Medical Cost – Indiana Rate Increase of 5%
The Indiana rate increase in medical cost should come as no surprise. Yesterday, I posted on the increase in Indiana’s advisory rates of 5%. I had actually written the article under the impression that the lack of a fee schedule was to blame for the increase.
I was right as NCCI has said the increase was due to a striking increase in medical costs in Indiana. The adoption of a fee schedule would eventually turn the tide on the medical costs in the state. As I have posted often, any Workers Comp changes will affect a state gradually over the next four years. There are no quick overnight fixes in Workers Comp.
The changeover would not take that long nor be that complicated as they could use a good fee schedule such as Tennessee’s and just add in a factor due to different economies of scale in each state.
One of their neighboring states, Illinois, had installed a fee schedule a few years ago. The last recommendation from NCCI that was accepted by Illinois was a 3.8% cut in rates. Tennessee saw a 5% cut.
The reason for a smaller decrease in Illinois was the fee schedule has not had time to fully work itself into their WC system. Additionally, IL used what I would call an artificial fee schedule at the very beginning of the switch.
There may be an excellent reason that Indiana does to want a fee schedule for Workers Comp such as a large medical lobby, or wanting to be totally independent. Saving their employers WC $ is obviously not one of the goals.
©J&L Risk Management Inc Copyright Notice