No Magic Bullet For Comp Cost: WCRI Director

By Daniel Hays

NU Online News Service, May 20, 9:23 a.m. EDT?Techniques to stop the escalating medical costs of the nation's workers' compensation systems must vary by locality, a research expert told a conference of workers' comp industry professionals last week.

The advice came from Richard Victor, Ph.D., speaking Friday in Orlando, Fla. at the annual seminar of the National Council on Compensation Insurance.

Mr. Victor, executive director of the Cambridge, Mass.-based not-for-profit Workers Compensation Research Institute, said that medical cost drivers vary from state to state. Because fee schedules and reimbursements differ depending on the venue, the incentive for use of all services is not the same.

Key levers that can be used to control system costs, he said, are fee schedules, use of provider networks, and controls over doctor selection and limits of chiropractic visits.

Mr. Victor noted that WCRI studies have found that, in Florida, costs are driven upward by hospital treatment, in Texas, by chiropractors, and in California, by the number of treatment visits.

Looking at the widespread variations among state costs for comparable items, Mr. Victor remarked that there was "no economic rationality behind this."

In Texas, he said that when a chiropractor is involved with treating a comp injury, the benefit claim cost is 40 percent higher than the median for 12 other states.

Discussing what leverage public officials have to control costs, Mr. Victor said that fee schedules "appear to reduce price growth."

Mr. Victor noted that in the private health sector, efforts have been made to reduce costs, but whenever dents have been made were of a temporary variety because of "powerful and persistent" forces at work.

The WCRI executive said that the state's treatment of workers' comp costs have "no economically rational underpinnings" related to the costs involved.

He cited the difference between Connecticut and the adjoining state of Massachusetts. In Connecticut, he said, the medical provider fee schedule reimburses at rates that are 80 percent above those of Medicaid, while Massachusetts pays 20 percent below Medicaid.

He said that a variety of studies have concluded that health networks reduce prices, and while workers are less satisfied with network treatment a study in Washington state has found that the medical outcomes are no less successful.

Where employers are given more control over the medical providers used, Mr. Victor said studies have found that costs will be lower. Changing their ability to choose a provider does not increase the percentage of workers who are dissatisfied with their treatment, but it does lessen the number who are intensely satisfied, he said.

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No Magic Bullet For Comp Cost: WCRI Director

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