BWC Board of Directors

Executive Summary
2017 BWC Hospital Outpatient Services
Payment Rule
Introduction
The Health Partnership Program (HPP) rules were first promulgated in 1996, prior to the
implementation of the HPP in 1997. HPP rules establishing criteria for the payment of various
specific medical services were subsequently adopted in February 1997.
Ohio Administrative Code 4123-6-37.2 provides specific methodology for the payment of hospital
outpatient services. Amendments to the rule adapting the Medicare Outpatient Prospective
Payment System to BWC initially took effect January 1, 2011, and the rule was last modified
effective May 1, 2016.

Background Law
R.C. 4123.66(A) provides that the BWC Administrator shall disburse and pay from the state
insurance fund the amounts for medical, nurse, and hospital services and medicine as the
administrator deems proper, and that the Administrator may adopt rules, with the advice and
consent of the [BWC] board of directors, with respect to furnishing medical, nurse, and hospital
service and medicine to injured or disabled employees entitled thereto, and for the payment
therefor.
R.C. 4121.441(A)(8) provides that the BWC Administrator, with the advice and consent of the
BWC Board of Directors, shall adopt rules for implementation of the HPP to provide medical,
surgical, nursing, drug, hospital, and rehabilitation services and supplies to injured workers,
including but not limited to rules regarding [d]iscounted pricing for all . . . out-patient medical
services.
Pursuant to the 10th District Court of Appeals decision in Ohio Hosp. Assn. v. Ohio Bur. Of
Workers' Comp., Franklin App. No. 06AP-471, 2007-Ohio-1499, BWC is required to adopt
changes to its methodology for the payment of hospital outpatient services via the O.R.C.
Chapter 119 rulemaking process.
BWCs hospital outpatient services reimbursement methodology is based on Medicares
Outpatient Prospective Payment System (OPPS), which is updated annually. Therefore, BWC
must also annually update OAC 4123-6-37.2 to keep in sync with Medicare.

Proposed Changes
As more fully set forth in the OPPS medical services summary document, for hospital outpatient
services with a date of service on or after May 1, 2017, BWC is recommending the following
changes to OAC 4123-6-37.2:
1. Adopt the 2017 hospital outpatient rates as published in Medicares OPPS final rule.
2. Apply a 270.0% BWC payment adjustment factor to OPPS rates for childrens hospitals.
3. Apply a 158.0% BWC payment adjustment factor to OPPS rates for all other hospitals.

In addition, BWC is proposing to add language to the rule that will allow BWC to specify services
in the appendix to the rule for which BWC will determine reimbursement using the Medicare

OPPS methodology even though Medicare does not reimburse for the specified services on an
outpatient basis. BWC is proposing to reimburse for two services in this manner under the
proposed 2017 OPPS rule: total knee arthroplasty and total hip arthroplasty.

Stakeholder Involvement
The proposed hospital outpatient services payment rule was posted on BWCs website for
stakeholder feedback on October 31, 2016 with a comment period open from October 31, 2016
through November 11, 2016, and notice was e-mailed to the following lists of stakeholders:
BWCs Managed Care Organizations
BWCs internal medical provider stakeholder list
BWCs Healthcare Quality Assurance Advisory Committee
Ohio Association for Justice
Employer Organizations
o Council of Smaller Enterprises (COSE)
o Ohio Manufacturers Association (OMA)
o National Federation of Independent Business (NFIB)
o Ohio Chamber of Commerce
BWCs Self-Insured Divisions employer distribution list
BWCs Employer Services Divisions Third Party Administrator (TPA) distribution list.
On October 13, 2016, the proposed rule was presented to the Ohio Hospital Association
Executive Vice President and the Finance Committee.
Stakeholder responses received by BWC will be summarized on the Stakeholder Feedback
Summary Spreadsheet for the second reading of the rules.

4123-6-37.2 Payment of hospital outpatient services.

