CA workers' comp to rein in MRI

October 21, 1992

A study of medical payments in California's workers' compensationsystem has found that MRI procedures are a leading factor drivingradiology costs. The study also indicates that many of the MRIprocedures showing major cost increases are not covered

A study of medical payments in California's workers' compensationsystem has found that MRI procedures are a leading factor drivingradiology costs. The study also indicates that many of the MRIprocedures showing major cost increases are not covered underthe system's fee schedule, a cost-control mechanism that is beingrevised.

The report, released last month, was conducted by the CaliforniaWorkers' Compensation Institute (CWCI), a nonprofit research clearinghousebased in San Francisco. It surveyed over 250,000 medical proceduresapproved for payment by workers' compensation insurers for theweek ending Sept. 27, 1991, and compared them to data compiledin 1990.

Radiology was the category responsible for the second-largestpercentage increase in payments to physicians, with payments upby $90 million to $266 million, an increase of 51% over the previousyear's payments of $176 million. Ancillary services, a catch-allcategory, constituted the largest percentage increase.

Radiology was also the second largest segment within the Californiafee schedule in 1991, behind a general medicine category thatincludes office visits, consultation, physical therapy and otherfees (see graphs).

Within radiology, MRI payments jumped significantly. The totalamount of workers' comp payments made for four of the most commonMRI procedures showed increases ranging from 13% to 66% over theprevious year. These came despite the fact that the frequencyof disabling work injuries over the same period fell about 9%,while the consumer price index in California rose just over 4%.

The data do not indicate whether MRI's higher numbers are dueto increases in per-procedure costs, a rising number of procedures,or a combination of the two. But the fact that MRI is not coveredby the unit-value cost control mechanism of the workers' compsystem is probably one reason for the higher payments, accordingto Thomas Parry, research director with CWCI.

Unit values are set by the workers' compensation fee scheduleand limit the size of payments for procedures covered by workers'comp. Physicians billing for procedures that are not in the schedule,like MRIs, typically charge their usual and customary fee, whichis usually higher than the fee schedule.

MRIs are not in the fee schedule because the schedule was lastupdated before MRI usage became common, according to Parry.

"The body of the schedule hasn't been updated in at leasta decade," Parry said. "The schedule has not capturedthe changes in technology at all. It is sorely in need of beingupdated."

That process is under way. The state Division of Workers' Compensationis revising the schedule, with the goal of having a new systemin place sometime next year. MRI is one of the areas that is beingdiscussed, according to an agency spokesperson.

"There is a concern that MRI is being overutilized,"the spokesperson said.

Insurance carriers in the workers' comp system are leadingthe effort to bring MRI costs under control.

"MRI has gotten a lot of attention because it is expensiveand not in the schedule," Parry said. "I think insurersfeel frustrated that they don't have a better way of controllingthose costs without (MRI) being in the fee schedule with the unitvalues."