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.

Comments

Resource Center

View All »

Complimentary Case Study: Helping achieve your financial goals By:...

Find out how a Special Investigation Union used TLOxp to save the company money and...

Do Your Clients Hold The Right CDL License?

Learn about the various classes of CDL Licenses and the industries that are impacted by...

Integrated Content & Communications: A Key Business Issue For Insurers

Insurers are renewing their focus on top line growth, and many are learning that growth...

High Risk Insurance Coverage in the E&S Market

Experts discuss market conditions, trends and projected growth in a rapidly changing niche.

Top E-Signature Security Requirements

This white paper covers the most important security features to look for when evaluating e-signatures...

EPLI Programs Crafted Just For Your Clients

Bring us your restaurant clients, associations and other groups and we’ll help you win more...

Is It Time To Step Up And Own An Agency?

Download this eBook for insight on how to determine if owning an agency is right...

Claims - The Good The Bad And The Ugly

Fraudulent claims cost the industry and the public thousands of dollars in losses. This article...

Leveraging BI for Improved Claims Performance and Results

If claims organizations do not avail themselves of the latest business intelligence (BI) tools, they...

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

Claims Connection eNewsletter

Breaking news on disasters, fraud, legal trends, technology, and CE initiatives for the P&C claim professional – FREE. Sign Up Now!

Claims-Handling Guidelines

Claims Magazine is providing the following free guidelines and regulations in order to help adjusting professionals stay abreast of each state’s unique property and casualty claim-handling requirements.

View our State Guidelines »

Advertisement. Closing in 15 seconds.