California Workers' Compensation Medical Utilization of Services is High, Says New Study.

Business/Technology Editors

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Feb. 22, 2001

The use of medical services is higher in California than in seven other large states studied by the Workers Compensation Research Institute. In spite of this, medical costs per claim in California are typical of the states analyzed. The higher utilization is offset by a lower payment per service.

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 number of visits per claim is higher than average for most providers with the exception of hospitals.

--The average payment per medical service overall is lowest of the states surveyed.

--Claim costs for chiropractors are significantly higher than the typical state in this study.

--Physical therapists are involved in more claims than in the typical state.

--Hospitals are involved in fewer claims.

The data in the reference work, The Anatomy of Workers' Compensation Medical Costs and Utilization, identifies where workers' compensation medical dollars go and how costs and utilization differ across eight important states - California, Connecticut, Florida, Georgia, Massachusetts, Minnesota, Pennsylvania and Texas.

"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.

"We learned that California's medical costs per claim seem typical of the states analyzed, but those costs could be reduced further if the state reduced its high utilization rate," he said.

The study found that the average medical cost per claim in California ($4,560) is much like that in the median state ($4,671), in spite of a utilization rate that is substantially higher (24 percent) than the median rate of the eight states studied.

The high utilization rate is a function of a higher than typical number of visits per claim in California - 22.2 versus the median of 18.0 - and a higher average number of medical services per claim - 69.4 compared with the median of 55.7 in the states analyzed.

Although California's fee schedule sets maximum fees at typical levels, the average payment per service is the lowest of the eight states surveyed. Because the number of services per visit is typical, the difference in the average payment is more likely a result of lower cost services being provided at a higher number of visits, rather than of billing practices.

The study found that chiropractic costs per claim are higher than the median, resulting from significantly more visits per claim than is typical.

"Although it is possible that chiropractors in California treat more severe injuries than chiropractors in the other states studied, the higher use of services probably is also a product of treatment practices because we find a similar pattern among lost-time claims of seven days duration or less," said Victor.

The study reported that physical/occupational therapists are more likely to provide treatment in California than in the median state studied. Hospitals are less likely to provide treatment.

However, when California hospitals are involved in a claim, there are more emergency visits, more visits for physical therapy and greater use of supplies and equipment than in the other seven states.

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 ($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.