An In-Depth Look at Workers’ Compensation Medical Costs … · An In-Depth Look at Workers’...

An In-Depth Look at Workers’ Compensation Medical Costs in Minnesota

Minnesota Workers’ Compensation Advisory CouncilMarch 12, 2014

▪ About WCRI

▪ Highlights from WCRI research relevant to Minnesota workers’ compensation medical costs

▪ Trends

▪ Interstate comparisons

▪ Longer-term opioid use

▪ Physician dispensing

Today’s Outline

2

1Copyrighted: Do not distribute without WCRI’s written consent

A N I N - D E P T H L O O K A T W O R K E R S ' C O M P E N S A T I O N M E D I C A L C O S T S I N M I N N E S O T A P R E S E N T A T I O N B Y W C R I - 3 / 1 2 / 2 0 1 4

▪ Independent, not-for-profit research organization

▪ Mission: to be a catalyst for constructive improvements in workers’ compensation systems

▪ Diverse membership support (including Sentry)▪ Focus on benefit delivery system, not insurance market▪ Studies are peer-reviewed▪ Do not make recommendations or take positions

▪ Resource for public officials and stakeholders▪ Over 400 WC studies published

About WCRI

3© Copyright 2013 WCRI. All Rights Reserved.

WCRI Provides States With A Broad Scope Of Benchmarking Studies


MN

CompScope™Worker

Outcomes

Longer-Term Use Of Opioids

MCCInventory

MedicalPrice IndexPhysician

Dispensing In WC

PrescriptionBenchmarks

HospitalCost Index

InterstateVariation In Use

Of Narcotics

Hospital/ASCFS Inventory



CompScope™CompScope™ Medical▪ Medical costs

▪ Medical prices

▪ Utilization of services

▪ By provider type

▪ By service type

Scope Of CompScope™ Multistate Benchmarks

▪ Benefit amounts

▪ Timeliness

▪ Medical costs

▪ Disability duration

▪ Defense attorney involvement

▪ Vocational rehabilitation use

▪ Benefit delivery expenses


▪ Data reasonably representative of state experience▪ 51% of Minnesota claims; 36–69% across all 16 states

▪ Meaningful interstate comparisons▪ Definitions harmonized across states and data sources▪ Adjusted for differences in injury/industry mix▪ Adjusted for differences in waiting periods (claims with

> 7 days of lost time)▪ Trends shown are unadjusted numbers▪ Analysis focuses on cases with different maturities

(12, 24, and 36 months of experience) to capture phenomena that occur earlier and later in a claim

▪ See the Technical Appendix for more detail

Data And Methods In This Study




▪ Overall medical cost growth generally typical, but faster growth in costs for hospital inpatient surgical episodes

▪ Little change in medical payments per claim since 2009▪ Slower growth in hospital outpatient payments/service reflects

slower growth in charges

▪ Nonhospital prices stabilized after 2010 fee schedule updates

▪ Overall nonhospital utilization stable

▪ Overall medical payments per claim typical due to offsetting components, esp. for nonhospital providers

Key Findings For MN From CompScope™Medical Benchmarks, 14th Edition


Growth In Minnesota Medical Payments Generally Typical During 2006 To 2011

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

FL NC MI TX MA MN IL VA PA CA IA NJ AR WI LA IN

Annu

al A

vg. %

Cha

nge

In M

edic

al

Cos

ts/C

laim

(20

06

/07

To

201

1/1

2)

AAPC: 4.6%

Median AAPC: 5.6%


Claims With > 7 Days Of Lost Time At 12 Months Of Experience, Not Adjusted For Injury/Industry Mix



Faster Growth In Payments For Hospital Inpatient Episodes During 2006 To 2011

Medical Cost Components (AAPC 2006/07 to 2011/12)

