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.

AMENDMENT

LCO No.: 5116

File Copy No.: 267

Senate Calendar No.: 195


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 15 $

FY 16 $

UConn Health Ctr.

Operating Fund-Uncertain

Uncertain

Uncertain

Various State Agencies

GF, TF- Uncertain

Uncertain

Uncertain

Workers' Compensation Commission

Workers' Compensation Fund

$25,000 to $50,000

$10,000

Municipal Impact:

Municipalities

Effect

FY 15 $

FY 16 $

Various Municipalities

Uncertain

Uncertain

Uncertain

Explanation

The amendment strikes the underlying bill and its associated fiscal impact. The amendment may result in a fiscal impact to the state and municipalities' workers' compensation programs and the University of Connecticut Health Center (UCHC), which is indeterminate. The bill changes the current reimbursement formula for hospitals and ambulatory surgical centers (ASC) within the workers' compensation system. 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 the Medicare rates which would form the basis of the reimbursement formula established in the amendment, is not currently available.

The amendment replaces the current hospital reimbursement formula for workers' compensation of “actual cost,” which is not currently defined in statute, and institutes (1) a Medicare-based formula for those services which Medicare has a reimbursement rate, or (2) a rate set by the Workers' Compensation Commission (WCC) Commissioner in consultation with various stakeholders. The WCC will incur a one-time cost of $25,000 to $50,000 to establish the Medicare-based formulas and fee schedule. The WCC will incur an annual on-going cost, starting in FY 16 of approximately $10,000 to provide the annual update to the reimbursement formulas. The fiscal impact is based on the costs incurred by the WCC to establish and maintain the physicians' fee schedule.

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 This amendment allows the state and municipalities to continue the practice of negotiating rates with hospitals and ambulatory surgical centers.

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 (1) the rate generated by the Medicare-based formula or (2) the rate established by the WCC Commissioner.

The amendment may result in a fiscal impact to the clinical operations of the UCHC if (1) Medicare based reimbursement rates or (2) the fee schedule established by the WCC Commissioner 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.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

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.