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Sep
4

Work comp medical spend and other fun facts

In my ongoing effort to serve the public good, here are current facts and figures related to how many dollars are spent on medical care in worker’s comp. 

Total medical dollars

In 2013 workers comp medical spend totaled $31.5 billion.  Source – NASI’s Workers’ Compensation 2013 Report.  NASI is the definitive source for this data; their primary sources are NCCI for the 38 states where NCCI is the rating agency and state rating agencies/bureaus for the other 13.

Worker’s comp medical trend rate

NCCI’s Annual State of the Line presentation at the firm’s Annual Issues Symposium provides the earliest – and most complete – insight into medical inflation.  For 2014, initial indication was medical severity for lost time claims increased 4 percent.

A couple of caveats – this is for lost time claims only; while LT claims account for the vast majority of medical spend, medical only claims account for perhaps 15% of spend.  In addition, NCCI’s data does not include self-insureds; about a quarter of comp benefits are self-insured.

Pharmacy spend

Work comp pharmacy spend accounts for somewhere around $5.5 – $6 billion.

Sources

  • Internal HSA data from research projects (my consulting work)
  • NCCI – by their estimate drugs accounted for 18% of all medical expenses in 2011; note that this is based on total incurred cost, or for the layperson, their estimate of what the total including already-paid and future drug costs. Therefore this isn’t actual annual “spend”. And, the data comes from 2011 reports.  There’s a lot more to this, but suffice it to say the $ range above is solid.
  • note – some claimants are submitting their work comp scripts to their group health plans.  While this won’t affect “spend”, it does impact the addressable market.

There are a lot of other sub-categories out there – and just as much confusion about what services, codes, provider types, or locations of service belong in what buckets.

If you are attempting to categorize spend, make very sure you understand your sources’ definitions.  E.g., script count; how do you define a “script”?

  • Is it the prescriber’s prescription written out for a patient?  If so, understand that most “scripts” include 2+ drugs.
  • Is it each individual medication prescribed?  If so, understand that some “scripts” are for 3 days’ supply, others for 90.
  • Is it for a certain number of days’ supply?

Different stakeholders use different definitions – and not just for pharma.  How is “surgery” captured, and what is included?  CPT codes? Facility fees?  Associated office visits? Bills submitted by providers with a surgical specialty?

I could go on, but hopefully you get the (cloudy) picture by now.  If not, your bad.

What does this mean for you?

Work comp data is dirty, inconsistently categorized, and there are no single sources for all categories/spend types.

If you want to really understand the space, get granular, precisely understand definitions, and do NOT make any assumptions that other non-primary sources have got it right.  


Joe Paduda is the principal of Health Strategy Associates

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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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© Joe Paduda 2019. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

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