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WCRI’s latest research says…


The good folk at WCRI were kind enough to send me their latest CompScope research which covers workers’ comp cost drivers, components, the impact of regulatory changes, and trends in 16 states.

Needless to say, there’s a LOT there.  And I’d be ‘less than truthful’ if I said I’d read them all.  So, here’s what I gleaned from reviewing what I could in between working on client stuff.  The reports examined data from 2005/06 to 2010/11 for lost-time claims, providing insight into trends, the impact of regulatory reform, and changes in provider practice/billing patterns

  • Inpatient hospital payments per episode – a measure of price inflation – were up 36 percent on average over that period.  Remember, price is but one component of cost – others include intensity of services (e.g. using an MRI instead of an X-Ray) and utilization (how many MRIs per episode) plus the percentage of all claims that get that service (frequency).
  • Outpatient hopsital average payments per claim were up about 31 percent – but fewer claims used outpatient services…
  • The average payment per claim for hospital outpatient treatment/OR/recovery room services increased about 62 percent.
  • The variation in the use of opioids was striking.  17% of Louisiana claimants who started using opioids were still using them 3-6 months later, compared to about 3 percent in Arizona.
  • Less than a quarter of all long-term opioid users were tested for drugs via urine drug screening.
  • Surgical claims were pretty interesting.
    • Average payment for claim for major surgery (not including hospital providers) increased 27.6 percent; however there was essentially no change in the percentage of claims that had major surgery over the study period
    • However, utilization – the volume of services delivered to each claimant who did have surgery – was up about 10 percent.
    • So, we have price and utilization up, but not frequency (the percentage of claims that had surgery)

So, what does all this mean?

Well, surgical costs were driven more by utilization and price than frequency.  Outpatient hospital costs look to be all-but out of control. Clearly, payers need to do a much better job addressing these cost areas.

There’s wide variation in drug usage, indicating one-size-fits-all approaches probably will be too much in some areas and far too little in others.  Payers and their PBMs who understand regional differences will be better able to address this critical cost driver.

A good chunk of the research period was undoubtedly affected by the Great Recession.  Teasing out the impact of the recession will help drive deeper understanding in two ways; the impact of that most powerful of external factors, and structural drivers v macro drivers.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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