Workers Comp medical reserves are the most complicated of the three reserves to estimate. Can you imagine trying to predict all of the medical treatment that will occur over the lifetime of a file? There are as many medical treatments as there are CPT codes. CPT codes number into the thousands.
If we look at CPT coding, there are six kinds of medical treatment
1. Evaluation and Management
5. Pathology and Laboratory
There are other considerations that have to be taken into account that are not coded such as mileage.
Most of the Workers Comp injuries are orthopaedic in nature. It may be a good idea to review the orthopaedic CPT codes and their costs for each of the states where you company operates in most of the time.
The fee schedules for each state will likely reduce the full value of most medical procedures. Another area in the medical reserves that may help reduce reserves is if the insurance carrier or TPA has their medical networks that allow for a discount for medical services. It is advisable that you ask your claims adjuster if the fee schedules and Workers Compensation treatment networks were taken into account when the reserves were set for the claim.
Medical payments on claims are approaching 60% of the claim values nationwide. In some states, medical payouts are more than 60% of a claim’s value. There are many reasons for the increase. Workers Comp indemnity payments are based on wages. Medical inflation has increased much more quickly than wages.
I wish that I could be more specific on medical reserving. There are so many medical treatments that I am only able to cover the surface of medical reserving. The next post will cover the Expense reserves and a few areas that have resulted in confusion over what is a Medical or Expense reserve.
Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com.