Comp Med Cost Drivers? Pick A State

By Daniel Hays

NU Online News Service, Aug. 22, 1:40 p.m. EST, Orlando, Fla.?The reasons behind the surge in medical costs for workers' compensation systems vary widely by state--ranging from expensive chiropractic treatments to high-priced hospital care, researchers said at an industry conference here.

The results of their findings were presented at the Workers' Compensation Educational Conference presented by the Florida Workers' Compensation Institute in partnership with The National Underwriter Company and New York-based Risk and Insurance Management Society.

(The National Underwriter Company is the parent company of this newsmagazine.)

There is "tremendous variation across states on cost containment" noted Ann Clayton, who heads Ann Clayton & Associates, a Lexington, Mass.-based workers' compensation consulting firm. She said that differences related to unique "political challenges" among the states.

Ms. Clayton was joined by Stacey Eccleston, a senior analyst with Workers' Compensation Research Institute of Cambridge, Mass., and much of the material they presented involved studies done for WCRI.

The research revealed a wide diversity in what states permitted health care providers to charge and where their dollars for workers' comp medical costs were going. Most of the research was based on data from 1998 to mid-1999.

Their research did not compare all states.

Examining the outlay in eight states for cost containment of claims, researchers found that the lowest average medical cost containment expenditure for a seven-day lost time claim in Wisconsin was slightly more than $300. Wisconsin's average was followed by Connecticut, at about $350; Massachusetts, Georgia, Pennsylvania, California and Texas, which were all over $600; and Florida, which was more than $1,000.

(Cost containment expenditures include bill review, utilization review, and case management expenses.)

Although Texas was second behind Florida in spending for cost containment, the study found that Texas' average medical payment per claim was actually the highest in the eight-state comparison, with its average exceeding $7,000.

The studies found that there was a low correlation between workers' compensation fee schedule levels and the actual costs to deliver medical services, and large differences between workers' compensation fee levels and the Medicare benchmark in each state.

In 32 states, workers' compensation fees were found to be double--or more than double--the Medicare levels. Among the states with the highest surgery fees were: Idaho, at 363 percent above Medicare; Alaska, at 234 percent; and Connecticut at 194 percent.

Idaho was 266 percent over Medicare for radiology costs, 318 percent for general medicine, and 115 percent for evaluation and management.

Among states with fees below Medicare, Massachusetts paid four percent less for surgery, 12 percent less for radiology, 13 percent less for general medicine, three percent less for physical medicine, and 36 percent less for evaluation and management. Maryland was 37 percent below Medicare for physical medicine.

Ms. Eccleston said research found that the differences paid in fees were not related to actual expenses of medical practices.

When Texas was studied, she said the cost driver was found to be chiropractic care where medical costs during the study grew seven percent a year.

The study found that with chiropractic care there were more visits per claim and higher prices paid. The study also found that, from 1996 to 1998, the average per claim payment in Texas remained stable for medical doctors and doctors of osteopathy, but that for chiropractors it had risen 36 percent from $3,545 to $4,836. During the same period, average patient chiropractor visits per claim increased by seven percent.

While Florida pays low fees for medical treatment, the researchers found in an eight state comparison that Florida was paying very high hospital prices more than offsetting low non-hospital prices.

Ms. Eccleston said the researchers did not know why chiropractic treatment in Texas involved a higher number of visits than other states, but she noted that chiropractors in Texas are allowed to treat a broader range of ailments than elsewhere.