(A) HPP:
Unless an MCO has negotiated a different payment rate with a hospital pursuant to rule 4123-6-10 of the
Administrative Code, reimbursement for hospital outpatient services with a date of service of May 1, 2016
2017 or after shall be the applicable rate set forth in paragraphs (A)(1) to (A)(6) of this rule as follows:
(1) Except as otherwise provided in this rule, reimbursement for hospital outpatient services shall be equal to
the applicable medicare reimbursement rate for the hospital outpatient service under the medicare
outpatient prospective payment system as implemented by the materials specified in paragraph (A)(7) of
this rule, multiplied by a bureau-specific payment adjustment factor, which shall be 3.06 2.70 for
children's hospitals and 1.67 1.58 for all hospitals other than children's hospitals.
The medicare integrated outpatient code editor and medicare medically unlikely edits in effect as
implemented by the materials specified in paragraph (A)(7) of this rule shall be utilized to process bills
for hospital outpatient services under this rule; however, the outpatient code edits identified in table 1 of
the appendix to this rule shall not be applied.
The annual medicare outpatient prospective payment system outlier, hold harmless, and exempt cancer
hospital reconciliation processes shall not be applied to payments for hospital outpatient services under
this rule.
For purposes of this rule, hospitals shall be identified as critical access hospitals, rural sole community
hospitals, essential access community hospitals and exempt cancer hospitals based on the hospitals'
designation in the medicare outpatient provider specific file in effect implemented by the materials
specified in paragraph (A)(7) of this rule.
For purposes of this rule, the following hospitals shall be recognized as "children's hospitals":
nationwide children's hospital (Columbus), Cincinnati children's hospital medical center, shriners
hospital for children (Cincinnati), university hospitals rainbow babies and children's hospital
(Cleveland), Toledo children's hospital, children's hospital medical center of Akron, and children's
medical center of Dayton.
Reimbursement for hospital outpatient services identified in table 6 of the appendix to this rule shall be
determined using the medicare outpatient prospective payment system methodology as set forth in this
paragraph, applying the status indicator, ambulatory payment classification, relative weight, and
medicare base payment amount specified for the service in table 6.
In the event the centers for medicare and medicaid services makes subsequent adjustments to the
medicare reimbursement rates under the medicare outpatient prospective payment system as
implemented by the materials specified in paragraph (A)(7) of this rule, other than technical corrections,
including but not limited to adjustments related to federal budget sequestration pursuant to the Budget
Control Act of 2011, 125 Stat. 239, 2 U.S.C. 900 et seq. as amended as of the effective date of this rule,
the "applicable medicare reimbursement rate for the hospital outpatient service under the medicare

outpatient prospective payment system" as specified in this paragraph shall be determined by the bureau
without regard to such subsequent adjustments.
(2) Services reimbursed via fee schedule. These services shall not be wage index adjusted.
(a) Services reimbursed via fee schedule to which the bureau-specific payment adjustment factor shall be
applied.
Except as otherwise provided in paragraphs (A)(2)(b)(ii) and (A)(2)(b)(iii) of this rule, hospital
outpatient services reimbursed via fee schedule under the medicare outpatient prospective payment
system shall be reimbursed under the applicable medicare fee schedule in effect as implemented by
the materials specified in paragraph (A)(7) of this rule.
(b) Services reimbursed via fee schedule to which the bureau-specific payment adjustment factor shall
not be applied.
(i) Hospital outpatient vocational rehabilitation services for which the bureau has established a fee,
which shall be reimbursed in accordance with table 2 of the appendix to this rule.
(ii) Hospital outpatient services reimbursed via fee schedule under the medicare outpatient
prospective payment system that the bureau has determined shall be reimbursed at a rate other
than the applicable medicare fee schedule in effect as implemented by the materials specified in
paragraph (A)(7) of this rule, which shall be reimbursed in accordance with table 3 of the
appendix A to this rule.
(iii) Hospital outpatient services not reimbursed under the medicare outpatient prospective payment
system that the bureau has determined are necessary for treatment of injured workers, which
shall be reimbursed in accordance with tables 4 and 5 of theappendix the appendix to this rule.
(3) Services reimbursed at reasonable cost. To calculate reasonable cost, the line item charge shall be
multiplied by the hospital's outpatient cost to charge ratio from the medicare outpatient provider specific
file in effect as implemented by the materials specified in paragraph (A)(7) of this rule. These services
shall not be wage index adjusted.
(a) Services reimbursed at reasonable cost to which the bureau-specific payment adjustment factor shall
be applied.
Critical access hospitals shall be reimbursed at one hundred one per cent of reasonable cost for all
payable line items.
(b) Services reimbursed at reasonable cost to which the bureau-specific payment adjustment factor shall
not be applied.
(i) Services designated as inpatient only under the medicare outpatient prospective payment system.
(ii) Hospital outpatient services reimbursed at reasonable cost as identified in tables 3 and 4 of the
appendix to this rule.
(4) Add-on payments calculated using the applicable medicare outpatient prospective payment system

