California Workers' Compensation Medical Payments Up, Driven by Increases in Utilization and Hospital Prices, Reports New WCRI Study.

Business Editors and Health/Medical Writers

CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 2, 2002

The average medical payment per workers' compensation claim in California has been rising significantly in recent years primarily as a result of increasing visits to non-hospital providers and rising hospital prices, according to a study by the Workers Compensation Research Institute (WCRI).

However, prices paid to non-hospital providers in California, such as physicians, physical therapists and chiropractors, remained relatively unchanged.

The study of eight states, which represent 40 percent of the benefits paid in the nation's workers' compensation systems, found that in California:

-- The average medical payment per claim grew 11.5 percent for 1998 claims
compared to 1997 claims, considering medical services received through
mid-1999.

-- The increases in medical payment per claim occur for all providers but are
most significant for chiropractors and hospitals.

-- For chiropractors, payments per claim rose nearly 20 percent from 1997 to
1998, considering services delivered through mid-1999.

-- Hospital facility prices (e.g. room and board) grew by more than 29 percent
from 1997 to 1998 claims, considering services delivered though mid-1999.

The reference work, The Anatomy of Workers' Compensation Medical Costs and Utilization: Trends and Interstate Comparisons, 1996-1999, identifies where workers' compensation medical dollars go and how costs and utilization differ across eight important states representing 40 percent of the workers' compensation benefits paid nationwide.

In addition to California, the states analyzed in the WCRI study were Connecticut, Florida, Georgia, Massachusetts, Pennsylvania, Texas and Wisconsin.

"This reference work is designed to improve the decision making process of public officials and business people seeking to target cost drivers and benchmark system performance in California and other states," said Dr. Richard Victor, executive director of the Cambridge-based, independent, not-for-profit research organization.

According to the study, California's medical payment per claim grew at an annual rate of 9 percent from 1996 to 1998, increasing 6.6 percent from 1996-1997 and accelerating to 11.5 percent for the 1997-1998 period.

The study reported that the average medical payment per claim in California ($5,390) is close to the eight-state median ($5,334).

"Increasing visits per claim for all providers and growing hospital payments per service are the primary causes of the rise in medical payments per claim," said Victor. Non-hospital prices remain relatively stable, according to the study.

The study noted that the average payment per claim for chiropractors rose sharply over the period, increasing most significantly for 1997-1998 injuries - a 20 percent increase in payments. The main reason for this increase is an increase in the average number of visits per claim, WCRI said.

For chiropractors, the average number of visits per claim increased by 14 percent from 1997 to 1998. California has 90 percent more visits per claim to a chiropractor than the median of the eight states in the study.

For hospitals, an increase in the average price drives the rise in hospital payments per claim. The increase in hospitals prices is most significant for facility services, such as room and board and other in-patient charges.

The study observed that in previous years California has had the lowest hospital prices among the eight states studied for claims involving more serious injuries - those with more than seven days of lost time.

However, the price per service ($1,222) for hospital facility fees (e.g. room and board) grew by more than 24 percent from 1996 to 1998 - an annual rate of 11.4 percent - bringing hospital prices above the eight-state median level ($977).

The Workers Compensation Research Institute is a not-for-profit membership organization conducting public policy research on workers' compensation, health care and disability issues. Its members include employers, insurers, insurance regulators and state regulatory agencies as well as several state labor organizations.

For more information or to purchase the study The Anatomy of Workers' Compensation Medical Costs and Utilization: Trends and Interstate Comparisons, 1996-1999 ($95 for WCRI members, government agencies and non-profit organizations; $495 for all others) contact Jill Lawson at [e-mail] or call WCRI at 617-661-9274.