WC Reforms Examined

Medical Cost Drivers, Trends Examined

New WCRI report helps track the effectiveness of workers' comp policy changes.
By: | March 21, 2014 • 2 min read

“Fee schedule increases in Texas following Medicare updates as required under House Bill 7 and the 2011 ban on informal networks drove an increase in prices fueling the recent growth in medical payments,” explains a new study. “A decrease in utilization of nonhospital care slightly offset the increases in prices.”

WCRI_logoTexas is one of the states studied in a variety of new reports from the Workers Compensation Research Institute. The 14th edition of CompScope Medical Benchmarks provides a baseline of medical costs and trends and documents how medical payments per claim and their cost components compare with other states. It looks at medical prices, payments, and utilization by provider type and service group.

“The reports are designed to help policymakers and others benchmark the performance of state systems in providing medical care for injured workers,” said Ramona Tanabe, WCRI’s deputy director and counsel. “The reports also provide an excellent baseline for tracking the effectiveness of policy changes and identifying important trends.”


In the case of Texas, the study looked at the impact on metrics of medical costs and care from recent reforms, especially H.B. 7 in 2005. “H.B. 7 impacted both prices and utilization of medical care as the various provisions were implemented beginning in 2005,” the report says. “With few exceptions, the data we report likely reflect nearly all of the effects of H.B. 7 provisions, including certified medical networks and the required use of treatment guidelines.”

For 2011 injuries in Texas evaluated as of 2012, the report said medical payments per claim increased nearly 8 percent, which it said was a faster growth rate than in previous years and faster than in most study states. The report blames price increases related to fee schedule increases based on H.B. 7. However, medical payments per claim were still lower than the typical study state.

Before reforms in 2001 and 2005, medical payments per claim in Texas were the highest of the study states. More recently, payments for nonhospital care were typical while payments for hospital outpatient and inpatient care were lower than the state study median.

At the same time, there was a large decrease in utilization of nonhospital care due to the mandatory use of treatment guidelines and utilization review, the introduction of certified networks, preauthorization for physical and occupational therapy services, and an increased payer focus on utilization. There was also a decrease in utilization for physicians and chiropractors; however, Texas was still higher than typical for things such as chiropractic use and neurological/neuromuscular testing.


Key findings for other states included:

  • Medical payments per claim in Indiana were 17 percent higher than the 16-state median due mainly to higher prices and inpatient payments.
  • The average medical payment per claim in Louisiana was higher than the 16-state median, largely the result of much higher hospital outpatient payments per claim, which also contributed to the rapid growth rate.
Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.


That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.


Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]