Medical Payments per Claim in California Growing Rapidly After Steep Post-Reform Decreases, New WCRI Study Reports

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The costs per claim of medical treatments for injured workers in California were growing rapidly after large decreases that resulted from system reforms in prior years, according to a new study,CompScope™ Medical Benchmarks for California 12th Edition, from the Workers Compensation Research Institute (WCRI).

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This report provides information for policymakers and system stakeholders to monitor the areas that have become drivers of the growth in medical costs after the impact of the prior reforms in 2002-2004, which have largely ended.

The costs per claim of medical treatments for injured workers in California were growing rapidly after large decreases that resulted from system reforms in prior years, according to a new study,CompScope™ Medical Benchmarks for California 12th Edition, from the Workers Compensation Research Institute (WCRI).

According to WCRI’s study, medical payments per workers’ compensation claim in California rose about eight percent per year from 2005 to 2009. These increases followed an overall decrease of about 30 percent from 2002 to 2005 due to the comprehensive reforms in the California workers’ compensation system.

The Cambridge, Mass.-based WCRI said the growth in medical payments per claim after 2005 was driven by both increases in the utilization of medical care and prices for some services.

“This report provides information for policymakers and system stakeholders to monitor the areas that have become drivers of the growth in medical costs after the impact of the prior reforms in 2002-2004, which have largely ended,” said Ramona Tanabe, WCRI’s Deputy Director and Counsel.

The study reported that use of medical services in California increased moderately starting in 2006, reflecting a potential combined impact of changes in regulations, practice patterns, and participant behavior after the effect of reforms largely ended.

For example, the percentage of claims that received more than 24 visits for physical medicine services increased gradually from 2006 to 2009. Since the reform limited physical medicine treatments to 24 visits for a claim unless additional treatments were authorized, the recent increase may indicate that more treatments were authorized. Another underlying factor might be the update of the Medical Treatment Utilization Schedule (MTUS) that allowed additional post-surgery physical medicine services outside of the 24-visit limit in the reform.

Other medical cost drivers included more frequent billing for complex office visits with higher prices, increases in the percentage of claims that received major radiology services, a rise in prices paid for office visits due to a large fee schedule increase, and increases in costs for hospital outpatient and/or ambulatory surgical center (ASC) services due to regulation updates. Medical cost containment expenses and medical-legal expenses per claim also grew rapidly.

Copies of this report can be ordered from the WCRI web site: http://www.wcrinet.org.

ABOUT WCRI:

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. WCRI is a recognized leader in providing objective, credible, and high-quality information about public policy issues involving workers' compensation systems. WCRI's members include employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia and New Zealand.

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Karen Holt
Workers Compensation Research Institute
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