OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sSB-61

AN ACT CONCERNING WORKERS' COMPENSATION AND LIABILITY FOR HOSPITAL AND AMBULATORY SURGICAL CENTER SERVICES.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 15 $

FY 16 $

UConn Health Ctr.

Operating Fund- Uncertain

None

Uncertain

Various State Agencies

GF, TF - Uncertain

None

Uncertain

Municipal Impact:

Municipalities

Effect

FY 15 $

FY 16 $

Various Municipalities

Uncertain

None

Uncertain

Explanation

The bill may result in a fiscal impact to the state and municipalities' workers' compensation programs and the University of Connecticut Health Center (UCHC) starting in FY 16, which is indeterminate. The bill changes the current reimbursement formula for hospitals and ambulatory surgery centers (ASC) within the workers' compensation system and the dispute resolution process for hospital and ASCs' disputed charges. It is uncertain what the fiscal impact to the state or municipalities' workers' compensation programs will be, as the hospital data is currently reported to the state workers' compensation program in a format inconsistent with Medicare rates1 and therefore a crosswalk between current rates and Medicare rates is not currently available.

The bill replaces the current hospital reimbursement formula for workers' compensation of “actual cost,” which is not currently defined in statute, and institutes a formula that is 200% of Medicare for both hospitals and ASCs.

In practice, the state and many municipalities currently negotiate a discount off the invoiced amount directly with the hospital; this negotiated price forms the current reimbursement platform for the state and municipalities' workers' compensation programs. The invoiced value is based on a hospital generated “master charge list”.2

In contrast, Medicare sets a base hospital reimbursement rate for all procedures to which weights are applied based on the procedure and geographical region of the facility. Medicare changes reimbursement rates multiple times a year; many states who reimburse workers' compensation hospital services as a percentage of Medicare, set their rates annually. The fiscal impact to the state and municipal plans will depend on the difference between the current negotiated rates and 200% of Medicare.

The bill may result in a fiscal impact to the clinical operations of the UCHC if Medicare based reimbursement rates are different than current negotiated rates. The impact will depend on the number of workers' compensation patients seen in a given year, which cannot be predicted.

Lastly, the bill adds ASCs to current statute which is conforming to current practice and does not result in a fiscal impact. The bill also requires payment disputes to be filed within a year after the state or municipality pays the hospital or notifies the facility of the dispute. This provision is not anticipated to result in a cost to the state or municipalities.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to changes in the Medicare hospital reimbursement rates.

1 In general hospital information is reported using revenue codes and Medicare information is reported using diagnostic related groups (DRGs).

2 Hospital master charge lists are currently filed with the state's Office of Health Care Access.