Frank Raneri, Paradigm Specialty Networks: 

What’s driving up medical costs in workers’ comp?
From ever-rising facility fees to the impact of tariffs on surgical implants, here are a few of the key cost drivers that networks must analyze and address:

  • Rising facility costs: With up to 40 cents of every workers’ comp medical dollar spent on facility-related expenses, high hospital fees directly shape the cost of work-related claims. One particularly alarming trend shows some hospitals charging workers’ comp payers significantly higher rates for outpatient surgeries when compared to other insurers. The Workers’ Compensation Research Institute (WCRI) estimates this can result in an additional $7,500 to $22,000 per procedure.
  • Growing provider consolidation: Consolidation has accelerated in recent years, with more than 470 hospital mergers between 2016 and 2024. Limited competition enables large health systems to exert significant influence over pricing, with aggressive network negotiations often resulting in only modest discounts.
  • Inconsistent fee schedules: WCRI estimates that states without cost controls or fee schedules see payments 61% to 134% higher than those in regulated states, and 69% to 217% higher when payments are limited to a percentage of hospital charges. And unlike group health insurance, where patients may opt for lower-cost facilities to limit out-of-pocket expenses, injured workers typically incur no direct costs and have limited influence over surgical site selection.
  • Cost drivers in surgical implants: From 2021 to 2024, costs for surgical implantable devices in the U.S. rose sharply...

Read the sponsored article in WorkCompWire here. 

The WCRI study that he cites is the Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 11th Edition.  Visit its page on our website for more information, including details on how to get a copy!