methodology and formula in effect as implemented by the materials specified in paragraph (A)(7) of this
rule. These add-on payments shall be calculated prior to application of the bureau-specific payment
adjustment factor.
(a) Outlier add-on payment. An outlier add-on payment shall be provided on a line item basis for partial
hospitalization services and for ambulatory payment classification reimbursed services for all
hospitals other than critical access hospitals.
(b) Rural hospital add-on payment. A rural hospital add-on payment shall be provided on a line item basis
for rural sole community hospitals, including essential access community hospitals; however, drugs,
biological, devices reimbursed via pass-through and reasonable cost items shall be excluded. The
rural add-on payment shall be calculated prior to the outlier add-on payment calculation.
(c) Hold harmless add-on payment. A hold harmless add-on payment shall be provided on a line item
basis to exempt cancer centers and children's hospitals. The hold harmless add-on payment shall be
calculated after the outlier add-on payment calculation.
(5) Providers not participating in the medicare program.
Reimbursement for outpatient services provided by hospitals and distinct-part units of hospitals that do
not participate in the medicare program shall be calculated in accordance with the methodologies set
forth in this rule, using a default hospital outpatient cost-to-charge ratio of forty-seven per cent where
applicable.
(6) Reimbursement for outpatient services provided by "new hospitals" as defined in 42 C.F.R. 412.300(b) as
published in the October 1, 2015 2016 Code of Federal Regulations shall be calculated in the same
manner as provided under paragraph (A)(5) of this rule.
(7) For purposes of this rule, the "applicable medicare reimbursement rate for the hospital outpatient service
under the medicare outpatient prospective payment system" and the "medicare outpatient prospective
payment system" shall be determined in accordance with the medicare program established under Title
XVIII of the Social Security Act, 79 Stat. 286 (1965), 42 U.S.C. 1395 et seq. as amended, as
implemented by the following materials, which are incorporated by reference:
(a) 42 C.F.R. Part 419 as published in the October 1, 2015 2016 Code of Federal Regulations;
(b) Department of health and human services, centers for medicare and medicaid services' "42 CFR Parts
405, 410, 412 416, 419, 482, et al. Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Short Inpatient
Hospital Stays; Transition for Certain Medicare-Dependent, Small Rural Hospitals under the
Hospital Inpatient Prospective Payment System; Provider Administrative Appeals and Judicial
Review Organ Procurement Organization Reporting and Communication; Transplant Outcome
Measures and Documentation Requirements; Electronic Health Record (EHR) Incentive Programs;
Payment to Certain Off-Campus Outpatient Departments of a Provider; Hospital Value-Based
Purchasing (VBP) Program; Final Rule", 80 81 Fed. Reg. 70297 - 70607 _____ - _____ (2015

2016).
(B) QHP or self-insuring employer (non-QHP):
A QHP or self-insuring employer may reimburse hospital outpatient services at:
(1) The applicable rate under the methodology set forth in paragraph (A) of this rule; or
(a) For hospitals the department of health and human services, centers for medicare and medicaid
services maintained hospital-specific cost-to-charge ratio information on as of January 1, 2016 2017,
based on the hospitals' submitted cost report (CMS-2552-96 CMS-2552-10), the hospital's allowable
billed charges multiplied by the hospital's reported cost-to-charge ratio (from the outpatient provider
specific file in use by medicare on January 1, 2016 2017) multiplied by a payment adjustment factor
of 1.16, not to exceed sixty per cent of the hospital's allowed billed charges.
(b) For hospitals the department of health and human services, centers for medicare and medicaid
services did not maintain hospital-specific cost-to-charge ratio information on as of January 1, 2016
2017, the hospital's allowable billed charges multiplied by the applicable FY16 FY17 urban or rural
statewide average outpatient cost-to-charge ratio set forth in table 14 4 of the federal rule referenced
in paragraph (A)(7)(b) of this rule (the Ohio average cost-to-charge ratio shall be used for hospitals
outside the United States) multiplied by a payment adjustment factor of 1.16, not to exceed sixty per
cent of the hospital's allowed billed charges; or
(2) The rate negotiated between the hospital and the QHP or self-insuring employer in accordance with rule
4123-6-46 of the Administrative Code.

