Medical Cost per Worker High in Wisconsin; Utilization Low

Higher medical costs per claim in Wisconsin are offset by much lower utilization of medical services in the state’s workers compensation system. As a result, medical payments per workers’ comp claim in Wisconsin were typical among 15 states for 2005/2008 claims, according to the Workers Compensation Research Institute’s (WCRI) study, CompScope Medical Benchmarks for Wisconsin 10th Edition.

Medical payments per claim in Wisconsin grew faster than the medical costs in other study states starting in 2003, according to Cambridge, Mass.-based WCRI. Over the five-year period 2002/2003 to 2007/2008, medical costs per claim in Wisconsin grew 64 percent, compared to 40-50 percent in most other study states.

However, the growth in medical costs per claim in Wisconsin slowed to 7 percent in 2007/2008 from 11 and 10 percent in the prior two years. The slowdown was due to changes in utilization of medical services.

The study reported that in 2007/2008, for the first time since 2002/2003, nonhospital utilization changed little (2 percent), while hospital outpatient services per claim decreased 7 percent.

A key reason for the rapid growth in medical costs per claim in Wisconsin was that prices paid to nonhospital providers and payments per service for hospital outpatient services rose much faster in Wisconsin than in other study states.

For example, prices paid to nonhospital providers grew 28 percent from 2002/2003 to 2007/2008, the fastest rate of 25 study states.

Hospital outpatient payments per service showed a similar pattern – a 43 percent growth from 2002/2003 to 2007/2008, compared to a 25 to 32 percent increase in most of the study states.

Prices paid for many medical services in Wisconsin were substantially higher than prices paid in other study states. Wisconsin prices paid to nonhospital providers doubled the median of the 25 study states in calendar year 2007.

In addition, payments per service for services billed in a hospital outpatient setting were 13 percent higher than the median of 15 states in 2007/2008.

However, higher prices paid to nonhospital providers and payments per service for hospital outpatient services in Wisconsin were offset by lower utilization of medical services.

Historically, Wisconsin had among the lowest nonhospital utilization of the study states. In contrast to the overall medical payments per claim that shifted from typical to higher of the study states based on claims with 12 months of experience for 2007/2008 claims, nonhospital utilization was among the lowest of the study states since 2002/2003.

The main reason for the lower utilization of medical services was that nonhospital providers in Wisconsin treated injured workers with fewer visits per claim, on average 15 visits per claim compared to 20 in the typical study state.

Another contributing factor was that fewer claims involved physical medicine and neurological testing (nerve conduction) in Wisconsin when these services were billed by nonhospital providers than in the typical study state.

On the other hand, the study found that frequency of claims involving physical medicine and major radiology (MRIs) provided in a hospital outpatient setting was higher in Wisconsin in 2007/2008.

During the analysis period 2002 to 2007, nonhospital utilization grew much faster in Wisconsin than in most of the study states. However, the current trend in nonhospital utilization should be viewed in the light of lower utilization of medical services in Wisconsin compared to the study states.

The number of services per claim delivered by hospital outpatient providers in Wisconsin grew little (4 percent) from 2002 to 2007.

Source: Workers Compensation Research Institute