Trees and Forests

It makes sense that the cost of medical services is less in states with fee schedules, and that costs grow slower, than in states without fee schedules.

A recent study by the Workers' Compensation Research Institute confirmed that in a comparison of 31 states.

chart courtesy WCRI, 2015

Prices paid for a similar set of professional services varied significantly across states, ranging from 33% below the 31-state median in Florida to 124% above the 31-state median in Wisconsin in 2013, the study found.

There was also “tremendous variation across states” in price changes from 2008 to 2014, ranging from a 20% reduction in Illinois to a 28% increase in Wisconsin.

States with fee schedules experienced slower growth in prices paid for professional services compared with most states with no fee schedules. The median growth rate among the fee schedule states was 6% from 2008 to 2014, compared with the median growth rate of 17% among the non-fee schedule states.

Also affecting the delivery cost of medical services are networks - network states have lower costs and likewise experience slower cost inflation.

Presumably these findings are good.

Or are they?

Looking at just a small slice of the workers' compensation pie doesn't tell the whole story.

For instance, what is the correlation between lower medical cost states and disability rates, duration and severity?

How quickly are medical services delivered in lower cost states versus higher cost states?

Are premiums affected by medical costs? Or do employers see greater premium impact via other case management techniques, such as imposition of nurse case managers?

How long do medical providers and vendors wait to get paid in low cost states versus higher cost states? Is there any correlation with litigation?

In lower cost states, is more of the pie paid to claimants for wage replacement? Or are cost containment expenses eating up a greater proportion of the pie?

Lots of additional questions, indeed - because at the end of the day there are only two things that matter: does the injured worker get benefits timely and adequately; and does the employer realize good value for its premium dollar?

Studies like this WCRI comparison are good for understanding at a micro-level how certain elements affect performance, but they need to be married up to the macro-view to see if we're really doing our jobs well.

Controlling costs means nothing if those paying into the system, employers, and the intended beneficiaries of the system, injured workers, don't get the value proposed in The Grand Bargain.

Trees make up a forest. Forests make up an eco-system. Lots of things live in that eco-system. Cut down trees and an unknown toll is exacted upon those things.