Over the last few years I’ve had quite a few calls and meetings with folks in the investment community looking to get up to speed on the workers’ comp industry and various aspects thereof.
While the volume of calls ebbs and flows, of late there’s been increasing interest, likely due to the credit market’s interest in OneCall Care Management and other transactions.
So, here are some key datapoints for anyone looking for basic information.
- Total workers’ comp premium and equivalents is about $85 billion. That includes insurance premiums from private carriers and state funds, claims, administrative, and excess insurance costs for self-insureds, governmental programs e.g. FECA, and claims costs for minimum-premium or other “deductible” type insurance plans.
- Workers’ comp medical costs will be about $33 billion this year.
- That’s about 1.25% of total US medical spend.
- Medical costs account for about 60% of claims expense, with indemnity expense accounting for the remainder. (adding administrative costs to claim costs gets you close to total WC premium and equivalents)
- Claim frequency has been dropping by about 2-3% per year for more than two decades. That will almost certainly continue.
- Drug costs will account for around 15-17% of that spend, with physical medicine in the same ballpark.
- Most states have some sort of medical fee schedule (FS) in place, however there’s MUCH variation among and between the states. Some only have provider FS, others have provider, drug, facility, DME and other services covered by fee schedules.
- Almost all provider fee schedules are based on Medicare. However, few states directly link their FS to Medicare, so when Medicare’s FS changes, it may – or more likely may not – change that state’s reimbursement.
There’s a lot more here; if you are looking for more information, try the search box on this page – it’s up there to the right. With about 3000 posts on MCM, chances are pretty good there’s some discussion of pretty much every comp-related topic.
btw, good sources are:
NASI.org – see the workers compensation tab
WCRInet.org – everything workers’ comp
CWCI.org – California-specific
NCCI.com – their Annual State of the Line is really good.