Effective:
5/1/17
Five Year Review (FYR) Date: 2/1/2020
Promulgated Under: 119.03
Statutory Authority: 4121.12, 4121.121, 4121.30, 4121.31, 4123.05
Rule Amplifies: 4121.121, 4121.44, 4121.441, 4123.66
Prior Effective Dates: 9/1/07, 1/1/11, 4/1/11, 4/1/12, 4/1/13, 5/5/14, 5/1/15, 5/1/16

Ohio Bureau of Workers' Compensation 2016 Hospital Outpatient Services Appendix

Table 6 - Base Payment for Inpatient-Only Services Covered in the Hospital Outpatient Setting
CPT
Code

Description

Status Indicator

APC

Relative Weight

Medicare Base
Rate

27130

Total hip arthroplasty

J1

5115

126.7004

$9,491.00

27447

Total knee arthroplasty

J1

5115

126.7004

$9,491.00

BWC 2017 Proposed Hospital Outpatient Reimbursement Methodology

Goals for 2017
Prompt, effective medical care makes a big difference for those injured on the job. It is often the
key to a quicker recovery and timely return-to-work and quality of life for injured workers. Thus,
maintaining a network of dependable medical and vocational rehabilitation service providers
ensures injured workers get the prompt care they need. Maintaining a network of hospitals to
provide appropriate care is an important element to ensure the best possible recoveries from
workplace injuries. It also ensures access to quality, cost-effective service. Access for injured
workers, and employers, means the availability of quality, cost-effective treatment provided on the
basis of medical necessity. It facilitates faster recovery and a prompt, safe return to work.
The Medical Services Division has focused on improving its core medical services functions. Our goal
is to ensure injured workers have access to high-quality medical care and vocational rehabilitation
services through the maintenance of an appropriate benefit plan coupled with a competitive fee
schedule which facilitates maintenance and enhancement of an appropriate medical/vocational
provider network.
2016 Hospital Outpatient Fee Schedule Objectives:

Maintain a simplified reimbursement methodology

Maintain injured worker access to quality care
Remain current with the Medicare Outpatient prospective payment methodology
Maintain statewide reimbursement to hospital cost benchmark of 114%

Background on BWCs Hospital Outpatient Reimbursement Methodology

Hospital outpatient bills represent about twenty-three percent of BWCs overall medical expenses.
Hospital outpatient services include emergency department visits which may be the first treatment
following an injury, as well as surgery or rehabilitation services intended to return the injured
worker to employment.
BWC implemented a prospective payment methodology for hospital outpatient services on January
1, 2011. Specifically, BWC adopted and implemented Medicares Outpatient Prospective Payment
System (OPPS), with some modification thereto. Reimbursement rates and policies are established
in advance with the prospective payment methodology, and rates and policies remain constant
during the fee schedule effective period.
A key benefit of the prospective methodology is that all facilities experience consistent and
equitable reimbursement for services rendered during the effective period. Further, under the
prospective payment system, providers are encouraged to practice cost containment. Rates being
established in advance provide facilities the data they can use to determine the best mix of their
resources to achieve established budget goals without foregoing the provision of quality services.

2017 Proposed Hospital Outpatient Reimbursement Methodology Recommendations

The Medical Services Division is recommending the following changes to the current 2016 Hospital
Outpatient Fee Schedule:
1. Adopt the hospital outpatient rates as published in the Medicare OPPS 2017 final rule
1.55% rate increase (proposed)
2. Modify payment adjustment factors
Payment adjustment factor to OPPS rates for childrens hospitals: 270.0%
Payment adjustment factor to OPPS rates for all other hospitals: 158.0%
3. Adopt two Inpatient-Only procedures the outpatient setting
1.

