Texas Sees Rise in Workers’ Comp Medical Cost per Claim

Medical costs per claim in Texas rose 8 percent in 2008, after a period of declining costs following reforms enacted in 2001 and 2005, and increased payor focus on managing medical care, according to a study by the Workers Compensation Research Institute (WCRI).

The 16-state study by the Cambridge, Mass.-based WCRI, Monitoring the Impact of Reforms in Texas: CompScope Benchmarks, 11th Edition, found that the rise in average workers’ compensation medical costs per claim in Texas was likely related in part to an increase in the fee schedule for nonhospital providers.

The study reported that medical costs per claim fell 18 percent from 2002 to 2006, largely due to fee schedule decreases under HB 2600, enacted in 2001, combined with an increased management of medical care by payors through utilization review and other means.

However, the study found the 2008 increase in medical fee schedule conversion factors to reflect the increases in practice expenses since 2002 and the separate conversion factor established for surgery resulted in large increases in reimbursement levels.

Medical cost containment expenses per claim continued to grow rapidly, even after medical costs began to decline. At an average of $2,627, medical cost containment expenses per claim in Texas were among the highest of the study states for 2008 claims evaluated in 2009 – 40 percent higher than typical. The combined increase in medical costs and in cost containment expenses per claim brought medical-related costs per claim in 2008 back to 2003 levels.

The study reported that indemnity benefits per claim rose 6 percent in 2008/2009 due mainly to growth in wages.

In the previous year, indemnity benefits per claim rose 9 percent, largely due to an increase in the statutory weekly temporary total disability benefit maximum effective October 2006. Despite a nearly 25 percent increase in the maximum benefit, the percentage of workers whose benefits were limited by the maximum was 16 percent in 2008 – much higher than the percentage in most study states.

Indemnity benefits per claim were 17 percent lower than typical, even after the increase in the maximum weekly statutory benefit, for claims with an average of 24 months of experience. WCRI said several system features may have contributed to that result. These included setting the maximum benefit at less than 100 percent of the statewide average weekly wage and limitations on lump-sum settlements.

Texas was among the higher group of states in the percentage of claims with the first indemnity payment made within 21 days of injury, indicating faster first indemnity payment on average.

Source: The Workers Compensation Research Institute

Topics Trends Texas Workers' Compensation