PENNSYLVANIA WORKERS’ COMPENSATION MEDICAL COSTS PER CLAIM TYPICAL OF OTHER STUDY STATES, BUT RISING,
NEW WCRI STUDY REPORTS

CAMBRIDGE, MA, July 28, 2009   –   Medical costs per claim for workers’ compensation claims in Pennsylvania were typical compared with other states, but rising, a new study said.

The Cambridge, Mass.-based Workers Compensation Research Institute (WCRI) reported that typical medical costs per claim in 2006/2007 were a result of lower costs per claim for services billed by physicians and hospitals and higher costs per claim for services billed by chiropractors and physical therapists compared to the median state in the 14-state study.

The study, CompScope™ Medical Benchmarks for Pennsylvania, 9th Edition, reported that lower physician and hospital costs per claim were driven by lower to typical prices paid to physicians and lower payments per service for hospital outpatient services.

Higher costs per claim for services billed by chiropractors and physical/occupational therapists, on the other hand, stemmed from higher utilization of these services due to more visits per claim offset by typical prices paid.

Payments for services by chiropractors and physical occupational/therapists in Pennsylvania accounted for 13 percent of total medical dollars paid for claims with more than seven days of lost time in 2006/2007, according to the study.

The study observed that in Pennsylvania more claims received clinic/evaluation and management (office visits), physical therapy (modalities and procedures), and minor radiology (X-rays) services in a hospital outpatient setting than in other study states. This might suggest that more routine procedures were delivered in a hospital outpatient setting in Pennsylvania than were provided by nonhospital providers in other states.

In addition, more frequent use of hospital outpatient services may mean that physicians and physical/occupational therapists might have billed more often for their services under hospital ownership in Pennsylvania than in the typical state, the study said.

Although more care was delivered in a hospital outpatient setting, the average medical cost per claim in Pennsylvania was substantially lower than other study states.

For example, medical costs per claim for operating/treatment/recovery room services were 41 percent lower than the typical state, major radiology services (MRIs and CT scans) were 20 percent lower, and minor radiology services (X rays) were 18 percent lower. Overall lower payments per claim were primarily driven by lower payments per service; services per claim were generally typical of the study states.

Medical costs per claim in Pennsylvania continued to grow in 2006/2007 by 11 percent. The growth for nonhospital providers in 2006/2007 (eight percent) was driven mainly by an increase in utilization for services billed by physicians and chiropractors.

On the other hand, hospital outpatient payments per claim were not a significant cost driver in the latest year.

The study noted that in 2006/2007, the average hospital inpatient payment per episode increased significantly although the median or typical payment per episode showed little change. The average payment per episode is very sensitive to the number of episodes and length of stay. Hence, the median or typical payment per episode is a more meaningful measure to observe changes in the trend.

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, health care and disability issues. Its members include employers, insurers, and governmental entities, insurance regulators and state administrative agencies, as well as several state labor organizations.