s usual fee.

Also on July 1, 2011, the department implemented a fee schedule based on the Centers for Medicare and Medicaid Services (CMS) Ambulatory Payment Classification (APC) system for services performed in ASCs. The department publishes the MAPs based on the Healthcare Common Procedure Coding System (HCPCS) codes.

Fee schedules have been adopted in several categories to replace the 80 percent rule. Services specific to the Oregon workers’ compensation system, such as reports and depositions of medical providers, sign-language and foreign language interpreter services, and independent medical examinations to resolve disputes are included in their own fee schedule maintained by the department. Interpreter services were first included among the Oregon Specific Codes (OSCs) in April 2011. Interpreters may bill for their services, as well as for travel to and from appointments.

The pharmaceutical fee schedule sets MAPs for products from both compounding pharmacies and non-compounding pharmacies. These fee schedules include a dispensing fee, as well as payment of a percentage of the average wholesale price (AWP) for the pharmaceuticals. Physician-dispensed pharmaceuticals are compensable only for an initial 10-day supply.

The Workers’ Compensation Division (WCD) implemented a hospital payment system using adjusted cost-to-charge ratios (CCRs) in 1991. Since July 1992, the department has published revised CCRs semi-annually or annually for all general acute care hospitals in the state, in the Bulletin 290. The calculation is based on information from hospitals’ audited financial statements and Medicare cost reports. The CCR is the proportion of the hospital bill that insurers reimburse Oregon hospitals for treating injured workers. This system allows hospitals to recover their cost of providing services to injured workers, a reasonable rate of return on their capital assets, and an allowance for losses due to bad debt and charity care. Rural hospitals may be excluded from imposition of the CCR. This exclusion is based on designation as a critical-access hospital under the Medicare Rural Hospital Flexibility Program or on economic need as determined from their financial reports. Exempt hospitals are paid at 100 percent of charges.

Medical payments

The Workers’ Compensation Division requires that insurers with a three-year average of 100 or more accepted disabling claims report their medical payment data. The department extrapolates from this data estimated medical payments for the entire workers’ compensation system.