MinnesotaMedian State

Nonhospital Payments/Claim 4.5% 5.4%

Prices Paid 1.1% 1.8%

Utilization 1.6% 2.5%

Hospital Outpatient Payments/Claim 5.9% 6.0%

Payments/Service 3.9% 5.9%

Services/Claim 1.9% 0.7%

Hospital Payments/Inpatient Episode 7.8% 6.7%

Inpatient Surgical Episodes 9.5% 7.4%

Inpatient Nonsurgical Episodes 5.9% 6.4%


Claims With > 7 Days Of Lost Time, Not Adjusted For Injury/Industry Mix

Rapid Increases In MN Hospital Inpatient Payments: Not A Recent Phenomenon

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Aver

age

Hos

pita

l Pay

men

ts

Inpatient Episode Surgical Episode Nonsurgical Episode



AAPC 2002 To 2011 2006 To 2011

Payments/Inpatient Ep. 7.3% 7.8%

Inpatient Surgical Ep. 8.5% 9.5%

Inpatient Nonsurgical Ep. 6.3% 5.9%



Longer-Term Decline In % Of MN Claims With Inpatient Episodes, Esp. Surgical

0%

2%

4%

6%

8%

10%

12%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

% O

f Cla

ims

With

Inpa

tient

Epi

sode

s

All Inpatient Surgical Nonsurgical



Decline In % Of Inpatient Episodes With Surgery In Minnesota

0%

10%

20%

30%

40%

50%

60%

70%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

% O

f Inp

atie

nt E

piso

des

With

Sur

gery





Shift From Inpatient To Outpatient Surgery For MN Disc Conditions

Change In Measures For Disc Conditions: 2006/07 To 2011/12

% With Inpatient Care -15 ppt

% With Surgery -9 ppt

% With Inpatient Surgery -32 ppt

% With Outpatient Surgery 32 ppt

AAPC

Total Payments/Episode – Inpatient Surgery 8.8%

Total Payments/Episode – Outpatient Surgery 5.2%

Total Hosp. Payments/Episode – Inpatient Surgery 11.1%

Total Hosp. Payment/Episode – Outpatient Surgery 9.3%




Little change in medical payments per claim since 2009▪ Slower growth in hospital outpatient payments/service reflects









Little Change In Minnesota Medical Payments Since 2009

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

06/07 To07/08

07/08 To08/09

08/09 To09/10

09/10 To10/11

10/11 To11/12

Annu

al %

Cha

nge

In M

edic

al

Cos

ts/C

laim

Minnesota Median State

MN AAPC 2009 To 2011: -0.7%

MN AAPC 2006 To 2009: 8.3%



Little Recent Change In Nonhospital And Hospital Payments; Inpatient Increased

80

90

100

110

120

130

140

150

160

2006/07 2007/08 2008/09 2009/10 2010/11 2011/12

Aver

age

Med

ical

Pay

men

t/C

laim

In

dexe

d To

20

06

/07

= 1

00

Nonhospital Hospital Hosp. Outpatient Hosp. Inpatient Episode

AAPC 2006 To 2009

Nonhospital: 7%

Hospital: 8%

Hospital Outpatient: 10%

Hospital Inpatient: 7%



AAPC 2009 To 2011

Nonhospital: 1%

Hospital: 3%

Hospital Outpatient: 0%

Hospital Inpatient: 9%



Little Change In Most Medical Cost Components Since 2009, Except Inpatient

Annual Change In Medical Cost Components (AAPC)

2006/07 To 2009/10

2009/10 To 2011/12

Nonhospital Payments/Claim 7.1% 0.6%

Prices Paid 2.3% -0.7%

Utilization 3.1% -0.6%

Hospital Outpatient Payments/Claim 9.7% 0.4%

Payments/Service 7.6% -1.4%

Services/Claim 2.0% 1.9%

Hospital Payments/Inpatient Episode 7.2% 8.7%




▪ Little change in medical payments per claim since 2009Slower growth in hospital outpatient payments/service reflects









