Hospital Costs Rising Even Though Claimants Avoiding Emergency Rooms

Auto casualty claimants are avoiding hospital emergency rooms during the COVID-19 pandemic but are generating increased hospital charges anyway, according to a new report by Mitchell, a San Diego-based claims administrator.

“Anecdotally, we have heard that some people have been avoiding going to the emergency room during the COVID-19 pandemic, and Mitchell’s data confirms those narratives,” Mitchell says in the Dec. 3 report.

The analysis of third-party claims says Mitchell saw a 32% reduction in total charges associated with emergency room visits from January through June 2020 compared to the same period in 2018 and 2019. At the same time, inpatient stays increased 157% in the same time frame.

The Mitchell report augments other research reports that have noted a sharp drop in auto claim frequency but an increase in claim severity. CCC Information Systems reported in a Dec. 5 Claims Snapshot that repairable appraisals were down 18.7% in November compared to the same month last year, continuing a trend that started with COVID-19 shutdowns in March.

CCC reported in October that bodily injury claim severity in the auto line increased 12% from 2017 to 2019. Fitch Ratings reported in August that although claims frequency for Allstate, GEICO and Progressive dropped by 27% to 30% in the first quarter of 2020, claim severity increased by 9% to 14% for those carriers.

Mitchell’s analysis noted that treatment patterns have changed during COVID-19. The percent of total charges associated with soft tissue injury claims declined by 23% in April, compared to 2018 and 2019 levels. Similar reductions were noted in May and June.

During the same period, the share of total charges associated with fracture and traumatic brain injury claims increased. Mitchell said that charges associated with fractures jumped made up about 25% of charges in April, compared to less than 10% for the same period in 2018 and 2019. Traumatic brain injury charges made up about 12% of bodily injury charges in April, compared to about 6% in April of 2018 and 2019.

Delays in treatment may be a cost driver. Mitchell said the time between the first treatment for an injury claim and the second increased by 111% in California from March until June. Similar, but less severe, increases in the time between treatments were noted in Florida and New York.

Third-party claims got treatment averaged about eight days between each date of service for the three states in early March. By the middle of June, that gap had increased to 14 days — a 63% average increase of the three states.

“So far, treatment gaps have mostly aligned with state-mandated COVID-19 regulations and closures,” the report says.

Mitchell recommends that carriers add workflow rules to control those negative trends.

“For example, a rule around treatment duration or gaps could automatically notify adjusters when an in-person treatment was billed at a time when a certain jurisdiction was under COVID-19 shelter-in-place orders,” the report says. “Utilizing a software solution that can be dynamically configured to identify these scenarios and alert adjusters to them, can be a very efficient way to ensure adjusters are always considering important treatment factors.”

Other research has shown that treatment delays can drive up the cost of medical care. A report by the California Workers’ Compensation Insurance Rating Bureau released in November found that claims with soft tissue injuries that had a month delay before receiving the first medical service had significantly higher indemnity and medical costs than similar claims without medical care delays. Soft tissue claims with delayed care were more likely to stay open longer, have a longer duration of temporary disability and involve permanent disability, WCRIB said.