CAMBRIDGE, MA,–WorkCompWire– October 27, 2010 – After four years of decreases, medical costs per workers’ compensation claim in Texas stabilized in 2007, reflecting the impact of reforms enacted in 2001 and much of those passed in 2005, according to a study by the Workers Compensation Research Institute (WCRI).
The Cambridge, Mass.-based WCRI reported that payments per claim to chiropractors and physical/occupational therapists in Texas continued to fall, while payments to physicians were stable. By contrast, payments to hospitals were rising, particularly for inpatient care in recent years.
The study, Monitoring the Impact of Reforms in Texas: CompScopeTM Medical Benchmarks, 10th Edition, said that decreases in Texas medical costs per claim resulted from House Bill 2600 passed in 2001 and House Bill 7 in 2005, along with increased payor focus and effort on managing medical care.
Medical costs per claim shifted dramatically lower since 2001, when medical costs per claim were among the highest of study states. By 2007 (evaluated in 2008), medical costs per claim were 19 percent lower than the typical state for claims with more than seven days of lost time.
The study pointed out that while utilization of medical services in Texas decreased significantly for nonhospital services, Texas was still higher than the typical study state.
For example, the number of chiropractor visits was cut by 60 percent from 2001 to 2007, but the number of visits in Texas was still higher than the typical study state. Similarly, the percentage of claims with chiropractic care fell by 10 points from 2005 to 2007, but Texas was still highest among 15 states.
Medical payments per claim to physicians declined 22 percent overall from 2002 to 2006, and then showed little change in 2007, in part the result of a drop in office visits, according to the study. The drop in office visits was offset in part by more complex office visits being billed. Still, in 2007, Texas had more office visits per claim than the typical state, about 8 compared to 6 in the median study state.
A lower fee schedule, under House Bill 2600, led to decreases in prices paid for most nonhospital services – also a factor in the drop in Texas medical costs per claim.
Although payments per claim for hospital care in Texas were lower than typical for both outpatient and inpatient services, medical payments per claim to hospitals for inpatient care grew nearly 7.6 percent from 2001 to 2007, the main driver of growth in Texas hospital payments per claim.
Medical cost containment expenses per claim also grew, up 6 to 9 percent per year from 2002 to 2006 and 4 percent in 2007. Texas had the highest medical cost containment expenses per claim among study states in 2007. Texas also was highest for this measure in prior years.
The rapid growth in these expenses continued even after medical costs per claim began to decline, likely related to increases in bill review fees and other components related to reform provisions such as utilization review, said the study.
Still, the combined effect of the decreasing medical costs per claim and the increasing medical management expenses resulted in a decline in medical-related costs per claim.
The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, healthcare and disability issues. Its members include employers, insurers, insurance regulators and state administrative agencies in the U.S., Canada, Australia and New Zealand as well as several state labor organizations.