Calif. Workers’ Compensation Medical Payments on the Rise

April 3, 2002

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

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

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

The average medical payment per claim increased 11.5 percent for 1998 claims compared to 1997 claims, considering medical services obtained 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 grew approximately 20 percent from 1997 to 1998, considering services delivered through mid-1999.

Hospital facility prices (e.g. room and board) increased by greater 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.

Along with California, the states studied in the WCRI report were Connecticut, Florida, Georgia, Massachusetts, Pennsylvania, Texas and Wisconsin.

According to the study, California’s medical payment per claim climbed 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). 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 greater visits per claim to a chiropractor than the median of the eight states in the study.

The study reported that in prior years California has had the lowest hospital prices among the eight states analyzed for claims involving more serious injuries ¾ those with greater 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).

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