WCRI: Fla. Workers’ Comp Medical Payments Per Claim Grow Due to Increasing Costs in Hospital Services

July 16, 2004

The average medical payment per workers’ compensation claim in Florida rose significantly in the most recent period studied, in large part due to the increasing costs of hospital services and treatments by physicians and therapists, according to a study by the Workers Compensation Research Institute (WCRI).

The study period preceded the 2003 legislative changes that addressed some of these issues. The study noted that recent legislation will have an impact on medical costs in the state’s workers’ comp system, lowering the costs of some services while increasing others.

Overall, the average medical payment per claim in Florida ($6,755) was near the 12-state median level ($6,736). The study reported that the average medical payment per workers’ comp claim grew 16 percent between 2000 and 2001. The major driver was the nearly 13 percent increase in payments per claim to hospitals during the period.

In particular, this increase was due to substantial increases in the average payment per visit for radiology, lab tests, anesthesia, supplies and fees for minor surgery.

At the same time, payments per claim to physicians and physical and occupational therapists rose nine to 10 percent, according to the study.

The data in the reference work, The Anatomy of Workers’ Compensation Medical Costs and Utilization: Trends and Interstate Comparisons, 4th Edition, identifies where workers’ comp medical dollars go and how costs and utilization differ across 12 important states, representing more than 50 percent of the total benefits paid in the nation.

In addition to Florida, the study states included California, Connecticut, Illinois, Indiana, Louisiana, Massachusetts, North Carolina, Pennsylvania, Tennessee, Texas and Wisconsin.

The study also reported that several services billed by nonhospital providers – physicians, therapists and chiropractors – experienced increases in both the number of visits per claim and the number of services per visit.

Compared with the 12-state median, Florida’s medical payments per claim to members of this group of nonhospital providers were 21 to 52 percent lower, while payments per claim to hospitals were 40 percent higher than the 12-state median. The lower medical payment per claim to nonhospital providers is reportedly not surprising given that Florida has one of the lowest non-hospital provider fee schedules among the 12 states.

“It is important to understand that the 2003 legislation affecting several areas of medical costs and utilization could affect future trends and benchmarks,” said Dr. Richard Victor, executive director of the Cambridge-based, independent, not-for-profit research organization.

For example, Senate Bill 50-A, a portion of which became effective in 2003 and 2004, increases many nonhospital fees to 110 percent of Medicare and increases surgery fees to 140 percent of Medicare.

A previous WCRI study showed that in 2001, fees in Florida ranged from four percent above Medicare for surgery to 35 percent below Medicare for office visits.

Hospital payments per visit – a combination of services per visit and average price per service – were 40 percent higher than the median of the states in the report. In fact, for many hospital services, including outpatient and inpatient services, Florida had one of the highest average payments per visit of the study states. Recent legislative changes lowering certain fees paid to hospitals may reportedly reduce prices for some hospital services delivered after December 2003.

“Our goal in this report is to help public policymakers and business decision makers focus on the most likely opportunities to improve the performance of medical care delivery and medical cost management in workers’ compensation,” said Victor. “Future WCRI studies will be valuable in analyzing the effectiveness of the recent reforms in Florida which are now beginning to have an impact.”

The payments per claim to physicians were on average 21 percent lower than typical of the study states, largely due to average prices that were 17 percent lower than the median despite a higher number of visits per claim. “Recent legislation may raise prices in the future for certain physician services such as surgery and office visits,” said Victor.

Chiropractors received payments per claim that were 52 percent less than the median state in the study. They were involved in substantially fewer claims (51 percent), and when involved, provided fewer visits per claim at lower payments per visit.

In part, this may have been the result of restrictions placed on the number of visits allowed, according to the study. Legislation effective on Jan. 1, 2004, increased the number from a maximum of 18 visits or eight weeks of treatment to a maximum of 24 visits or 12 weeks of care after the initial chiropractic treatment.

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