NU Online News Service, Jan. 25, 11:34 a.m. EST

Workers' compensation costs per claim for injured employees' medical care grew rapidly in California in 2006 and 2007 after years of post-reform decreases, according to a new study.

As a result of reforms enacted from 2002 to 2004, the Workers Compensation Research Institute (WCRI)–a Cambridge, Mass.-based not-for-profit research group–said California medical costs per claim changed from being the highest of 15 study states pre-reform to being lower than typical post-reform.

This downward shift, WCRI said, was due to "the significant change in utilization of nonhospital services–from 33 percent higher than typical of the study states pre-reform to 9 percent lower than typical post-reform."

Some reform provisions, WCRI noted, targeted utilization of medical services, such as a 24-visit cap on physical medicine treatments, requiring use of the American College of Occupational and Environmental Medicine (ACOEM) treatment guidelines, mandating utilization review programs, and adopting medical provider networks.

But in 2007, WCRI said, for claims with more than seven days of lost time, medical costs per claim saw a nearly 9 percent increase for claims with 12 months of experience.

WCRI said prices for services rendered by nonhospital providers remained stable in 2007, so the increase in medical costs per claim in 2007 was likely driven by other factors, such as in increase in the utilization of those nonhospital services and hospital inpatient and outpatient payments.

Additionally, WCRI said medical cost containment expenses per claim increased steadily in California over the study period, even during the period from 2003 to 2005 when medical costs per claim had double-digit decreases due to the reforms.

Claims with permanent partial disability benefits and/or lump-sum settlements have risen since 2005, WCRI said, as large decreases from the reforms ended.

"For claims with 36 months of experience, the frequency of permanent partial disability lump-sum claims in California fell 5 percentage points, and the average permanent partial disability lump-sum payments per claim decreased 18 percent," WCRI said.

"After 2005, the average PPD/lump-sum payments per claim had moderate growth, including a nearly 6 percent increase in 2007, and the frequency of PPD/lump-sum claims remained fairly stable.

"Furthermore, the average duration of temporary disability per claim in California remained stable in 2006 and 2007 after continuous rapid decreases post-reform," WCRI reported.