‘Adverse Surprise’ Workers Comp Cases Consume 40% of Medical Costs

July 21, 2005

Workers’ compensation cases with significant unanticipated medical care and costs are most common in California and Texas, and can represent as much as 30 to 40 percent of medical costs in most states, according to a new study by the Workers Compensation Research Institute.

These so-called “adverse surprise” cases involve those where medical conditions and costs worsen beyond what insurers originally estimated. The often involve back injuries.

“Cases with adverse surprises are the ultimate ‘lose-lose’ for workers and employers,” said Dr. Richard A. Victor, executive director of the Cambridge, Mass.-based WCRI.

“In these cases, workers’ medical conditions may have become chronic, a result that was not anticipated earlier in the case. The costs to employers may have significantly exceeded expectations, compared to how the medical condition presented at an earlier point in the case,” Victor explained.

After California and Texas, the states where adverse surpise costs are highest include Florida, Louisiana and North Carolina.

The study found that in some of the 12 large states reviewed, the frequency of these adverse surprise cases was increasing more rapidly than in others.

The other states in the study were Connecticut, Illinois, Indiana, Massachusetts, Pennsylvania, Tennessee and Wisconsin .

Among the other findings of the study, Adverse Surprises in Workers’ Compensation: Cases with Significant Unanticipated Medical Care and Costs:

* Adverse surprise cases were disproportionately chronic conditions with multiple surgeries. They were also disproportionately back pain cases.

* Cases with significant or moderate surprises represented about 30 percent to 40 percent of medical costs in most states. However, they represented 57 percent in California, but only 15 percent in Indiana .

* Adverse surprise cases became relatively more frequent in almost all of the study states, with the largest increase in California. In Indiana and Wisconsin, there was little growth in the likelihood of an adverse surprise.

Victor said that while specific actions to prevent adverse surprise cases are not identified in this study, it is likely that some improvement in public policies and medical management are part of the answer.

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