Adopt the 2017 Medicare OPPS rates

As part of our yearly analysis process, BWC evaluates and/or models numerous factors impacting
OPPS reimbursement which include but are not limited to changes to the Medicare proposed and
final rules, utilization trends, Ohio-specific and national reimbursement and coverage trends.
The adoption of the prospective payment methodology in May of 2010 for implementation on
January 1, 2011 requires annual updates to the most current Medicare OPPS rates. Rates, wage
index values, and other adjustments are reviewed and updated each year by Medicare with the
most current bill data available. By adopting the yearly Medicare updates, BWC is ensuring the
baseline payment rates are aligned with national utilization benchmarks, and are an appropriate
foundation from which to base an Ohio fee schedule to ensure injured workers access to quality
care. It should be noted that BWC does not necessarily adopt all of Medicares updates, but rather
performs an extensive evaluation of the various changes Medicare makes to its baseline data to
determine if those changes reflect and/or support the philosophy and goals of BWC and the Ohio
workers compensation system. If it is determined that a Medicare change is not in line with the
philosophy and/or goal of BWC and the Ohio workers compensation system, the change is either
not adopted or a BWC adjustment factor is added to the reimbursement methodology to address
the change. Medicare has proposed a 1.55% base rate increase for 2017. Additionally, Medicare
made several other key changes that will impact reimbursement as described below.
In most cases, the unit of payment under the OPPS is the Ambulatory Payment Classification (APC).
Individual services are assigned to APCs based on similar clinical characteristics and costs. In 2017,
Medicare is continuing with the restructuring and consolidation of APCs, which includes the
continued packaging of services or items- meaning that the costs of integral and ancillary services
and supplies are built into the associated APC payment rates. Therefore, in many cases, these
ancillary services and supplies are no longer reimbursed separately. This idea of enhanced
packaging encourages efficiency among hospitals.
Additionally, orthopedic-related APCs have been restructured from their 2016 format. Previously,
treatment for closed fractures was grouped in separate APCs from other musculoskeletal
procedures. In 2017, Medicare chose to combine all fracture treatment with the musculoskeletal
APCs. Changes in packaging status, status indicator assignment, reclassification and/or
consolidation may result in positive or negative payment rate swings.

Therefore, Medical Services is recommending, without change, the adoption of the Medicare 2017
OPPS methodology updates and rates.
2.

Modify current payment adjustment factors (PAFs)

In determining the 2017 payment adjustment factors recommendations, two underlying principles
were considered:
a)
The principle BWC goal of setting reimbursement level at a point where the total
reimbursement equals 114% of the statewide average of hospital costs in providing
services to our injured workers; and
b)
The principle of ensuring that our reimbursement rates maintain our injured
workers access to medical care.
Understanding those principles, our data analysis consultant performed payment simulations using
actual BWC bill data to understand the impact of adopting the Medicare rates, while maintaining
our 2016 PAFs.
Key steps in the consultants analysis were:
a)
The establishment of an appropriate statewide hospital costs benchmark by:

Utilizing the data from the annual Medicare cost reports submitted by all
hospitals, and

The BWC established reimbursement goal of setting statewide

reimbursement at 114% of hospital costs for providing services
b)

Additionally, the consultants included in their analysis the appropriate inclusion of

Medicare outpatient methodology changes including:

Administrative or other general Medicare program changes such as APC

reclassifications, changes in status indicators, packaging changes and
adjustments.

c)

Finally, it was critical to give consideration to adjusting the PAFs to appropriately

offset Medicare changes such as adjustments for budget neutrality and the
Affordable Care Act.

The resulting analysis revealed that the OPPS 2017 reimbursement would be over the 114% of
payment to cost target if the 2016 payment adjustment factor of 167.0% for all hospitals other than
childrens hospitals was maintained. Therefore, to hit our target for these services the payment
adjustment factor would be adjusted downward to 158.0%. This assessment also held true for
childrens hospitals. We recommend a decrease in the payment adjustment factor for childrens
hospital to 270.0% for 2017, from 306.0%. By adjusting these PAFs, BWC will maintain its goal of
114% reimbursement of hospital costs in Ohio. Those recommended 2017 PAF modifications will
facilitate BWCs reimbursement and access to quality care goals.

