Wednesday, March 26, 2014

Texas Medical Up 8%? Yawn...

I haven't written much about Texas lately because the state has been so boring.

After all, what can you say about a system that has continued to lower costs, deliver benefits, and rank as one of the most efficient systems in the United States.

All of us pundits have attributed the state's performance to various things such as competition from non-subscription, closed prescription formulary and independent medical.

But this being workers' compensation, we also can not deny cyclicality, and inherent ties to the economy and culture of a state.

The Workers Compensation Research Institute released a report Tuesday indicating that medical payments per workers' compensation injury claim in Texas grew by nearly 8% from 2010 to 2011.

Researchers attribute the rise to fee schedule increases resulting from 2005 legislation, that state's landmark reform, HB 7.

"Prior to the reforms in 2001 and 2005, Texas medical payments per claim were the highest of the study states," Ramona Tanabe, WCRI's deputy director and counsel, said in a prepared statement. "In recent years, however, they were lower than the typical state in the study."

Texas paid lower medical payments per claim than most other states, the study said, because it paid lower than typical prices for some medical care and experienced large decreases in the use of medical care.

Wonks call medical care use, "utilization." While the report says that there was lower utilization as a result of these legislative changes, particularly in the fields of chiropractic and other physical medicine fields, this can also be interpreted as more restricted access to care.

If a medical service provider does not find it financially beneficial to participate in the workers' compensation medical delivery system because a fee schedule does not compensate sufficiently to induce participation, then there is restriction to medical care access and consequently lower utilization.

Whether that utilization and access to care is supplanted by some other medical delivery system or not, or whether the providers shift to other payment models typically isn't a focus of workers' compensation specific research - there isn't a whole lot of motivation to find out because the primary focus of workers' compensation research is on system costs.

If those costs go somewhere else, well, it's not our problem...

Chiropractic care took one of the biggest hits in HB 7 as Texas followed a formula other states adopted - hard lining the number of chiropractic visits permitted.

A 71% decrease occurred in visits per claim to Texas chiropractors from 2001 to 2011, from 39 to 12.

Price increases in 2011 from 2010 were due to higher prices paid for non-hospital care, higher prices for hospital outpatient payments per service and rapid growth in hospital payments per inpatient episode, the study found.

Higher medical payments were fueled by fee schedule increases following Medicare updates required under HB 7, the study reported, and the 2011 ban on informal networks, which allowed medical service prices to be negotiated. WCRI also reported a decrease in the use of non-hospital care slightly offset the increase in prices.

But the study also found the average medical cost per claim on a 12-month average at just over $9,800 in Texas, fourth-lowest and 18% lower than the median of the 16 study states. Average cost per claim was lower only in Michigan, California and Massachusetts.

(I know you're thinking this: ... California?)

Texas remains one of the few states where carriers can make an underwriting profit in work comp with one of the lowest average combined ratios in the states. Some will say that is at the cost of injured workers, others will say it reflects good system management.

I'll just say it's what the people of Texas have - each workers' compensation system reflects in large part the culture of that state and general sentiment towards work, and working.

In other words, it is what it is - and while other states can mimic elements of Texas, the culture and attitudes of the state are much more difficult to assimilate.

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