Texas: Medical costs per claim stable after years of decreases, study finds
Medical costs per workers' compensation claim in Texas were stable in 2007 after several years of significant decreases, according to a study.
The Workers Compensation Research Institute said the decline in costs resulted from the enactment of two major pieces of reform legislation, as well as an increased effort to manage medical care by system payors.
The study, Monitoring the Impact of Reforms in Texas:CompScopeTM Benchmarks, 10th Edition, found that prior to the passage of H.B. 2600 in 2001 and H.B. 7 in 2005, medical costs per claim in Texas were the highest of the states studied by the Cambridge, Mass.-based organization. By 2007, however, medical costs per claim in Texas were 19 percent lower than the typical study state for claims with more than seven days of lost time. Researchers said fee schedule decreases under H.B. 2600, combined with increased management of medical care by payors through utilization review and other means, were behind the decline.
Among the highlights of the study, WCRI found that:
- A one-time increase in prices paid for services by nonhospital providers may lie ahead. The study noted that the increase in the 2008 medical fee schedule conversion factors to reflect increases in practice expenses since 2002 and the separate conversion factor established for surgery may result in a one-time increase between 16 to 41 percent in prices paid for services by nonhospital providers.
- Medical cost containment expenses grew rapidly. WCRI reported that medical cost containment expenses per claim continued to grow rapidly in Texas, even after medical costs began to decline. At an average of $2,818, researchers said Texas had the highest medical cost containment expenses per claim among the study states in 2007 claims evaluated in 2008 -- 37 percent higher than typical.
- Indemnity benefits per claim rose in 2007 after years of decreases. Indemnity benefits per claim rose 10 percent in 2007, largely due to a nearly 25 percent increase in the maximum benefit for statutory weekly temporary total disability. Despite this significant increase in the maximum benefit, the study concluded that the percentage of workers whose benefits were limited by the maximum was 17 percent, more than double the percentage in the typical study state.
In the years preceding 2007 -- 2002 to 2006 -- indemnity benefits per claim decreased 9 percent overall, largely the result of a decrease in the duration of temporary disability. Since 2002, the study found that the average duration of temporary disability for injured workers in Texas declined by more than three weeks for claims at an average of 36 months of experience. Researchers said this was likely related to the decrease in medical utilization under H.B. 2600 and payor focus on managing medical care.
- Attorney involvement remained low. The study found that defense attorney involvement in Texas remained low -- 8 percent compared to 24 percent in the typical study state for 2005 claims with more than seven days of lost time and 36 months of experience. Researchers said this likely reflects some combination of the dispute resolution process, limits on attorney fees, limits on settlements, and relatively lower PPD/lump-sum payments per claim, which may impact the necessity or the willingness of defense attorneys to become involved in certain types of workers' comp cases in Texas.
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June 21, 2010
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