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Illinois’ workers comp costs – drivers and solutions

My post on Accident Fund’s ground-breaking analytical work generated a good bit of discussion, some public and much not, some appropriate and some a bit confused.

To clarify, allow me to address a few issues.

1.  As I said yesterday, Illinois has the highest medical costs in workers comp, driven in large part by the second highest fee schedule. WCRI’s CompScope report (12th Ed., ppg 10-11) provides an excellent comparison of medical costs among the study states; IL’s medical costs are – by far – the highest for both lost time and medical only claims (as defined by WCRI).

2.  I did NOT say IL’s workers comp costs were the highest – the state is fourth in that category.  Some readers evidently conflated “medical” with “workers’ comp”; medical is a component of workers comp costs, along with indemnity and administrative expense (ULAE and ALAE).

3.  There are several contributors to IL’s medical cost problem.  The highest outpatient facility costs, an easily-gamed fee schedule, no real employer direction, and high – I would suggest far too high – utilization of physical medicine at prices much higher than those in surrounding states are among the major drivers.  Internal HSA data from several large payers indicates the average number of PT visits for work comp claims in IL was above 15 in 2010; if anyone has more current data I’d love to see it.  This was substantially higher than states surrounding Illinois.

So, what’s to be done?

Well, start with identifying the best providers – defined as those who adhere to evidence-based medical guidelines and deliver the best outcomes: shortest disability duration, lowest medical and indemnity expense, sustained return to work.  Note that patient satisfaction is not automatically included.  Unfortunately some WC claimants don’t want to return to work when they’re physically ready to do so, and therefore don’t like providers who try to get them back quickly.  That’s not to say patient satisfaction should not be factored in, just that one has to be careful when doing so.  Much of what I’ve seen re patient satisfaction doesn’t adequately address this potentially-confounding issue.

Next, develop strong relationships with those selected providers – pay them fairly and quickly, don’t bother them with needless UR requirements, help them schedule ancillary services when and where necessary, and let them know you’ll be monitoring their performance on an on-going basis.

Direct injured workers to those good providers – this can be done in every state except New York. There’s an industry-wide misunderstanding of “direction”; it is legal in every state (but NY), however in some states the claimant can decide where they want to go, while in others the employer can require an injured worker go to a specific provider (or choose from among selected providers in states such as GA and PA).

Finally, monitor and measure outcomes, provide that data to providers, and continuously tweak your network.

Which leads us back to the Accident Fund’s CareAnalytics(tm) approach.  Notably, the analysis of providers did not factor in network participation or discount arrangements, rather it focused on outcomes.  As Jeff White reported in his public presentation at WCI in Orlando, desired outcomes include:

  • adherence to evidence-based medical guidelines
  • total claims cost
  • claim duration
  • medical cost
  • addiction and dependency prevention

Finally, I’d echo what George Anstadt MD, former president of ACOEM, said yesterday in a comment on MCM: “glad to see insurers looking at good outcomes and recognizing that Occupational Medicine specialists are a great value, as a group, and that within that group are an experienced and ethical sub-group who save insurers even more money and get even better health outcomes for workers and their employers.”

3 thoughts on “Illinois’ workers comp costs – drivers and solutions”

  1. I don’t understand why the states need fee schedules at all — IMHO this is not good for WC. I believe it causes many of the best docs to turn away WC patients whenever the fee schedule is too low – they don’t need the low paying fee schedule business and their professionalism will not allow them to game the system with volume or unnecessary visits. For cost containment, regulators should focus on RTW (i.e. evidence based results) numbers: if the carriers and TPAs were accountable for returning IWs to gainful employment, the medical cost containment piece would take care of itself.

    1. Joe – thanks for the comment and observation. I’d just note that WCRI’s studies have demonstrated that medical costs are lower for states with effective fee schedules – in general. That said, my home state of Connecticut has one of the highest fee schedules but medical costs that are about average. A good friend who happens to be an orthopedic surgeon is only too happy to handle workers comp, recognizing that the additional workload and challenges inherent in WC are balanced against the solid compensation.

  2. Joe I can’t argue with you about anything here “except” the ability to direct care. we are regional and we can direct much better in one state due to another based on how the courts “handle” medical disagreements between opposing doctors. In the past LA courts have favored the employee in the large majority of cases. The main goal of guideline implementation was to not only speed up treatment but get medical decisions out of the courts. That appears to be working so far but the plaintiff bar isn’t happy and continues to try to erode the changes. Mississippi on the other hand does allow more direction of care even though they are an employee choice state based on the balance the court allows. I am not a glass half empty guy but people in the trenches will tell you direction of care is toughter than it appears.

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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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