WCRI: Pennsylvania Workers’ Comp Medical Costs Per Claim Grow at Double-Digit Rate

July 14, 2004

The average medical payment for workers’ compensation claims in Pennsylvania rose nearly 14 percent during the most recent period studied, according to a new study by the Workers Compensation Research Institute (WCRI).

The study pointed out that the rapid growth rate in medical payments per claim resulted from both higher prices for medical services and increases in the number of visits per claim.

Overall, however, Pennsylvania’s average medical payment per claim ($5, 849) for 2001 injuries was about 13 percent lower than the median ($6,736) of the 12 states in the study.

Although average prices for medical care of injured workers in Pennsylvania was typical to lower than those in the other study states, they grew rapidly in the most recent years studied. This was particularly true for surgical prices (up 16 percent) and major radiology, like MRIs and CAT scans (up ten percent), said the report. Payments per claim for many outpatient hospital services as well as for inpatient stays increased significantly during the period studied. For hospital providers, the average medical payment per claim increased 13 percent.

Pennsylvania’s lower overall medical costs masked higher payments to chiropractors and physical and occupational therapists for their treatment of injured workers. These payments per claim were 15 to 26 percent higher than the 12-state median.

Helping to hold down workers’ comp medical costs in Pennsylvania were payments per claim to physicians and hospitals which were 26 percent to 38 percent lower than typical of the states studied.

The study of 12 states, which represent more than 50 percent of the benefits paid in the nation’s workers’ comp systems, found that in Pennsylvania the higher payments per claim for physical medicine services – chiropractic care and physical and occupational therapy – were largely the result of more services per claim and more visits per claim, not higher prices for these services.

In fact, there were up to 22 percent more physical medicine visits per claim in Pennsylvania than the 12-state median.

On the other hand, medical payments per claim to physicians were lower than the 12-state median due to lower average prices for many services, particularly for surgery and radiology.

This is in line with the relatively lower fee schedule rates for these services in Pennsylvania compared with other study states.

The data in the reference work, The Anatomy of Workers’ Compensation Medical Costs and Utilization: Trends and Interstate Comparisons, 4th Edition, identifies where workers’ comp medical dollars go and how costs and utilization differ across 12 large states.

In addition to Pennsylvania, the states analyzed in the WCRI study were California, Connecticut, Florida, Illinois, Indiana, Louisiana, Massachusetts, North Carolina, Tennessee, Texas and Wisconsin.

“This new study finds that Pennsylvania was experiencing substantial growth in medical payments per claim to injured workers even as it remained among the lower cost states in the study,” said Dr. Richard Victor, executive director of the Cambridge, Mass.-based, independent, not-for-profit research organization.

“Policymakers in Pennsylvania may want to take a closer look at what’s behind the larger than expected price increases for surgery and radiology which exceeded what might be expected given the annual increase dictated by the fee schedule,” he said.

To purchase the report, The Anatomy of Workers’ Compensation Medical Costs and Utilization: Trends and Interstate Comparisons, 4th Edition, visit WCRI’s Web site at www.wcrinet.org.

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