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May
12

Correction – Are work comp medical costs really dropping?

Last week’s announcement at NCCI AIS that medical costs for lost time claims dropped for the first time ever was a shocker. Talks with experts and industry pros after Kathy Antonello’s talk led to much head scratching and wondering.

The likeliest contributor is…California.

My mistake – California is NOT an NCCI state.  I was under the mistaken impression that, while CA is not an NCCI state, CA does share data with NCCI and therefore was included in the data used for this research.

Today’s WorkCompCentral opened with the news that California’s work comp rates are dropping 5%, driven primarily by reduced medical costs.  In turn, that decrease was due to favorable medical development on older claims – which means those older claims are turning out to be less expensive than originally forecast.

As California accounts for more than 20% of ALL workers’ comp premium, it should not be a surprise that the reforms that have stripped out a lot of the egregious profiteering and waste (e.g. double billing for surgical implants, reduced reimbursement for certain procedures, reductions in costs for physician-dispensed drugs) have actually lowered cost for older claims.

What’s not apparent is the undoubted improvement in patients’ medical outcomes. By reducing incentives for too many surgeries and drugs, patients aren’t getting as much unnecessary care that prolongs disability and has dangerous side effects.

Notably, if Los Angeles was removed from the data, results would be a LOT better. That county has most of the worst physicians treating work comp patients.

What does this mean for you?

Don’t write work comp in LA County.


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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