What Can Workers Compensation Learn From Group Medical Insurance?

Posted Date: July 2005
    

Dramatic cost increases in workers compensation medical benefits have resulted in workers compensation medical benefits exceeding the compensation for lost work time. Over the last few years, compensation for lost work time in NCCI states has grown 5% to 7% per year, while medical benefits have grown 9% to 12% per year.

Key Findings

Our findings on the prices paid by workers compensation and group health insurance for individual medical services include:

  • Prices paid per service for workers compensation are of similar magnitude to those paid for group health
  • For each state reviewed in this study, average prices paid in workers compensation are either persistently above or persistently below those paid for group health
  • States with a workers compensation medical fee schedule showed a workers compensation price level from 8% to 31% below that of group health and, conversely, states with no applicable fee schedule showed a workers compensation price level 16% to 19% above that of group health

Our findings on the aggregate cost of treating an injury include:

  • Workers compensation costs more than group health to treat injuries within the same diagnostic group
  • Workers compensation has more intense and costly treatment early on as compared with group health; the cumulative difference declines slightly over the time periods reviewed, which go up to two years
  • Group health has a greater proportion of low-cost treatments than does workers compensation
  • Cost differences between workers compensation and group health are smaller than average for acute injuries and trauma-related conditions like fractures or sprains. Cost differences are greater for injuries subject to surgery and for chronic or pain-related injuries