No Magic Bullet For Comp Cost: WCRI Director

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By Daniel Hays

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

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The advice came from Richard Victor, Ph.D., speaking Friday inOrlando, Fla. at the annual seminar of the National Council onCompensation Insurance.

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Mr. Victor, executive director of the Cambridge, Mass.-basednot-for-profit Workers Compensation Research Institute, said thatmedical cost drivers vary from state to state. Because feeschedules and reimbursements differ depending on the venue, theincentive for use of all services is not the same.

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

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

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Looking at the widespread variations among state costs forcomparable items, Mr. Victor remarked that there was "no economicrationality behind this."

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

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

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

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

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He cited the difference between Connecticut and the adjoiningstate of Massachusetts. In Connecticut, he said, the medicalprovider fee schedule reimburses at rates that are 80 percent abovethose of Medicaid, while Massachusetts pays 20 percent belowMedicaid.

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He said that a variety of studies have concluded that healthnetworks reduce prices, and while workers are less satisfied withnetwork treatment a study in Washington state has found that themedical outcomes are no less successful.

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Where employers are given more control over the medicalproviders used, Mr. Victor said studies have found that costs willbe lower. Changing their ability to choose a provider does notincrease the percentage of workers who are dissatisfied with theirtreatment, but it does lessen the number who are intenselysatisfied, he said.

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