BWC Continues to Trim Rising Health Care Costs

The Ohio Bureau of Workers’ Compensation (BWC) announced recently paid medical costs for workers’ compensation claims were 6.1 percent, or more than $27 million, lower than expected medical costs for the first half of fiscal year 2005. The reduced costs continue a positive trend by BWC and other Ohio stakeholders to implement containment measures designed to control skyrocketing medical costs.

From July 1, 2004 through Dec. 31, 2004, the Bureau paid nearly $428 million in medical costs, which is more than $27 million less than expected. This real savings occurred despite medical inflation rising 4.4 percent over the past year.

“Ohio’s business climate benefits when workers’ compensation costs remain low.” Governor Bob Taft said. “The bureau has worked hard to control medical costs while maintaining excellent quality care to Ohio’s injured workers. I am pleased to see that their efforts have been successful.”

BWC Administrator/CEO James Conrad touted the news as a continued success for Ohio’s workers’ comp system.

“We’re continuing to show progress in our efforts to contain medical costs while maintaining high-quality benefits for Ohio’s injured workers,” Conrad said. “Though there’s more work to do, we’re confident BWC and its Ohio stakeholders have put together a successful long-term plan that will continue to lead to greater cost efficiency.”

The expected payments are prepared by an outside actuarial firm using the payment patterns, trends, and development factors for the past five years. The firm projected payments of $456 million for the first half of fiscal year 2005.

The positive second quarter numbers reportedly continue a positive trend for BWC.

In fiscal year 2004, paid medical costs for workers’ comp claims were 8.5 percent, or $80 million, lower than expected costs for fiscal year 2004. Despite medical inflation increasing by 4.4 percent, BWC’s health care costs for all Ohio employers decreased from $858 million in fiscal year 2003 to $854 million in fiscal year 2004.

The commitment to reducing medical costs began in January 2003 when BWC, managed care organizations (MCOs), and stakeholders such as the AFL-CIO, NFIB, the Ohio Academy of Trial Lawyers, and the Ohio Hospital Association, hosted a Healthcare Symposium. From the symposium, several workgroups began to look at opportunities to reduce medical costs without affecting injured worker benefits.

Overall, the cost of workers’ comp in Ohio has reportedly been reduced dramatically.

Premiums remain an average of 32 percent lower since 1994. The average company that paid $10,000 in premiums in 1994 now pays only $6,776. In addition, more than $10 billion in dividends have been returned to companies in the form of credits or rebates during that time.