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What’s really going on with workers’ comp medical…

Medical inflation in workers’ comp is pretty much flat – as it has been for several years.  Why?

Four reasons.

  1. Claim counts continue to remain pretty flat with lost time claim frequency down yet again.
  2. Drug costs have plummeted over the last decade, and now account for about $2.2 to $2.5 billion or 7% – 8% of total medical spend…down from around $5 billion.
  3. Costs for professional services – docs, PTs/Ots/chiro – remain pretty low. WCRI’s latest publication (available for now cost at the link) shows very little inflation across 36 states. Kudos to WCRI for tracking this up through 2023 – that’s really fresh data.
  4. Facility costs are increasing, but have yet to reach the point where payers actually do anything material about cost control.
    A better way to say this is payers are lazy and complacent, waiting for the crisis to hit before actually doing anything.

What does this mean for you?

Focus on facilities. 

2 thoughts on “What’s really going on with workers’ comp medical…”

  1. Great post Joe. You distilled the issues down well. Workers comp may be a small share of the overall facility spend, but payers don’t have to pay their excessive charges.

  2. What caused prescription drug costs to plummet? Better controls on physician dispensing? In my state where physician dispensing is still rampant, drug costs are 15-25% of medical.

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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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