North Carolina Has High Workers’ Compensation Medical Costs

North Carolina’s medical costs per workers’ compensation claim were among the highest in a study of 15 states, according to a new report.

The study by the Cambridge, Mass.-based Workers Compensation Research Institute (WCRI) said that several factors led to the higher cost per claim in the state, including higher payments to hospital providers. The higher payments to hospitals were targeted by fee schedule changes which became effective in July 2009.

The study, CompScope Medical Benchmarks for North Carolina,10th Edition, found that medical costs per claim in North Carolina were 14 percent higher than the median of the states in the study of 2007 claims.

WCRI said this finding masked offsetting factors. Hospital payments per claim were the highest in the study states at just under $9,500. Both inpatient and outpatient payments were among the highest with the average inpatient payment per episode 49 percent higher than the median study state.

For most hospitals, the new fee schedule that was implemented in July 2009 lowered end caps on inpatient hospitalization reimbursement to 75 percent of charges from 77.07 percent and reduced the percent of charges for hospital outpatient reimbursement to 79 percent from 95 percent.

Payments per claim to nonhospital providers – physicians, chiropractors, and physical and occupation therapists – were lower than typical of the study states due, in part, to lower prices paid for nonhospital services. The study observed that this result is likely related to the physician fee schedule in North Carolina which in 2006 was lower than the median of 42 other states with fee schedules.

Utilization of nonhospital services was generally typical of the study states. Chiropractor involvement in North Carolina claims was among the lowest of the study states, less than 2 percent of claims, which may indicate issues with access to care, the study said.

Medical costs per claim grew 9 percent in North Carolina, similar to the annual average rate of growth of 8 percent over the study period. The growth in 2007 was the result of an increase in outpatient hospital payments per service, an increase in the percent of claims with payments made to hospitals for inpatient care, and an increase in payments to nonhospital providers, generated by increased utilization.

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, healthcare and disability issues.