Iowa Approves 7.9% Increase in Rates (Ouch)
The state of Iowa Approves a 7.9 percent rate increase. NCCI recommended that Iowa increase its Workers Compensation rates by 7.9% (3% effective 01/01/13 + additional 4% on 07/01/13). Iowa subsequently approved the rate increases. This was rather surprising in such a down economy. Iowa for many years bucked the trend that a medical fee schedule is needed to keep Workers Comp costs in check.
The trend-bucking may be coming to an end very soon. I have always said states that do not have a WC fee schedule end up costing employers more than other comparable states. For some reason, Iowa stood alone in not having a medical fee schedule while keeping medical costs in check.
The bell may be tolling for Workers Comp medical costs in Iowa. Up until 6 months ago, Iowa was still defying the medical fee schedule = lower Workers Comp costs scenario.
The effect of no fee schedule seems to have taken hold in Iowa. According to NCCI:
- 58% of total benefits in Iowa are now medical.
- The % of medical benefits is increasing faster than other states
- Overall costs are quickly catching the regional and national averages
- The change in medical benefits greatly exceeded changes in indemnity benefits
- No other reasons such as medical inflation, etc were found as root causes of the increase
This is the normal time a state starts looking into a medical fee schedule. Many states that have considered WC fee schedules usually wait until the situation is dire then switch to one.
Iowa should definitely consider having a medical fee schedule. It is very easy to copy off another state and institute that fee schedule with follow-up adjustments.
The old warning concerning medical providers refusing to treat Workers Comp patients is very minor. I have not seen that situation occur very often after a state enacts a Workers Comp medical fee schedule.
©J&L Risk Management Inc Copyright Notice