Medical Utilization In Workers Comp – California
California Medical Utilization for Workers Comp hit the radar screen this week. I often post concerning the Workers Compensation situation in California. I do this to specifically point out what the future will look like for your company’s jurisdictions. California seems to be the bellwether for upcoming Workers Comp trends. What happens there will be coming to a jurisdiction near you very soon.
Approximately five years ago, I consulted with an investment company to perform a study on Workers Comp costs associated with physical therapy in various states. The one astounding statistic that I discovered was that the reduction in any state’s fee schedule for unit costs (costs per visit) was offset by an almost directly proportional increase in visits.
In other words, if the fee schedule for each visit by an injured employee was decreased by 25%, the number of treatment visits increased by 25%. I am not inferring that any medical provider was overcharging for their services. I have performed similar studies since then for various companies that basically drew the same conclusion.
California’s insurance commissioner basically said the same thing in a memo approving an increase in Workers Comp rates of almost 9%. His exact quote was:
The primary increase in California’s Workers Compensation costs is with medical costs. Here, it is important to explain that medical costs are not only per unit medical costs, but medical utilization and cost containment. Per unit medical costs do not seem to be increasing much, but medical utilization appears to be the main cost driver of overall costs increases.
Commissioner Jones then goes on to say the WCIRB will be looking into the overall cost drivers. I think they already know the reason for the spiraling medical costs.
There may also be other reasons for the rate increases in CA. I will cover those in the next post.
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