Medical billing reimbursement in Virginia has been a hot topic among industry pundits for years. As one of the few remaining “usual & customary” states where hospitals and physicians are not reimbursed at specific rates dictated by the state, the opportunity for creative interpretation of the rules has existed on both sides and bad actors have created a perfect storm for change. As a result, large gulfs between hospital charges and payments have generated thousands of disputes brought before the Virginia Work Comp Commission over the years and in 2015, the bubble burst.
Everything changed in March 2015 when Governor Terry McAuliffe signed into law Chapter 456 of the Acts of Assembly pursuant to House Bill 1820 which required the Work Comp Commission to obtain data on provider charges for the establishment of a Fee Schedule. Further, the Commission was to convene a work group of stakeholders comprised of employers, medical providers, insurance companies and labor representatives. In October of that year, Rule 14 was amended and Virginia was broken up into 6 geographic communities for payment.
The first draft of the Medical Fee Schedule (MFS) was released in January 2017 and stakeholder feedback was requested. Providers and Industry leaders like EnableComp tested, analyzed and offered feedback to the Commission in February before the second draft of the MFS was released in April 2017 and similar feedback was returned in May. In June, a semi-final version of the MFS and ground rules were released for industry scrutiny. In-depth analysis of the published rates revealed large swings from one region to another for the same or similar services and concern for patient access is a growing concern for Virginia health systems.
Revenue Neutrality was a requirement of the new Fee Schedule, although new “lesser-of” verbiage may create provider-specific variances between charges and scheduled rates that generate underpayment “pockets”. Hospitals should have their work comp partners run analytics to see how the “lesser-of” rule impacts them.
It’s important to note that the MFS currently requires that all surgical implants be billed with a HCPCS code, and EnableComp data shows that roughly 25% of all implants are billed with no HCPCS code of any kind. While the new MFS restricts payers from requesting implant invoices or other cost-accounting documentation to payers, omitting the necessary HCPCS code could create lost revenue opportunities for hospitals and low-hanging fruit for bill review companies.
Impact to Hospital Contracting:
Virginia is one of the most heavily contracted states for workers’ compensation. Most Virginia hospitals have multiple PPO contracts in place to not only drive work comp business into their facilities, but also provide relief from never-ending reimbursements disputes. Because the MFS gives clear direction on payment rates, there are significant steps that hospitals must consider in order to mitigate the negative impact to contracted business by developing a smart, effective contracting plan.