Hospital Outpatient Services

Annual Average Change In Medical Payments Per Claim

2006/07 To 2009/10

2009/10 To 2011/12

Treatment/Operating/Recovery 15% 2%

Minor Radiology 11% -3%

Clinic/Evaluation & Management

4% 3%

Physical Medicine 8% 3%

Major Radiology 3% 0%



Slower Growth Since 2009 In Payments Per Claim For Most Hospital Outpatient Services

Payments/Service Key Driver Of Slower Growth In Hospital Outpatient Payments


Payments/Service(AAPC)

Services/Claim(AAPC)

06/07 To 09/10

09/10 To 11/12

06/07 To 09/10

09/10 To 11/12

Treat./Oper./Rec. 15% 2% 0% 0%

Minor Radiology 7% -1% 4% -2%

Clinic/Eval. & Mgmt. 3% 4% 1% -1%

Physical Medicine 6% 1% 2% 3%

Major Radiology 0% 1% 3% -1%





▪ If more than 100 beds, reimbursement is limited to the lowest of:

▪ Maximum fee that applies to any service included in relative value fee schedule (typically labs, X rays, physical/occupational therapy)

▪ 85% of usual and customary charge

▪ 85% of the prevailing charge

▪ The facility’s actual charge

▪ If fewer than 100 beds, reimbursed at 100% of usual and customary unless judge decides fee is excessive

MN Reimbursement Approach: Changes In Payments Per Service Tied To Charges


Hospital Outpatient Payments/Service Generally Tracked Growth In Charges…

75

100

125

150

175

2006/07 2007/08 2008/09 2009/10 2010/11 2011/12

Inde

xed

To 2

00

6/0

7 =

10

0

TOR Charges Per Service TOR Payments Per ServiceOverall Charges Per Service Overall Payments Per Service





…Due Primarily To Slower Growth In Payments/Service Relative To Charges


2006/07 To 2009/10

(AAPC)

2009/10 To 2010/11

(% change)

2010/11 To 2011/12

(% change)

Change In Overall Charges/Service

7.7% 3.7% -1.4%

Change In Overall Payments/Service

7.3% 2.7% -6.0%

Change In TOR Charges/Service

13.3% 8.0% 9.0%

Change In TOR Payments/Service

12.7% 5.5% 2.2%


Hospital Outpatient Services, Claims With > 7 Days Of Lost Time, Not Adjusted For Injury/Industry Mix

▪ Increase in use of networks among hospital providers

▪ Potential for discounts in payments relative to charges for payors using network

▪ More aggressive use of bill review services, including greater reliance on prevailing charge criteria to set maximum fees for large hospitals

▪ Increased use of Minnesota Department of Labor and Industry administrative processes for resolving disputes about medical fees

Possible Reasons For Recent Decrease In MN Outpatient Paid-To-Charge Ratios




Increase Since 2006 In Percentage Of Network Payments For Hospital Providers

57%

66% 67% 67% 68% 68%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2006/07 2007/08 2008/09 2009/10 2010/11 2011/12

Perc

enta

ge O

f Pay

men

ts F

rom

N

etw

ork

Pro

vide

rs

Nonhospital Hospital






Nonhospital prices stabilized after 2010 fee schedule updates







Overall Nonhospital Prices Stable After 2010 Fee Schedule Changes

75

100

125

150

175

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*

Pric

es P

aid

For P

rofe

ssio

nal S

ervi

ces

Inde

xed

To 2

00

2 =

10

0

Fee Schedule Change


MN 2010 Fee Schedule Change Effective 10/1/10: Use 2009 Medicare RVUs To Replace 1998 RVUs; Decrease Conversion Factors To Hold Total Payments Constant. Source: WCRI Medical Price Index For WC, Fifth Edition (2013)

* Data shown for 2012 are based on data through June 2012.

