Ohio Comp Medical Costs Down 6.7%, Says Bureau

November 22, 2004

The Ohio Bureau of Workers’ Compensation (BWC) announced recently paid medical costs for workers’ compensation claims were 6.7 percent, about $15 million, lower than expected for the first quarter of fiscal year 2005.

From July 1, 2004, through Sept. 30, 2004, the bureau paid nearly $213 million in medical costs, which is more than $4 million less than BWC spent from July 1, 2003, through Sept. 30, 2003. These real savings occurred despite medical inflation rising 4.4 percent over the past year.

BWC Administrator James Conrad touted the news as a continued success for Ohio’s workers’ comp system. An outside actuarial firm prepares the expected payments using the payment patterns, trends and development factors for the past five years. The firm projected payments of $228 million for the first quarter of fiscal year 2005.

The most significant areas of savings were chiropractic costs, which were 9.4 percent lower than expected, and rehabilitation expenses, which were 7.9 percent lower. Only pharmaceuticals were higher than expected, outpacing anticipated payouts by 0.8 percent.

The positive first quarter numbers continue a positive trend for BWC. In fiscal year 2004, paid medical costs for workers’ comp claims were 8.5 percent, or $80 million, lower than expected. Despite medical inflation increasing by 4.4 percent, BWC’s health-care costs for all Ohio employers decreased from $858 million in fiscal year 2003 to $854 million in fiscal year 2004.

The commitment to reducing medical costs began in January 2003 when BWC, managed care organizations and stakeholders such as the AFL-CIO, National Federation of Independent Businesses, the Ohio Academy of Trail Lawyers and the Ohio Hospital Association, hosted a Healthcare Symposium. From the symposium, several work groups began to look at opportunities to reduce medical costs without affecting injured worker benefits.

Overall, the cost of workers’ comp in Ohio has reportedly decreased dramatically. Premiums remain an average of 32 percent lower since 1994. The average company that paid $10,000 in premiums in 1994 now pays only $6,776.

In addition, more than $10 billion in dividends have been returned to companies in the form of credits or rebates during that time.

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