Driven largely by skyrocketing medical costs and lack of controls for utilization, workers' compensation insurance costs have risen 50 percent nationwide in the last three years, with the greatest increases in California and Florida. The average medical cost per claim has nearly doubled over the past decade, to $15,300 and, in some states, the cost per claim has even quadrupled, according to the Insurance Information Institute.

In California, where workers' compensation premium rates are the highest in the nation, the median number of medical visits per workers' compensation claim is more than 70 percent greater than other states. The higher utilization is due mainly to higher rates of particular types of services, such as physical medicine and chiropractic care. Medical treatment frequently goes unchecked, and providers lack incentives to curtail the number of visits.

Legislatures across the nation are passing or formulating reforms of their states' workers' comp regulations. Too often, however, these reforms do not address the real issues. Most reforms, even those that establish medical fee schedules that cap some reimbursements to providers and limit the number of visits to chiropractors and physical therapists, do not go far enough to fix the system. The private sector also must offer strategies for solving the crisis. Insurance companies and self-insured employers must change the way that medical care is delivered and make health-care providers more accountable in order to lower costs and improve the quality of care that workers receive.