Workers’ Comp Medical Costs Per Claim on the Rise in Wisconsin

Medical costs per workers’ compensation claim in Wisconsin shifted from being lower than other study states to being typical, according to a new study by the Workers’ Compensation Research Institute (WCRI).

The study, CompScope Medical Benchmarks for Wisconsin, 9th Edition, found that for 2001 injuries with experience through the first quarter of 2004, employers in Wisconsin paid lower costs per claim than the median of 14 states in the WCRI study. By 2004/2007 however, employers in Wisconsin paid typical medical costs per claim compared to the other 13 study states.

WCRI attributed the shift in the average medical costs per claim in Wisconsin to a number of factors: faster growth in the medical costs per claim and among the highest nonhospital prices paid and hospital outpatient payments per service in Wisconsin compared to most of the study states.

Medical costs per claim rose more rapidly in Wisconsin than in the other study states. For a period of five years (2001/2002 to 2006/2007) medical costs per claim grew 70 percent in Wisconsin while costs per claim in the other study states rose between 47 and 54 percent.

The main cost drivers in Wisconsin were rapid growth in prices paid for nonhospital services and payments per service for hospital outpatient services, according to the study.

The study pointed out that employers in Wisconsin paid among the highest prices for many procedures performed in a nonhospital setting.

For example, the price paid for the most frequently-billed nonhospital established patient office visit was $95 compared to $62 in the median state in the study; the price for the most common arthroscopic knee surgery was $3,035 in Wisconsin compared to $1,336 in the typical state; the price for an MRI was $1,997 in Wisconsin compared to $805 in the median state.

The study reported that prices paid in Wisconsin were not only substantially higher than the prices in the typical study state, but they were also higher compared to the prices paid in Iowa and Indiana – two study states that currently do not regulate prices. In general, higher nonhospital prices paid in Wisconsin were offset by lower utilization of medical services. Similar conclusions apply to hospital outpatient services.

Despite these higher prices paid and payments per service for services delivered in a hospital outpatient setting, injured workers in Wisconsin reported faster recovery and return to work along with better access and satisfaction with care, said the study.

WCRI observed that it might be reasonable for an employer to pay higher costs if workers in Wisconsin have improved outcomes over time. WCRI is currently conducting a survey of injured workers in Wisconsin to address this question.

The study also reported that in 2006/2007, medical costs per claim in Wisconsin increased by 11 percent, driven by growth in costs per claim to both nonhospital and hospital providers.

Medical cost per claim for nonhospital services grew as a result of a 5 percent increase in prices paid and a 5 percent increase in utilization of medical services.

Hospital outpatient cost per claim grew 10 percent in 2006/2007, driven by a 6 percent increase in the average payment per service and 4 percent growth in the number of services per claim. These growth rates were similar to the rates in previous years.

Source: Workers Compensation Research Institute, www.wcrinet.org