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WCRI – the effect of WC reform in Texas

Carol Telles spoke briefly on what other states can learn from Texas’ recent reforms – designed to address medical utilization by introducing medical management tools, and reducing utilization. These tools actually added some cost, so the cost:benefit of the reforms have to be considered.

Relative to 14 other states, medical cost per claim over a 15 year period declined from highest among the other states to a position in the bottom third.

A big driver was a large decrease in utilization of non-facility care, which actually dropped by about 30% over the study period.  All other states costs increased, some by 70%.

There were a wide array of changes over a couple different reform periods including broadening the use of UR, implementing health care networks, increasing the prices for medical services, adoption of evidence-based medical guidelines, pre-cert for PT/OT, and a closed formulary for medications.  Most of the effects of these changes weren’t observed until 2011 or 2012, with the formulary’s impact delayed even further.

A few highlights specific to the impact on chiropractic

  • chiro utilization dropped 8.5%; % of claims with chiro dropped 60 percent.
  • the percentage of medical payments for chiro decreased from 10% to 3.5%
  • however, chiros are utilized more in Texas than in any study state except California

Re medical cost containment expenses, costs per claim went up about 40% and have stayed there since the reforms were fully implemented.  These expenses were a third higher than the average study state.

What does this mean for you?

Overall, adding medical management services and their attendant costs appears to be related to reducing medical costs.

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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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