State board sets new method for workers’ comp payments

The state has adopted a new method for paying physicians and other health providers for services provided under Workers’ Compensation to injured workers.

New regulations were adopted Oct. 29 by the Alaska Workers’ Compensation Board, which met in Anchorage. The change is aimed at slowing an annual rise in medical payments under workers’ compensation claims that result partly because of the payment formula.

The new procedure, approved by the Legislature in 2014, replaces the previous system of paying medical service providers at the 90th percentile of “usual and customary” fees in the region with a new method that sets a value for a procedure that accounts for a provider‘s work, practice expense and malpractice insurance.

The value is adjusted by a regional multiplier that adjusts for higher Alaska’s higher costs.

Thirty-two other states have adopted the new payment system for workers’ compensation, according to Marie Marx, director of the Division of Workers’ Compensation.

“Alaska has used the usual, customary and reasonable (UCR) fee schedule since 2004. The UCR rate was set at the 90th percentile, so for every procedure in workers’ compensation, the ninth-highest payer was considered the maximum allowable rate,” Marx said. “This schedule was inherently inflationary, because once a fee schedule was published charges tended to rise to and above the maximum level of payment, which guaranteed an annual increase in the UCR charge.

“The new methodology, called the Resource-Based Relative Value Scale, assigns a relative value to each procedure, and then applies a multiplier (a fixed conversion factor). The value is multiplied by the fixed conversion factor set by the state to determine the amount of payment.”

Marx acknowledged that not everyone is happy with the new system.

“We received many public comments, and the reaction was varied,” she said.

In a statement, the Department of Labor and Workforce Development said, “Alaska has had the highest workers’ compensation rates in the nation over the past decade although Alaska workplace injuries have declined significantly. The new fee schedule should reduce workers’ compensation costs.”

That will result in lower workers’ compensation premiums paid by employers in the state.

Other states have had to cut workers’ compensation, in some cases allowing companies to opt out, the department said. In contrast, “Alaska has sought to strengthen its system while also working to reduce costs for businesses that pay premiums.”

Updated: 
11/04/2015 - 2:05pm

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