Michigan Workers’ Comp Medical Payments Per Claim Among Lowest

July 31, 2009

Medical payments per workers’ compensation claim in Michigan were among the lowest of 14 states, largely the result of lower utilization and lower prices paid for some services, according to a new study from the Workers Compensation Research Institute (WCRI).

The study, CompScope Medical Benchmarks for Michigan, 9th Edition, reported that medical costs per claim in Michigan increased 6 percent in 2006 for claims at an average 12 months of experience – similar to the increase for the median study state, but at a slower pace compared to the previous five years.

The Cambridge, Mass.-based WCRI observed that medical payments per claim in Michigan were 23 percent lower than the 14-state median. The lower-than-typical medical cost per claim raises the question of what that means for injured workers, such as whether they had problems accessing the care they desired and how satisfied they were with the care they received.

Comparing Outcomes for Injured Workers in Michigan, a new WCRI study, examined these and other questions and found that Michigan injured workers reported outcomes in the middle of the range on nearly all measures, compared with worker responses in ten other states. For example, Michigan workers had fewer problems accessing desired medical care. Their satisfaction with the overall medical care and the rate and speed of return to work were in the middle.

The study found that Michigan had a combination of lower prices paid and lower utilization for some services. Payments per claim were lower for physicians and for hospital inpatient episodes compared to the typical study state, but were closer to typical for providers of physical medicine services (chiropractors and physical/occupational therapists) and for hospital outpatient services.

For example, payments per claim to physicians were 21 percent lower in Michigan than in the typical study state. The main reason was that the services provided by Michigan physicians were less resource intensive, that is, physicians billed less often for the most complex new and established patient office visits.

But neither the utilization nor the prices paid were consistently lower across all service types, according to the study.

For example, prices paid to nonhospital providers were lower than typical for surgery and radiology, but were slightly higher than what was paid in the median state for evaluation and management and physical medicine services. These differences are aligned with Michigan’s fee schedule, observed WCRI.

Utilization (number of visits and services per visit) was somewhat lower than typical in Michigan for evaluation and management, major radiology (MRIs and CT scans), and surgery, but higher than typical only for physical medicine services.

In addition, fewer claims in Michigan involved some specialty services, such as major radiology, physical medicine, and supplies and equipment, although the surgery rate was typical.

The share of claims with chiropractic care was lower in Michigan than typical and decreasing over the study period – raising possible questions about worker access to such care.

The study also found that average payment per hospital inpatient episode was among the lowest of the study states, although the share of claims with inpatient care was like the median study state. Hospital outpatient payments per service were consistently lower than in the median state across all service categories, while fewer services per claim were provided for clinic evaluation and management and relatively more services for outpatient laboratory and physical medicine.

A key reason for the recent growth in medical payments per claim in Michigan was the higher payments per claim to hospital providers; payments to nonhospital providers were generally stable.

According to the study, overall payments for hospital outpatient services increased an average of nearly 9 percent per year from 2004 to 2006, and grew for all important outpatient services. By contrast, prices paid for nonhospital services were mostly stable in 2006 (consistent with no fee schedule changes).

Overall nonhospital utilization changed little from 2005 to 2006, but decreases were observed for some services – 3 percent for physical medicine and 4 to 5 percent for radiology.

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, health care and disability issues. Its members include employers, insurers, and governmental entities, insurance regulators and state administrative agencies, as well as several state labor organizations.

Source: WCRI, www.wcrinet.org

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