10

3. Adopt two Inpatient-Only procedures in the outpatient setting

In 2014, the BWC Health Care Quality Assurance Advisory Committee (HCQAAC) directed BWC to
expand medical and reimbursement policy to allow the provision of two arthroplasty procedures
previously covered only when performed in the Ambulatory Surgical Center. The ASC fee schedule
was expanded to include these two arthroplasty (hereafter referred to as joint replacements)
procedures in 2016. Participating ASCs must meet special certification criteria in order to provide
these services, including having established an existing arthroplasty program, complying with
patient selection criteria and physician credentialing criteria, and finally participating in quality data
reporting.
For 2017, eight procedures proposed by the HCQAAC were reviewed for program expansion.
Medical Services is proposing to further expand the coverage by adding two additional procedures
to the outpatient and ASC settings. Total knee replacements and total hip replacements are two
commonly performed, high volume procedures for our injured workers. They are currently covered
by Medicare, but only when the patient is admitted to the hospital as inpatient. The decision on the
total knee and total hip replacement was made after consideration of several variables including
volume, patient selection and opportunity to allow our injured workers to be cared for in a more
efficient, safe environment to positively impact their return to work opportunities. These
procedures are safely performed in the hospital outpatient setting and in the ASC setting on select
patients who are not likely to pose any surgical risks. By allowing these same procedures to be
performed as outpatient services, BWC will potentially see a savings from elimination of room and
board or other inpatient costs associated with the case. Many studies published in recent years
have highlighted the fact that joint replacements performed on qualified patients as outpatient
services have seen improved outcomes, including, but not limited to: lower risk of infection, fewer
instances of readmission, and overall higher satisfaction rates in terms of quality of care.
Commercial insurance companies and other workers compensation systems are increasingly
covering these procedures in alternative settings for select patients. Similarly, CMS is also
considering solicited comments regarding whether total knee arthroplasty should be removed from
the Inpatient-Only list in a subsequent year. These two points further support BWCs decision to
move forward with adopting total joint replacements in the outpatient setting.
In order to establish reimbursement rates for these procedures, we obtained recommendations
from our consultant. They provided several reimbursement options for consideration which were
based on extrapolations from the existing hospital inpatient and outpatient Medicare rates for
same or similar device-intensive procedures and resulted in similar reimbursement results. By
utilizing the same ambulatory payment classification (APC) as the partial knee replacement, BWC is
able to control reimbursement on a hospital-specific basis. The outpatient hospital will be
reimbursed according to our prospective methodology and subject to the same calculations as all
other outpatient services are reimbursed. By following this method of APC reimbursement, BWC
ensures that CMS practice of packaging services remains intact, thus enhancing efficiency and also
ensuring that overpayment is not made for services that should otherwise not be paid separately.

11

Impact of Proposed 2017 OPPS Fee Schedule

The projected impact of the above recommendations will be a 2017 hospital outpatient spend of
$125 million, which reflects an estimated 5% decrease in overall reimbursement. The modifications
will continue to ensure Ohios injured workers access to quality care. These recommendations will
allow BWC to maintain a competitive fee schedule with appropriate benefits and quality care being
provided to Ohio injured workers.

12

2017 Hospital Outpatient Reimbursement

Proposal to the Board of Directors

Freddie L. Johnson, JD, MPA

Chief Medical Services & Compliance Officer
November 17, 2016

13

2017 Outpatient Reimbursement Goals

Maintain a simplified reimbursement methodology
Maintain injured worker access to quality care
Remain current with the Medicare Outpatient prospective
payment methodology
Maintain statewide reimbursement to cost benchmark of 114%

14

2017 Recommendations
Adopt Medicare 2017 updates
Modify BWC payment adjustment factor (PAF) to reflect the
statewide reimbursement to cost benchmark of 114%
Children's Hospital Factor - 270.0%
Non-Children's Factor - 158.0%

Adopt two inpatient-only arthroplasty procedures in the

outpatient setting

15

Hospital Outpatient Reimbursement Formula

Medicare Base + PAF = BWC Payment

BWC Goal is to pay hospital at 114% of cost

Hospital Cost = $100
Reimbursement Calculation Results = $114

16

2017 Medicare Updates

Adopt Medicare 2017 proposed rule including but not limited to:
Base rate increase - 1.55%
Consolidation and restructuring of selected modalities and services
Changes in packaging of services and supplies

