Mass. Workers’ Comp Medical Costs Rise But Still Remain Among Lowest in WCRI Study

The average medical payment per claim for the care of injured workers in Massachusetts rose 13 percent in the most recent period studied, according to a new report by the Cambridge-based Workers Compensation Research Institute (WCRI).

In spite of the accelerating costs, medical payments per claim in Massachusetts remained the lowest of the 12 important states analyzed in the study. An earlier WCRI study found that Massachusetts workers report similar or better outcomes than states that have higher medical costs.

The lower medical payment per claim – 51 percent less than the median of the 12 states – was due to significantly lower payments per visit, likely the result of lower average prices related to the lowest-in-the-nation medical fee schedule, the study said.

The number of visits per claim to physicians, chiropractors and physical and occupational therapists in Massachusetts was somewhat lower than the 12 state median, but the number of visits per claim was significantly higher than the median (40 percent) for hospitals.

For example, the study of 12 states, which represent more than 50 percent of the benefits paid in the nation’s workers’ compensation systems, found that in Massachusetts medical payments per claim were 34 percent to 45 percent lower than typical for non-hospital providers such as physicians, chiropractors and physical and occupational therapists and 71 percent lower for hospitals, primarily because of lower average prices and fewer services per visit.

The data in the reference work, The Anatomy of Workers’ Compensation Medical Costs and Utilization: Trends and Interstate Comparisons, 4th Edition, identify where workers’ compensation medical dollars go and how costs and utilization differ across 12 large states. In addition to Massachusetts, the states analyzed in the WCRI study were California, Connecticut, Florida, Illinois, Indiana, Louisiana, North Carolina, Pennsylvania, Tennessee, Texas and Wisconsin.

“This new study confirms that while Massachusetts was the lowest cost state when it came to payments per claim for medical services to injured workers, these costs were accelerating at a double-digit rate,” said Dr. Richard Victor, executive director of the independent, not-for-profit research organization.

The study found that the average medical cost per claim in Massachusetts ($3,333) was more than 50 percent lower than that in the median state studied ($6,736).

The study said that average prices were substantially lower for all nonhospital services except for office visits and major surgery, for which prices were near the median in Massachusetts despite having a fee schedule that was the lowest among the study states.

For major surgeries, the study found that they were paid at higher prices than the median of the 12 states and higher than those expected from the Massachusetts fee schedule. Somewhat surprisingly, the majority of office visits were billed under a unique Massachusetts code that yields a higher price compared to other study states.

The study also pointed out that hospitals in the state may have provided services that patients in other states more often received from physicians. Hospitals in Massachusetts were involved in 14 percent more claims compared with the 12 state median, generating 40 percent more visits per claim.

Non-hospital providers were involved in fewer claims for all major services, particularly physical medicine (chiropractic care and occupational and physical therapy), surgery and radiology.

“This likely indicates that Massachusetts hospitals billed or treated for services for a broader group of patients,” said Victor.

Increased payments per claim to physicians during 2000 to 2001 were largely due to average price increases of generally five percent and a shift in the mix of certain services toward higher priced procedures. In addition, for physical medicine providers there was an increase in the number of visits per claim as well as an increase in the average payment per visit.

Increases in payments per claim to hospitals generally were limited to physical medicine and major radiology, such as CAT scans and MRIs. However, the number of hospital visits per claim and services per visit increased substantially.