Virginia’s Low Workers’ Comp Costs Affected by Rising Medical Prices

Although overall workers’ compensation costs to employers in Virginia are lower than most states, costs for medical treatment for injured workers are higher and rising, according to a new study, Medical Benchmarks for Virginia, CompScope™ 12th Edition, from the Workers Compensation Research Institute (WCRI).

The 16-state study reported that medical payments per workers’ compensation claim in Virginia were 17 percent higher than the median of the study states and grew at an average of 8 percent per year from 2004 to 2009.

Higher medical prices were the driving force behind the higher medical costs and rate of increases. For example, the prices of nonhospital services in Virginia were 22 percent higher than typical and the average price for hospital outpatient services was 27 percent higher.

While the utilization of medical services was typical in Virginia, there were two exceptions: inpatient care was 14 percent more costly and somewhat more frequent, and physical medicine was utilized more frequently, with 11 percent more visits per claim and 12 percent more services provided per visit.

The study pointed out that states like Virginia, which have no fee schedule, tend to have higher prices and faster rates of price growth than states with fee schedules. While fee schedules may restrain medical prices, WCRI noted that they can stimulate changes in the billing or practice patterns of medical providers that might offset some or all of the cost savings from restrained prices.

Other studies have found that the overall workers’ compensation costs to employers in Virginia are lower than typical, in part because of lower claim frequency.

Source: Workers Compensation Research Institute