Five Items That Drive Workers Compensation Medical Costs

Study Finds Medical Costs Rise

Medical costs per workers’ compensation claim in Wisconsin shifted from being lower than other study states to being typical. A study by Workers’ Compensation Research Institute (WCRI) (CompScope^TM Medical Benchmarks for Wisconsin, 9th Edition) found Wisconsin employers paid lower costs per claim than the median of 14 study states 2001 injuries with experience through the first quarter of 2004.

However, by 2004/2007 Wisconsin employers paid typical medical costs per claim compared to the other 14 study states.

WCRI attributed Wisconsin’s shift in the average medical costs per claim compared to the study states to:

1. Faster growth in the medical costs per claim.

2. Being among the highest non-hospital prices paid and hospital outpatient payments per service.

3. Medical costs per claim rose more rapidly.

4. Over a period of five years (2001/2002 to 2006/2007) Wisconsin experienced a 70% growth in medical costs per claim vs. a rise in study states of 47% to 54%.

5. The main cost drivers were rapid growth in prices paid for non-hospital services and hospital outpatient services.

It was found employers paid among the highest prices for many procedures performed in a non-hospital setting, such as:

WI: Nonhospital established patient office visits: $95. (Most frequently billed service.)
SS: 62, median study state.
DIFF: $33.

WI: Arthroscopic knee surgery: $3,035 (most common procedure).
SS: $1,336, typical study state.
DIFF: $1,699.

WI: MRI: $1,997.
SS: $805, median study state.
DIFF: $1,192.

Not only did the study find Wisconsin paid substantially higher prices in the typical study state, but, compared to Iowa and Indiana (study states not regulating prices) they were also higher. In general, higher non-hospital prices were offset by lower utilization of medical services. Similar conclusions apply to hospital outpatient services.

Despite these higher prices workers reported faster recovery and return to work and better access and satisfaction with care.

WCRI observed might be reasonable for an employer to pay higher costs if workers experience improved outcomes over time. WCRI is currently conducting a survey of injured workers in Wisconsin to address this question.

For the period 2006/2007 WCRI reports:

1. Medical costs per claim increased by 11%, driven by growth in costs per claim to both non-hospital and hospital providers.

2. Medical cost per claim for non-hospital services grew as a result of a 5% increase in prices paid and a 5% increase of medical services utilization. (workersxzcompxzkit)

3. Hospital outpatient cost per claim grew 10%, driven by a 6% increase in the average payment per service and 4% growth in number of services per claim. These growth rates were similar to the rates in previous years.

To order this report, go to the WCRI Web site: www.wcrinet.org.

Author: Robert Elliott, J.D.

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