Medical Costs and the Impact of Reforms in 18 State Workers’ Compensation Systems Examined In New Reports

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These new reports from the Workers Compensation Research Institute (WCRI) can help identify changes over time in the provision of workers’ compensation medical care; detect areas where medical payments per claim, prices, or utilization may be higher or lower compared with other study states for a set of similar claims; or reveal areas where legislative changes or state system features and processes may be impacting the costs or delivery of medical services.

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The reports are useful to identify where medical cost and care patterns may be changing. They also help identify where medical payments per claim or utilization may differ from other states.

The factors behind trends of medical payments per claim in state workers’ compensation systems and the impact of legislative and regulatory changes on those costs are examined in a new set of studies released by the Workers Compensation Research Institute (WCRI).

The studies, CompScope™ Medical Benchmarks, 17th Edition, examine trends in payments, prices, and utilization of medical care for injured workers. The reports provide a snapshot of current costs and of historic trends for policymakers and other system stakeholders, reporting how medical payments per claim and cost components vary over time and from state to state.

“The reports are useful to identify where medical cost and care patterns may be changing,” said Ramona Tanabe, executive vice president and counsel for WCRI. “They also help identify where medical payments per claim or utilization may differ from other states.”

The following are some sample findings from the reports:

  •     California: Medical payments per claim decreased 3 percent in 2014, after dropping 4 percent in 2013, for claims with more than seven days of lost time at 12 months of experience. This trend mainly reflected the impact of Senate Bill (SB) 863, particularly the 2013 and 2014 fee schedule changes.
  •     Texas: Medical payments per workers’ compensation claim in Texas changed little from 2013 to 2014, reflecting nearly all the effects of reforms focused on medical costs passed in 2005. From 2010 to 2013, medical payments per claim increased 6 percent per year, double the rate in the median state. However, Texas medical costs per claim continue to remain lower than the typical study state.
  •     Illinois: Medical payments per workers’ compensation claim in Illinois increased annually an average of 3.1 percent between 2012 and 2014. Although payments were higher than the other study states, Illinois moved closer to the median study state, which can be attributed, in part, to the state’s 2011 reforms.
  •     Virginia: Medical payments per claim grew the fastest of all study states, between 2009 and 2014, driven by both hospital and nonhospital costs. After several years of debate, the state enacted a law this year to establish maximum reimbursement rates for workers’ compensation services starting in 2018.
  •     North Carolina: Medical payments per workers’ compensation claim changed little after 2009 following growth averaging 6 and 7 percent per year from 2004 to 2009 at all claim maturities. The study attributed the change in trends to several factors, including a decrease in hospital payments per claim. That decrease likely reflects, in part, 2013 interim changes in the state’s fee schedules.
  •     Indiana: Medical payments per claim changed little between 2013 and 2014, after nine years of increases. One factor was a decrease in hospital outpatient payments per claim, which may be related to the introduction of a hospital fee schedule effective in July 2014.

The studies cover the period from 2009 through 2014, with claims experience through March 2015. The 18 states in the study―Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Texas, Virginia, and Wisconsin―represent more than 60 percent of the nation’s workers’ compensation benefit payments. Individual reports are available for every state except Arkansas and Iowa.

For more information about these studies, visit: http://www.wcrinet.org/result/csmed17_all_result.html.

The Cambridge-based WCRI is recognized as a leader in providing high-quality, objective information about public policy issues involving workers' compensation systems.

ABOUT WCRI:

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Organized in late 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods. Objectivity is further ensured through rigorous, unbiased peer review procedures. WCRI's diverse membership includes 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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Andrew Kenneally
Workers Compensation Research Institute - WCRI
since: 06/2011
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