Florida Workers’ Comp Rates to Rise; Doctor-Dispensed Drug Costs Eyed

Employers in Florida will be paying more for workers’ compensation next year following the state insurance chief’s approval of an 8.9 percent statewide average rate hike.

Florida Insurance Commissioner Kevin McCarty said that he will approve the 8.9 percent rate bid filed by the National Council on Compensation Insurance (NCCI). The new rates will apply to all new and renewal business, effective Jan. 1, 2012.

In granting the rate request, McCarty noted that the state’s overall rate level has fallen significantly since lawmakers rewrote the workers’ compensation law nearly a decade ago.

“The rate increase that has just been justified would still give Florida the lowest workers’ compensation rates among the large states, the lowest workers’ compensation insurance rates in the southeast, and more importantly a 58.6 percent cumulative decrease from the highs prior to the legislative reforms in 2003,” McCarty said.

At a public hearing on the filing, NCCI officials attributed the rate increase to several factors including a slight increase in indemnity and medical benefits. Additionally, the state’s claim frequency has started to creep upward.

NCCI State Relations Executive Lori Lovgren told regulators that this year’s proposed increase shouldn’t be read a sign the system is failing. Instead, she said, it reflects a normal variance in rates, given that the savings from the 2003 reforms have now been fully realized.

“This is not a sign that the system is slipping toward a crisis,” she said. “It is more of an effort to find a new normal, a new baseline in Florida.”

McCarty called for legislative action next year on a cost issue cited at the previous public rate hearing: the dispensing and repackaging of drugs by physicians out of their own offices.

Industry officials say there has been an explosion of physician-dispensed drugs, with markups as high as 600 percent or more.

NCCI calculated that in 2003, only nine percent of drugs were dispensed by doctors. That number has risen to over 50 percent, making Florida the highest of 40 states.

NCCI said the doctor-dispensed drugs accounted for 2.5 percent of the 8.9 percent rate filing, representing $62 million in additional costs.

McCarty said he is “very concerned” about the increased costs associated with physician-dispensed repackaged drugs and urged the legislature to address the issue during the upcoming legislative session.

Topics Florida Trends Workers' Compensation Pricing Trends