Understanding the flow of payments—to whom and for what—is essential for targeting cost drivers, evaluating innovations in medical management, and challenging conventional wisdom. The benchmarks in this reference book help identify where changes in treatment patterns may be occurring, detect areas where medical
payments per claim or utilization may be atypical compared with other study states
for a set of similar claims, or discover areas where, because of underutilization of medical services, there may be concerns about restrictions on access to care. The reference book addresses key questions:

• How do medical prices, payments and utilization per claim differ across states for similar injuries and workers?

• How have medical prices, payments and utilization per claim changed over time within each state, and what are the major drivers of those changes?

Illustrative findings:

• Past WCRI studies have shown that the Wisconsin workers’ compensation system provides one of the best value propositions for workers and their employers. Workers were paid more promptly and achieved many better-than-average outcomes (recovery of health, return to work, and access to and satisfaction with care), and employers paid lower than average costs per claim. However, the average medical costs per claim continue to increase rapidly in Wisconsin for both hospital and nonhospital providers, driven by rising prices paid.

• Prior to the implementation of the 2005 fee schedules for nonhospital and hospital care, Tennessee had higher prices paid for both nonhospital and hospital outpatient services compared to other study states, and prices paid increased steadily in the years leading up to the fee schedule implementation. The nonfacility provider fee schedule in Tennessee is among the highest in the nation but may still lower medical costs for most service groups since the prices paid prior to the fee schedule were typically higher than the fee schedule rates.

• Massachusetts had the lowest medical payments per claim among the 14 study states. The lower medical payments were due to both lower prices paid for nonsurgical services as well as lower utilization, in particular fewer physician visits per claim. Hospital inpatient payments per claim were close to typical of the study states, while hospital outpatient payments per claim were substantially lower.

• Medical payments per claim in North Carolina were typical of the 14 study states, but that result masked offsetting factors—higher payments per claim to hospital providers and lower payments per claim to nonhospital providers compared to other study states. Payments per claim to hospital providers were 35 percent higher than typical, the result of higher hospital outpatient prices paid for similar services, higher inpatient payments per inpatient episode, and a higher surgery rate (meaning a different mix of care that leads to a more costly mix of services than in a state with lower surgery rates and more primary care).

This report examines fourteen states (Arkansas, California, Florida, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, North Carolina, Pennsylvania, Tennessee, Texas, and Wisconsin), providing detailed measures of medical prices, payments and utilization by provider type and service group. There are individual state reports for all states except Arkansas, Indiana, and Texas.

The Anatomy of Workers’ Compensation Medical Costs and Utilization, 7th Edition. Stacey M. Eccleston, Petia Petrova, and Xiaoping Zhao. January 2009. WC-08-16—WC-08-26.