A key factor in workers’ comp costs varies widely state to state: Report

A new, 33-state study from the WCRI reveals huge variance in a key healthcare costs, which plays a significant factor in ultimate payment – and premium – for clients

A key factor in workers’ comp costs varies widely state to state: Report

Insurance News


Hospital rates for outpatient surgery – a key determinant in workers’ compensation costs – vary widely across the country, a new industry study reveals.

In its 33-state study, “Hospital Outpatient Payment Index: Interstate Variation and Policy Analysis,” the Workers’ Compensation Research Institute reveals that states with fixed fee schedules have lower overall surgery costs for injured workers. By contrast, states with no workers’ comp fee schedules for hospital outpatient reimbursement had costs between 63% and 150% higher than the median of the study states.

In non-fee schedule states, workers’ comp paid between $4,262 and $8,107 more than Medicare for similar hospital outpatient services.

“This report found that hospital outpatient payments per surgical episode varied significantly across states, ranging from 69 percent below the study-state median in New York to 142 percent above the study-state median in Alabama in 2014,” said Dr. Olesya Fomenko, co-author of the study and economist at WCRI.

Most states with fixed-amount fee schedules and states with cost-to-charge ratio fee regulations had relatively lower payments per episode among the state states.

In particularly, for states with fixed-amount fee schedules, the difference between workers’ comp payments and Medicare ranged between -27% (or $-631) and 144% ($2,916).

The hospital outpatient payment indices compared payments (per surgical episode) for common outpatient surgeries under workers’ comp from state to state for each study year and trends within each state from 2005 to 2014.

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