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Interstate Comparison of Medical Costs

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Interstate Comparison of Medical Costs

November 3, 2014
In this special edition: Interstate Comparison of Medical Costs
 
In October, the Workers Compensation Research Institute (WCRI) published its annual CompscopeTM Medical Benchmarks for California report. The report showed that the average medical payment per claim for 2010 claims with more than seven days of lost time in California and valued at 36 months of maturity was $15,202. This figure is somewhat below the $16,297 median for the 16 states in the WCRI study. This finding contrasts with data included in the WCIRB’s Report on the State of the California Workers’ Compensation Insurance System (August 5, 2014) which showed that California had the third highest incurred medical cost per indemnity claim when compared to all states for accident year 2009 (the most recent year of comparable data), or approximately 75% above the level of the median state. Why the difference?
 
Dave Bellusci, WCIRB Chief Actuary, cites the maturity level of the data used in the reports as the primary reason for this difference. “The WCRI report reflects accident year medical payments made through 36 months of maturity. The WCIRB report reflects a projection of accident year medical costs beyond 36 months to their ultimate cost.”
 
The rate at which medical losses are paid in California is very slow compared to other states. In fact, as shown in the chart below—which compares the percentage of ultimate accident year medical losses paid at 36 months of maturity based on NCCI’s Annual Statistical Bulletin (ed. 2014) data—California at 39% is the slowest paying of all states and is well below the countrywide median percentage of 66%.
 
 

"These comparisons of medical cost per claim in California to medical cost per claim in other states imply that California is a high medical cost state not necessarily due to the intensity and cost of treatment in the first few years of a claim, but rather the duration of treatment and intensity of medical treatments later in the life of a claim.”

The WCIRB will continue to analyze the factors driving the intensity of treatment in California later in the life of claims and will review its research with the WCIRB Actuarial Committee and other system stakeholders as it becomes available.

To see additional actuarial research, visit the Research and Analysis section of the WCIRB website, and Subscribe to Actuarial Committee Agendas and Minutes to receive these documents in your inbox as they are released.