There's going to be lots of press surrounding the latest CompScope Benchmarks Study released by the Workers' Compensation Research Institute, as there always is, and should be. After all, the WCRI is one of the top research groups in our industry and the leadership and staff there work hard to provide as complete and unbiased data as possible.
What is unique about the latest study of 16 states is one common theme - controlling costs has more to do with instituting price schedules for medical services than any other single factor.
The premier example is Illinois, which, after reducing medical fees by 30% across the board on Sept. 1, 2011, saw all medical payments for claims with seven days of lost time declined by 5% for injuries arising in 2011 and evaluated as of 2012. Prices paid for non-hospital services dropped by 24% between 2010 and 2012.
And Texas' claim costs, which ranked the highest in the nation prior to a set of reforms passed in 2005, are now typical of the states studied, according to WCRI , with medical costs per claim 17% lower than the 16-state median for 2009 claims evaluated in 2012. The Institute expects costs to decline further in Texas with the prescription drug formulary that became effective 9/1/2011.
The state's claim cost growth rate is also slowing. Claims costs in Texas grew by between 3% and 6% per year between 2006 and 2011. Costs per claim for the 2010/2012 study period were $5,829 – slightly higher than the $5,354 median.
The flip side is that imposing fee schedules on medical services increases costs on the other side of the balance sheet.
For instance in Illinois payments for medical-cost containment increased by 5% during the 2011/2012 study period after little previous change.
Pennsylvania is also seeing a steady increase in cost containment ... costs. But the state is also experiencing pressure from Business to limit indemnity durations.
Injured workers in Pennsylvania received temporary disability benefits for an average of 25 weeks, compared to 17 weeks in Michigan, 20 weeks in Virginia and 23 weeks in Massachusetts.
For the past two years, the Pennsylvania Chamber of Business and Industry has called for reforms that would require medical-treatment guidelines, mandate that doctors perform drug tests on claimants receiving opioids and require workers to use coordinated-care organizations for the duration of their injuries.
Not surprisingly if you have ever been to the WCI Annual conference in Orlando, Florida and the grand suite parties held on the upper floors of the Marriott at night, WCRI said that more than 40% of all Florida claims involved payments to defense attorneys of $500 or more. Florida ranked second in the study behind New Jersey.
I guess I'll have to check out the major conferences in New Jersey to confirm that finding...