Study shows big differences in medical care for minor vs. serious injuries
The study, Medical Services by Size of Claim -- 2011 Update, includes figures through accident years 2006 and compares them to a prior study. The results were similar with two exceptions: the payout pattern for prescription drugs was faster than in the previous research while the payout pattern for office visits was slower.
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," the study says.
The share of prescription drugs generally increased as the claim size increased. It had the largest comparative proportion of costs in lost time claims ranging from $100,000 to $500,000 when compared with other medical services.
"Physical therapy, hospital services, and surgery and 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."
Among other findings were:
- Office visits, along with emergency services, dominated the service mix for smaller claims.
- Surgery and anesthesia are a larger share of the services for mid-range claims -- $5,000 to $100,000.
- Hospital services and prescription drugs comprise more than 40 percent of the cost of claims that are greater than $100,000.
- Large claims, in general, are subject to greater inflation than smaller claims. The Consumer Price Index for the prices of hospital services has recently been growing at a faster rate than the CPI for office visits or physical therapy.
NCCI used data provided by carriers. Claim size was identified as the case-incurred value of a claim at 36 months of maturity trended through 2009.
For all claims, the ultimate distribution of all medical losses shows that surgery and anesthesia and prescription drugs had the highest share while emergency services had the lowest medical costs. However, no category contributed more than 20 percent to overall medical costs.
In comparing large claims with small claims, the researchers found that office visits, emergency services, diagnostic testing, and physical therapy were greater for small claims. Hospital services, prescription drugs, and other services -- which includes nursing home and home health care costs -- generally increased as the claim size increased.
In looking at payout patterns, larger claims tended to take longer to pay out than smaller claims. "While 80 percent of medical costs are paid out by the end of the second relative service year for claims that are less than $50,000, only 32 percent are paid by the end of the sixth relative service year for claims that exceed $1 million," the report says. "This implies that the types of services that are more prevalent in the smaller claim size categories will generally pay out faster than the types of services that are more prevalent in the larger claim size categories."
The slowest payout rate for any service category was prescription drugs. The report shows that less than 20 percent of those costs for lost time claims are paid by the end of the sixth relative service year. Nevertheless, the payout pattern for prescription drugs was slightly faster than in the previous NCCI study.
"At that time, prescription costs were increasing annually at a rate much higher than other medical costs, and that trend was expected to persist," the report says. "Since then, the prescription drug trend has moderated, reducing the portion of expected payments beyond six years."
Physical therapy and office visits paid out faster than the average for lost time claims across all service categories even though the payout pattern for office visits has slowed since the previous study. The payout for office visits was less than 50 percent completed after six years for the most costly claim sizes -- greater than $500,000.
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November 14, 2011
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