Florida Workers’ Compensation Insurers Seek Bigger Rate Cut

Florida’s workers’ compensation insurers, already on record recommending an average 2.5 percent cut in rates, now say that a 3.3 percent cut is justified.

The modification in the industry’s rate filing by the National Council on Compensation Insurance (NCCI) rating organization is the result of lower than expected hospital charges that could save insurers about 0.8 percent or $26 million.

In August, NCCI, which serves Florida as both its ratemaking agency and statistical agent, proposed a statewide overall rate decrease of 2.5 percent based on fewer claims and lower wage-loss and medical benefits.

The newly proposed rate reduction comes as a result of a change in how Florida sets some of its reimbursement rates for outpatient surgeries and inpatient hospital stays. NCCI calculates that changes in rates for outpatient services will result in $16 million in workers’ compensation savings while a change in inpatient services charges will save insurers about $10 million.

According to NCCI, overall medical costs represent 69 percent of the total cost borne by workers compensation insurers while hospital costs account for 37 percent of those medical costs.

The Office of Insurance Regulation plans to hold a hearing on NCCI’s rate recommendation on Oct. 14.

The new rates would take effect on January 1, 2015.

The Workers’ Compensation Research Institute has found that hospital outpatient services in the state increased by 10 percent per year between 2005 and 2010.

Insurance Commissioner Kevin McCarty and others have argued that increased hospital costs have been a major cost driver in workers’ compensation.