Study: Workers’ Comp. Fee Schedules Control Medical-Cost Increases

NU Online News Service, April 2, 2:42 p.m. EDT

Workers’ compensation medical-cost increases can be better controlled when states have fee schedules in place, suggests a report from the Workers Compensation Research Institute.

A study of 25 large states representing 80 percent of workers’ comp benefits paid in the United States over a 10 year period from 2002 to 2011 finds states with no fee-schedule regulations on reimbursement for professional services had “higher prices paid and more rapid price growth over time compared with states with fee schedules.”

Of the 25 states in the study, six had no fee schedules as of 2011 and the prices paid for professional services were as high as 51 percent greater than the median of the study states with fee schedules.

Of the six states—Indiana, Iowa, Missouri, New Jersey, Virginia and Wisconsin—Wisconsin paid the highest price, more than twice the median of the study group.

From 2002 to 2011, prices for services rose 32 to 38 percent in these six states compared to the median growth rate of 14 percent.

WCRI also points out that in Louisiana, fee schedule rates did not change from 2002 to 2011 and prices paid for medical services remained stable.

However, pain management injections were not under a fee schedule in that state and rose about 60 percent because they were under a different method of reporting.

“In documenting the growing prices paid for medical care received by injured workers, this unique study also shows the effectiveness of medical fee schedules in controlling those costs,” says Dr. Richard Victor, executive director of WCRI.

In a market report presented by Robert Hartwig, president and chief economist for the Insurance Information Institute, he says workers’ comp medical costs have continued to climb since 1994, but in 2010 the pace of increase was only 2 percent, and indemnity claim costs dropped 3 percent. He suggests that this may be due to the way claims costs are reported.

However, workers comp rates rose by 7.5 percent in the fourth quarter of 2011. Even with investment returns, the line shows a loss of 1 percent 2010.

He suggests that with an improving economy, the line is set to see some marked improvement in 2012.

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