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The average cost per claim for medical care of injured workers under the workers’ compensation system is lowest in Massachusetts among the eight large states examined in a new study by the Workers Compensation Research Institute (WCRI) in Cambridge, MA. The lower cost results in large part from a lower medical utilization rate — numbers of visits and services provided to injured workers by physicians, chiropractors, physical therapists, and hospitals.
The study of eight states, which represent 40% of the benefits paid in the nation’s workers’ compensation systems, found these results for Massachusetts:
• Medical costs are the lowest of the eight states primarily because fewer services are being delivered.
• With scheduled fees among the lowest in the nation, payments per service are generally lower in most service groups with the exception of several types of services billed by hospitals, in particular, facility charges and emergency services.
• Given the relatively low fee schedule, the fact that the payment per service for many MD/DO (doctor of osteopathy) services is similar to the median of the states analyzed is surprising. It is likely that MDs/DOs render or bill for a mix of higher-fee services than is found in other states in the study.
• Hospitals are involved in more claims than average and when involved, patients have more visits than in other states in the report.
• Physical therapy is involved in far fewer claims than is typical of the states in the study and when involved, fewer services are provided.
The data in the reference work, The Anatomy of Workers’ Compensation Medical Costs and Utilization, identify where workers’ compensation medical dollars go and how costs and utilization differ across eight states: California, Connecticut, Florida, Georgia, Massachusetts, Minnesota, Pennsylvania, and Texas.
"This reference work is designed to improve the decision-making process of public officials and business people seeking to target cost drivers and benchmark system performance in Massachusetts and other states," says Richard Victor, MD, executive director of the independent, not-for-profit research organization. "Policy-makers in Massachusetts may want to ask whether its relatively low rates of utilization for many services indicate that access to care is limited because of its low fee schedule."
The study reported that Massachusetts had the lowest average medical claim cost ($3,028) among the eight states studied. This is clearly a function of lower utilization in terms of fewer visits per claim, nearly 10% less than the median, and fewer services per visit, nearly 38% less than the median of the eight states.
The study pointed out that Massachusetts has among the lowest scheduled fees for medical services of any state in the nation. As a result, it is not surprising that the average payment per service to chiropractors and hospital providers is below the equivalent in the median of the states analyzed. What is surprising, according to the study, is that the average payment per service to MDs and DOs is similar to the median of the eight states.
The study found that hospitals in Massachusetts are involved in 22% more claims than is typical of the states surveyed. Moreover, when hospitals are involved, the number of visits per claim is 34% higher than the median of the eight states. However, the number of services provided per visit is more than one-half that of the median state.
The study noted that the average cost per claim for all hospital services — medical, surgical, and diagnostic — is lower than the eight-state median value. This is particularly true for minor radiology procedures, minor surgery, and office visits. In each case, lower cost is a function of fewer visits combined with lower payments per service.
On the other hand, the average payment per service for physical medicine and supplies and equipment is near the eight-state median level. The study also reported that hospitals in Massachusetts are involved in more claims requiring emergency, physical medicine, and minor radiology than are hospitals in the median state in the study. The average payment per service for emergency treatment and both inpatient and outpatient hospital services is significantly higher than average for the eight states, according to the study.
"That hospital payments are higher than average may have to do with the fact that the hospital fee schedule in Massachusetts is based on discounted charges that are somewhat higher than the schedule that sets physician fees," Victor says.
WCRI is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, health care, and disability issues. Its members include employers, insurers, insurance regulators, and state regulatory agencies in the United States, Canada, Australia, and New Zealand, as well as several state labor organizations.
[For more information or to purchase the study ($95 for WCRI members, government agencies, and nonprofit organizations; $495 for all others) contact Jill Lawson at email@example.com or call WCRI at (617) 661-9274.]