CAMBRIDGE, MA, December 10, 2010 – The Michigan workers compensation system offered a better value proposition for both employers and injured workers both in terms of medical costs per claim and worker outcomes, according to a study from the Workers Compensation Research Institute (WCRI).
The study, CompScopeTM Medical Benchmarks for Michigan 10th Edition, found that the average medical cost per claim with more than seven days of lost time paid by employers in Michigan was among the lowest of the 15 study states. At about $8,500 per case, the average medical cost per claim in Michigan was 30 percent lower than the 15-state median for 2005 claims with 36 months of experience.
More importantly, compared to the study states that Michigan often competes with for business, employers in Michigan paid much less for medical care received by injured workers, according to Cambridge, Mass.-based WCRI. The states that Michigan often competes with for business studied in the report include Illinois, Indiana, Iowa, Minnesota, Pennsylvania, Tennessee, and Wisconsin.
While employers in Michigan paid less for medical services on an average case, injured workers in the state reported typical outcomes according to another WCRI study. Compared with other states in that study, injured workers in Michigan reported typical physical recovery, typical access to desired care and satisfaction with overall care, as well as fairly typical return-to-work rate and speed.
The study reported that a main driver of the lower medical costs per claim in Michigan was lower prices paid for many services provided by nonhospital providers, which were related to the relatively lower fee schedule rates in the state.
According to an earlier WCRI study, the fee schedule rates for surgery and radiology in Michigan were significantly lower than the rates in the 42-state median. Correspondingly, the prices paid for radiology services and surgeries in Michigan were much lower than the prices typically paid among the 15 states included in this CompScope™ Medical Benchmarks report.
In addition, the fee schedule rates for physical medicine and office visits in Michigan were slightly higher than the national median, which led to slightly higher prices paid for those services.
The prices paid for all of the major nonhospital services by employers in Michigan were much lower than the prices typically paid in the states that Michigan often competes with for business included in the study, according to WCRI.
In a state with lower prices, often a concern is that there could be excessive utilization of medical services. However, in Michigan, despite the lower prices, utilization for most nonhospital services was lower than or fairly typical to the 15-state median, except for physical medicine and minor radiology services.
In addition, chiropractors and physical/occupational therapists were involved less frequently in Michigan than in many other study states.
Another factor that contributed to the lower medical costs per claim in Michigan was the lower hospital outpatient payments per service. Compared to the median of 15 study
states, the average payments per service for all of the major hospital outpatient services in Michigan were significantly lower.
The average hospital inpatient payment per episode in Michigan was also among the lowest of the 15 study states.
Growth in medical costs per claim in Michigan from 2005 to 2007 was also slower than the typical growth rate among the study states that Michigan often competes with for business, the report found.
In 2007, medical costs per claim in Michigan increased about three percent, a more moderate rate compared to the seven percent growth in the median of those states. This moderate growth was due mainly to an increase in the average hospital inpatient payments per episode.
Since 2005, the hospital inpatient payments per episode in Michigan increased six percent per year, a steady growth rate that was fairly similar to the typical growth experienced in the study states that Michigan often competes with for business.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.
955 Massachusetts Avenue Cambridge, Massachusetts 02139 617-661-WCRI (9274)