Insight, analysis & opinion from Joe Paduda

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Medical costs in auto claims

Medical costs for auto claims are rapidly increasing in at least three states studied by The Insurance Research Council. The highest growth was 122% in Colorado, followed by 60% in NY and 37% in FL over the 1997-2002 period. MI costs stayed flat.
Why? What’s different about these states?
–PIP claimants in the three “higher inflation” states (CO NY FL) were more than twice as likely to see a chiropractor than the Michiganders
–and when they did see a chiro, the average total charge was three times higher in CO and FL than in MI and NY (roughly $4500 v $1500)
–CO and NY claimants were twice as likely to see a PT as MI and FL claimants
One possible reason for these discrepancies is the limits on bodily injury claims – all the states EXCEPT MI have monetary thresholds that have to be exceeded before a suit can be filed. MI’s standard is verbal – “injuries that lead to serious permanent disfigurement, serious impairment of bodily function, or death.”
So, where’s the cause and effect?
It is possible (cynics say even likely) that injured parties in the dollar threshold states pile up the costs to exceed the threshold, which allows them to sue to get even more money.

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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