Commission on Health and Safety and Workers' Compensation
Information Bulletin

October 31, 2000 Christine Baker
(415) 703-4220

Commission To Study Workers' Compensation
Hospital Fee Schedule and Outpatient Surgery Procedures

SAN FRANCISCO -- The Commission on Health and Safety and Workers' Compensation (CHSWC) today approved a proposal to study the workers’ compensation Hospital Fee Schedule and outpatient surgery procedures.

The California workers' compensation system includes an Official Medical Fee Schedule, mandated by Labor Code Section 5307.1, used for payment of medical services required to treat work-related injuries and illnesses. Many employers and insurers criticized the medical fee schedule in use in 1993 as outdated because it did not cover many common procedures and did not apply to inpatient hospital charges. The Official Medical Fee Schedule was updated effective April 1, 1999 and included an Inpatient Hospital Fee Schedule, or IHFS.

The IHFS takes into account cost and service differentials for various types of facilities based on the federal Medicare Fee Schedule. As in Medicare, reimbursement for each hospital differs depending on a number of factors that have an impact on the hospital’s costs and services. Since the implementation of the IHFS, the Division of Workers’ Compensation has received several letters from hospitals and physicians expressing their dissatisfaction with the current IHFS.

The Commission’s study will evaluate the adequacy of the Inpatient Hospital Fee Schedule in California. It will include a description of current difficulties with the IHFS, an analysis of the cost impact, a modeling analysis of outcomes of possible IHFS changes, and recommendations for revising the IHFS and establishing an outpatient surgery fee schedule.

The Commission, created by the workers' compensation reform legislation of 1993, is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. The Commission was established to conduct a continuing examination of the workers' compensation system and of the state's activities to prevent industrial injuries and occupational diseases and to examine those programs in other states.

Further information about the Commission and its activities may be obtained by writing to Christine Baker, Executive Officer, Commission on Health and Safety and Workers' Compensation, 455 Golden Gate Avenue, 10th Floor, San Francisco, California 94102, by calling (415) 703-4220, or by faxing a request to (415) 703-4234. Information is also available at