July 07, 2015

Medical Care Inflation's Effect on Work Comp Costs

Cost Containment
, Pharmacy
, Network Solutions

In a recent article in Business Insurance, Stephanie Goldberg reports on medical care inflation and its potential impact on workers’ compensation costs.

According to NCCI, medical care cost inflation is expected to rise at a faster pace in the next two years. However, sources cited by Goldberg say price alone isn’t the sole means to predict medical costs. According to a PricewaterhouseCoopers L.L.P. report, factors contributing to increases in medical costs include expensive specialty treatments and “investments to guard personal health data from major cyber security breaches.”

Matt Engels, Vice President, Network Solutions, was cited in Goldberg’s article:

“One of the contributors to a potentially disproportionate rise in medical costs is a siloed management approach,” said Matt Engels, vice president of network solutions at CorVel Corp. in Chicago.

Mr. Engels referenced what happened in California after S.B. 899 capped the number of physical therapy visits per workers comp case in 2004.

“The number of visits per case went down and, in the short term, that was considered a success,” Mr. Engels said. “But what happened over that same period to drug exposure and cost? The answer is that drug use went way up.”

Read the full article here