Identifying Medical Cost Drivers in Workers’ Compensation: Tools Available for Public Officials

Medical Cost per Claim Accelerates

Today’s Presentation New tools have been developed to identify cost drivers in workers’ compensation New tools have been developed to identify cost drivers in workers’ compensation Cost drivers vary from state to state Cost drivers vary from state to state Illustrative findings from soon-to-be- published worker outcomes study Illustrative findings from soon-to-be- published worker outcomes study What is the Workers Compensation Research Institute (WCRI)? What is the Workers Compensation Research Institute (WCRI)?

New Tools for Policymakers Benchmarks with meaningful interstate comparisons of …  Medical costs  Medical utilization  Key worker outcomes  Other aspects of the performance of workers’ compensation systems

WCRI Benchmarking Measures Benefit amounts Benefit amounts Timeliness Timeliness Medical costs Medical costs Disability duration Disability duration Defense attorney involvement Defense attorney involvement Vocational rehab use Vocational rehab use Benefit delivery expenses Benefit delivery expenses Medical costs by service/provider type Medical costs by service/provider type Medical prices Medical prices Utilization of services Utilization of services Utilization by provider Utilization by provider

Core Outcomes Measures Recovery of health and functioning Recovery of health and functioning Return-to-work Return-to-work  Return to work or not?  Speed of initial return to work  Sustainability of return to work Satisfaction with health care Satisfaction with health care Access to health care Access to health care

Medical Cost Drivers: Examples From Three States Florida – hospital prices Florida – hospital prices Texas – chiropractic price and utilization Texas – chiropractic price and utilization Illinois – hospital and non-hospital prices Illinois – hospital and non-hospital prices

Why Such Variation Exists? Medical training and practice patterns differ geographically (Dartmouth Atlas) Medical training and practice patterns differ geographically (Dartmouth Atlas) Reimbursement levels create incentives to deliver certain services Reimbursement levels create incentives to deliver certain services Utilization requirements also differ Utilization requirements also differ Networks also help manage costs – both price and utilization Networks also help manage costs – both price and utilization

Medical Cost Findings – Florida Florida’s medical costs and utilization are typical of 8 large states Florida’s medical costs and utilization are typical of 8 large states Lowest fee schedule levels among 40 states Lowest fee schedule levels among 40 states Lowest average prices for many non-hospital services Lowest average prices for many non-hospital services But, highest average prices for hospitals But, highest average prices for hospitals

Typical Average Medical Payment per Claim

Florida’s WC Fee Schedule Below FL Medicare (-17%) 151% 202% FL MA CA MI PA MNCTNY 2001 Fee Schedule

FL Fee Schedule Lower than FL Medicare for all but Surgery 2001 Fee Schedules

Average Prices are Lower for Many Non-Hospital Services Average Price/Service FL12-state Difference Median Office Visits $30 $48  38% Major Surgery$971$1,044  7% Physical Medicine $20 $30  33% Minor Radiology $29 $58  50% Major Radiology$378 $467  19 % 1999/2000 Claims with > 7 Days Lost Time

FL’s Average Price for Hospital Facility Services Among Higher States

FL’s Average Prices for Hospital Physical Med Among Higher States

FL’s Average Price for Hospital Lab Tests Highest of 12 States

Average Prices for Hospital Major Radiology Among Higher States

FL’s Average Prices for Hospital Minor Radiology Highest of 12 States

Major Findings - Texas TX’s medical costs increased 14% over 2 year period TX’s medical costs increased 14% over 2 year period Chiropractic care drives cost increases Chiropractic care drives cost increases  More claims with chiropractic care  More visits when seeing a chiropractor  Higher prices received for services  Higher revenues/claim for chiropractors

Average Medical Cost per Claim $/Claim

Why Are Medical Costs Higher in Texas Than Most States TexasMedian Difference State State Payment/claim $8,048$5, % Visits/claim % Services/visit % Price/service $78 $ % 1999/2000 Claims with > 7 Days Lost Time

Higher Utilization and Prices By Chiropractors Chiropractor TexasMedianDifference Payment/claim $4,995$ % Visits/claim % Services/visit % Price/service $41 $ % 1999/2000 Claims with > 7 Days Lost Time

Texas Chiropractors Involved in More Cases % of Cases

Texas Chiropractors Receive A Higher Share of Total Medical Payments % of Medical Payments

Texas Chiropractors Receive Much Higher Average Payments per Claim $/Claim

Texas Chiropractors Treat With More Visits per Claim Visits/Claim

Average Price per Service by Chiropractors is Highest in TX

IL: Average Medical Payment per Claim is 3 rd Highest

Findings for Illinois Higher prices for many non-hospital and hospital outpatient services Higher prices for many non-hospital and hospital outpatient services Average medical payments per claim increased 11% from 1998/99 to 1999/2000 Average medical payments per claim increased 11% from 1998/99 to 1999/2000 Increases for all providers–but greatest for hospitals due to outpatient prices and utilization Increases for all providers–but greatest for hospitals due to outpatient prices and utilization

Average Prices Higher for Non-Hospital Services IL12-State % Diff IL12-State % Diff Median Median Office visits$58 $48 +21% Physical medicine$37 $30+23% Major surgery$1,302 $1,044+25% Minor radiology$79 $58+36% Major radiology$467 $467same 1999/2000 Claims with > 7 Days Lost Time (Injury/Industry Mix Adjusted)

Average Prices Higher for Hospital “Ancillary Services” IL12-State % Diff IL12-State % Diff Median Median Hospital facility$617 $ % Physical medicine $93$76+22% Minor radiology$144$124+16% Major radiology$874$765+14% 1999/2000 Claims with > 7 Days Lost Time (Injury/Industry Mix Adjusted) Preliminary Results

Largest Cost Increases for Hospitals

IL’s Average Medical Payment Per Claim to Hospitals Highest of 12 States 1999/2000 Claims with > 7 Days Lost Time (Injury/Industry Mix Adjusted) * Balance billing

Today’s Presentation New tools have been developed to identify cost drivers in workers’ compensation New tools have been developed to identify cost drivers in workers’ compensation Cost drivers vary from state to state Cost drivers vary from state to state  Illustrative findings from soon-to-be- published worker outcomes study  What is the Workers Compensation Research Institute (WCRI)?

Higher Medical Cost per Claim in California and Texas 1999 injuries with experience through 6/2002

About WCRI Independent, not-for-profit research organization, established 1983 Independent, not-for-profit research organization, established 1983 Has diverse membership support Has diverse membership support Studies are peer-reviewed Studies are peer-reviewed Resource for public officials and stakeholders Resource for public officials and stakeholders

More more information and detailed benchmarks … wcrinet.org