Prices For Specific Services Stable After One-Time Fee Schedule Adjustments

75

100

125

150

175

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*

Inde

xed

To 2

00

2 =

10

0

E&M Physical Medicine Major RadiologyMinor Radiology Major Surgery Pain Mgmt. Inj.

Prices Stable

Fee Schedule Change


MN 2010 Fee Schedule Change: Use 2009 Medicare RVUs To Replace 1998 RVUs; Decrease Conversion Factors To Hold Total Payments Constant. Source: WCRI Medical Price Index For WC, Fifth Edition (2013)

* Data shown for 2012 are based on data through June 2012.







Overall nonhospital utilization stable




Overall Utilization In Minnesota Generally Stable Since 2009


Claims With > 7 Days Of Lost Time, Not Adjusted For Injury/Industry Mix

Change In Utilization2006 /07 To

2009/102009/10 To

2010/112010/11 To

2011/12

Overall 3% -3% 2%

Evaluation & Mgmt. 3% -1% 0%

Major Radiology 0% -1% 1%

Minor Radiology 2% -2% 5%

Neuro. Testing 1% -6% -1%

Pain Mgmt. Injections -3% -2% -3%

Physical Medicine 2% -3% -1%

Major Surgery 3% -3% 7%








Overall medical payments per claim typical due to offsetting components, esp. for nonhospital providers



Minnesota Medical Payments Per Claim Typical Of 16 Study States

$0

$5,000

$10,000

$15,000

$20,000

MA CA MI TX MN AR FL PA NC LA NJ IA VA IL WI IN

Aver

age

Med

ical

Pay

men

t/C

laim

$11,070

Median: $11,993


2011/12 Claims With > 7 Days Of Lost Time, Adjusted For Injury/Industry Mix



Nonhospital Medical Payments Per Claim Lower; Typical For Hospitals

Payments Per Claim By Provider

MNMedian State

% Diff. Diff.

Nonhospital $5,511 $6,440 -14% Lower

Hospital $9,019 $9,238 -2% Typical

Hospital Outpatient $5,294 $5,252 1% Typical

Hospital Payment Per Inpatient Episode (2010/12)

$29,359 $29,043 1% Typical



Prices Paid Typical To Higher For Many Nonhospital Services, Esp. Office Visits

84 85

100 104

118 119129

0

20

40

60

80

100

120

140

MajorSurgery

PainMgmt. Inj.

MinorRadiology

PhysicalMedicine

Neuro.Testing

MajorRadiology

Eval. &Mgmt.

Pric

es P

aid

(Med

ian

Sta

te =

10

0)


Price Indices For Selected Nonhospital Services Rendered In 2011Claims With > 7 Days Of Lost Time, Adjusted For Injury/Industry Mix



77

89

91 94 98 100 101

0

20

40

60

80

100

120

PhysicalMedicine

Eval. &Mgmt.

MinorRadiology

Neuro.Testing

MajorSurgery

PainMgmt. Inj.

MajorRadiology

Util

izat

ion

(Med

ian

Sta

te =

10

0)


Utilization Indices For Selected Nonhospital Services, 2011/122011/12 Claims With > 7 Days Of Lost Time, Adjusted For Injury/Industry Mix

MN Utilization Typical; Except Lower For Physical Medicine And Office Visits

Minnesota Hospital Payments Per Claim Typical Of 16 Study States

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

MA CA MI TX PA AR NJ MN FL IL LA IA VA NC WI IN

Aver

age

Hos

pita

l Pay

men

t/C

laim

$9,019



Median: $9,238

No Hospital Fee Regulation



Larger-Than-Typical Share Of Medical Payments To Hospital Providers



0%

10%

20%

30%

40%

50%

60%

CA TX NJ IL FL MI MA WI LA PA IN AR VA MN NC IA

% O

f Med

ical

Pay

men

ts T

oH

ospi

tal P

rovi

ders

53%Median: 47%

MN Hospital Outpatient Payments Per Claim Typical Of 16 Study States

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

CA MA TX MI PA NJ AR FL MN VA IL NC IA IN WI LA

Aver

age

Hos

pita

l Out

patie

nt

Paym

ent/

Cla

im



Median: $5,252

$5,294

No WC Hospital Outpatient Fee Regulation



States With No FS Or % Charges (Like MN): Higher Outpatient Costs/Surgical Episode