Benefits
APCs allow for a single payment, promoting efficiency and costeffectiveness
Packaging into one payment, services that were previously paid separately
are now part of the single payment

17

2017 Payment Adjustment Factor (PAF) Recommendations

Key considerations
Hospital costs
Medicare methodology changes
BWC established goal of 114% statewide average

Proposed
2017 PAF

2017
Projected
Payment
to Cost

Hospital
Type

2016
PAF

2016
Payment
to Cost

Childrens
NonChildrens

306.0%

123%

270.0%

114%

167.0%

117%

158.0%

114%
18

Inpatient-only Joint Replacement Recommendations

Procedures
Total hip replacement and total knee replacement

Injured workers pose lower risk than Medicare patients

Injured worker participation will follow same criteria already
established by hospital
Lower risk of infection
Fewer readmissions and emergency visits
Overall higher satisfaction in terms of quality of care

19

Inpatient-only Joint Replacement Recommendations

2015 BWC
Volume

2017 Medicare Base

Rate

Arthroplasty, acetabular and proximal femoral prosthetic,

27130 replacement (total hip arthroplasty) with or without
autograft or allograft

33

$9,491.00

Arthroplasty, knee, condoyle and plateau; medial and

27447 lateral compartments with or without patella resurfacing
(total knee arthroplasty)

183

$9,491.00

CPT

Description

20

2017 Projected Impacts

2017 payments of $125 million- estimated 5% decrease
Continue to meet 114% reimbursement to cost goal for Ohio
hospitals
Maintain injured worker access to quality care

21

Thank You

22

Average Hospital CCR and PAF Trend

0.3

0.291

0.287

OPPS Average Ohio Hospital CCR Trend

0.280
0.254

0.255

0.248

0.244

-16.2%

0.2
2011

2012

2013

2014

2015

2016

2017

OPPS PAF Trend

1.97
1.81

1.8

1.62

1.62

1.62

1.67

1.6

1.58

-19.8%

1.4
2011
$76.000
$75.000
$74.000
$73.000
$72.000
$71.000
$70.000
$69.000
$68.000

2012

2013

2014

CMS Conversion Factors Trend

2015

74.144

2016

2017
75.001

73.725

72.672
71.313
70.016
68.876

9%
2011

2012

2013

2014

2015

2016

23
2017

Impact of Fee Schedule Changes on Actual Costs:

2011-2016
Millions

Total Medical Reimbursement for Outpatient Fee Schedule

$180

$161

$161

$160

$147

$140

$131

$131

$131

$120
$100
$80
$60
$40
$20

-18%

$0
FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

Thousands

Total Active Claims with Paid Outpatient Fee Schedule Services

120

100

100

99

97

93

88

84

80
60
40
20

-16%

0
FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

FY 201624

Impact of Fee Schedule Changes on Actual Costs:

2011-2016
Total Average Cost per Claim for Outpatient Fee Schedule
$1,650.00

$1,613

$1,626

$1,600.00

$1,555

$1,550.00

$1,508

$1,486

$1,500.00
$1,450.00

$1,406

$1,400.00
$1,350.00
$1,300.00
$1,250.00
FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

Contributors
1. Rate changes for specific services
2. Consolidation and restructuring of ambulatory payment classifications
3. CMS shift of status indicators for enhanced packaging
4. Injury mix

25

Impact of Fee Schedule Changes on Actual Costs:

2011-2016
% Change of Average Medical Reimbursement for Outpatient Fee Schedule
15%
10%
5%

4%
0%

0%

0%

FY 2015

FY 2016

0%
-5%
-9%

-10%

-10%
-15%
FY 2011

FY 2012

FY 2013

FY 2014

26

Impact of Conversion Factor Changes by CMS

$76.000
75.001
74.144
$74.000

73.725

72.672
$72.000

71.313
70.016

$70.000
68.876
$68.000

$66.000

$64.000
2011

2012

2013

2014

2015

2016

2017

27

2017 Financial Impact by CMS Change in APC and

Packaging
Paid via other fee
schedule, 6%,
-$354,000

Other, 3%,
-$177,000

Separate Payment
Possible, 9%,
-$531,000

Packaged services,
82%
-$4,838,000

28