WCRI Medical Price Index for Workers' Compensation, Fourth Edition (MPI-WC)

Executive Summary

Increasing prices for medical treatment for workers’ compensation injuries have been a focus of public policymakers and system stakeholders. To help decision makers evaluate the impact of price-focused policy initiations and set priorities about system improvement, this study creates an index for prices paid for professional services (i.e., nonhospital, nonfacility services) that are most commonly used in workers’ compensation. This report includes 25 large states that represent nearly 80 percent of the workers’ compensation benefits paid in the U.S. and covers a ten-year period from 2002 to 2011.¹ This study provides policymakers and stakeholders with a useful tool for monitoring changes in prices over time within each state as well as meaningful comparisons of prices paid across study states.

The major findings from this study are as follows:

• States with no fee schedule regulations on reimbursement for professional services had higher prices paid and more rapid price growth over time compared with states with fee schedules.

  • Six states included in this study had no fee schedules as of 2011, namely Indiana, Iowa, Missouri, New Jersey, Virginia, and Wisconsin (Figure 1). The prices paid for professional services in Virginia, Missouri, New Jersey, Iowa, and Indiana were 27 to 51 percent higher than the median of the study states with fee schedules. The prices paid in Wisconsin were the highest of the 25 study states, more than twice the median of the study states with fee schedules and nearly 50 percent higher than the median of the study states with no fee schedules.

• States with no fee schedules also experienced more rapid growth in prices paid over the study period than states with fee schedules (Figure 2). The prices in Missouri, Indiana, Iowa, Virginia, and New Jersey increased 32 to 38 percent from 2002 to 2011, compared with the median growth rate of 14 percent for the study states with fee schedules. The prices in Wisconsin experienced the most rapid growth among the 25 states. Over the ten years covered in this study, the prices in Wisconsin increased 50 percent—not only faster than the typical growth in states with fee schedules, but also more rapid than the growth in the study states with no fee schedules.

• Fee schedule changes were an important factor driving changes in actual prices paid.

  • In states that did not have changes in their fee schedules for a while, prices paid remained fairly stable. For example, the fee schedule rates in North Carolina did not have any material change during the study period. The prices paid in that state remained stable from 2002 to 2011, with an overall increase of less than 3 percent (Figure A.17 in the report). In New York, the fee schedule rates for most types of services covered in this study did not change from 2002 to 2010, and the prices paid in the state remained stable during that period (Figure A.19 in the report).²

  • In states with fee schedule reforms, changes in the actual prices paid reflected the impact of the policy changes. For example, Texas underwent several fee schedule changes during the study period. Figure 3 shows the trends in prices paid and the changes in fee schedule rates for two types of services, evaluation and management (office visits) and surgeries. In August 2003, the fee schedule rates for surgery decreased nearly 50 percent (for services included in the marketbasket); meanwhile, the fee schedule rates for office visits increased about 40 percent. The prices paid for surgeries decreased about 50 percent and the prices paid for office visits grew about 40 percent from 2002 to 2004, tracking the fee schedule changes closely. In March 2008, Texas increased the fee schedule rates for most professional services, including an especially large increase for surgeries (about 40 percent). Correspondingly, the prices paid for surgeries increased nearly 40 percent from 2007 to 2009. The prices paid for office visits increased about 20 percent from 2007 to 2010, following the continuous increases in the fee schedule rates.³ In 2011, the fee schedule rates for both types of services increased again because of Medicare updates, and the growth in prices paid tracked fee schedule increases closely¾a nearly 16 percent increase in prices paid for office visits and a 17 percent increase for surgeries.

• In states with certain types of services not covered by their fee schedules, often the growth in prices paid for those services was more rapid than for the services covered by the fee schedules.

  • In Louisiana, the prices paid for most types of medical services remained fairly stable from 2002 to 2011, as the fee schedule rates did not change during the period. However, the prices paid for pain management injections grew rapidly, about 60 percent (Figure D.10 in the report). This was because many pain management injections were not regulated by fee schedule rates; instead they were determined under a by report method, which was based on factors such as payors’ specific prevailing charges data, documentation submitted by medical providers, etc.

  • In Minnesota, before 2010, many commonly used pain management injections were not covered by the fee schedule; the prices paid for these services grew about 50 percent from 2002 to 2009, much faster than the price growth in other types of services under the fee schedule (Figure D.14 in the report). In October 2010, Minnesota updated the fee schedule and covered the pain management injections that were not regulated before. This led to a decrease of nearly 40 percent in the prices paid for pain management injections from 2009 to 2011.