Hospital Outpatient Surgical Episodes, 2010Source: Hospital Outpatient Cost Index For Workers’ Compensation, 2nd Edition (2013)

0

20

40

60

80

100

120

140

160

MA OK MD PA MI CA TN TX GA NJ CT IA NC MN LA IN FL WI VA IL

Hos

pita

l Cos

t Ind

ex F

or S

urgi

cal

Epis

odes

(20

-Sta

te M

edia

n =

10

0)

No FS %-Of-Charge-Based Regulation “Fixed Amount” FS Other

Minnesota Had A Higher Percentage Of Claims With Inpatient Episodes

0%

2%

4%

6%

8%

10%

12%

WI CA MA IN FL NC TX IL MI IA PA NJ MN VA LA AR

% O

f Cla

ims

With

Inpa

tient

Epi

sode

s

Median: 7.8%



9.6%



Minnesota Among States With Higher % Of Inpatient Episodes With Surgery

0%

10%

20%

30%

40%

50%

60%

FL TX IN CA LA MA IA NJ NC AR PA WI MI VA IL MN% O

f Inp

atie

nt E

piso

des

With

Sur

gery

Median: 49%



60%

MN Hospital Payments Per Inpatient Episode Typical Of 16 Study States

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

MI MA TX LA CA FL WI PA AR IA MN NJ IN NC VA IL

Aver

age

Hos

pita

l Pay

men

t/In

patie

nt E

piso

de

Median: $29,043



$29,359

No Hospital Inpatient Fee Regulation



MN Hospital Payments Per Inpatient Surgical Episode Typical

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

MI MA LA TX CA AR PA MN FL WI NJ IA VA NC IL INAver

age

Hos

pita

l Pay

men

t/In

patie

nt

Sur

gica

l Epi

sode

Median: $34,137



$32,373

No Hospital Inpatient Fee Regulation

▪ Minnesota had lower prevalence of longer-term opioid use among injured workers

▪ Generally low frequency of recommended urine drug testing, psychological evaluation, and psychological treatment/reports across states, including Minnesota

▪ Prevalence of physician dispensing in Minnesota lower than typical compared with other study states

▪ Due to statutory provisions

Other Key Findings For Minnesota




Most Injured Workers With Pain Medications Received Opioids

0%

25%

50%

75%

100%

CT NJ IL MI CA PA GA NY MA IA IN VA SC AZ TX* WI MN TN LA NC AR

% O

f Cla

ims

With

Pai

n M

edic

atio

ns T

hat H

ad O

pioi

d R

x


Nonsurgical Claims With > 7 Days Of Lost Time, Injuries From October 2008 To September 2009, Prescriptions Filled Through March 2011. Source: Longer-Term Use of Opioids (2012)

* Texas Closed Formulary Went Into Effect On September 1, 2011, Which Was Expected To Reduce Use And Longer-Term Use Of Opioids

Longer-Term Use Of Opioids Less Prevalent In Minnesota

0%

5%

10%

15%

20%

AZ WI NJ IN IA MN AR MI IL MA GA TN VA CT NC CA SC PATX*NY LA

% O

f Non

surg

ical

Cla

ims

With

O

pioi

ds T

hat W

ere

Iden

tifie

d As

Lo

nger

-Ter

m U

sers

Of O

pioi

ds


Nonsurgical Claims With > 7 Days Of Lost Time, Injuries From October 2008 To September 2009, Narcotic Prescriptions Filled Through March 2011 . Source: Longer-Term Use of Opioids (2012)

* Texas Closed Formulary Went Into Effect On September 1, 2011, