Knowing how different medical services contribute to workers compensation claim costs over time provides insight into the growth in medical costs.
Medical services now constitute almost 60% of workers compensation claim costs, up from about 40% in the early 1980s.
In the latest NCCI research study, we quantify how the mix of medical services for a more serious injury or illness differs from the type of care required to help a worker heal from a minor mishap. Also, the medical services profile for workers with serious injuries is quite different in the later years of their treatment from the mix of services required early on.
NCCI looked at nine different service groups in this study. The mix of medical services differs by service group between small and large claims:
- Office Visits and Emergency Services dominate the service mix for smaller claims
- Surgery & Anesthesia are a larger share of the services for mid-range ($5,000 to $100,000) claims than for other claim sizes
- Hospital Services and Prescription Drugs comprise more than 40% of the cost of claims that are greater than $100,000
Large claims, in general, are subject to greater inflation than smaller claims:
- The CPI for the prices of hospital services has recently been growing at a faster rate than the CPI for office visits or physical therapy
The varying mix of services by claim size has implications for the payout rates by type of service:
- Office Visits, Physical Therapy, and Emergency Services all have relatively fast payout patterns
- Hospital Services and Prescription Drugs have relatively slow payout patterns
- For every claim size range, Prescription Drugs are a substantially greater share of total medical costs paid after the sixth relative service year than they are up through the first six relative service years
- Physical Therapy, Hospital Services, and Surgery & Anesthesia are greater shares of total medical costs paid through the sixth relative service year than they are of the seventh and subsequent relative service years
The patterns of distribution and development are generally similar to those in NCCI's prior study, with two main differences:
- Prescription Drug payout pattern is faster than observed in the prior study
- Office Visit payout pattern is slower than observed in the prior study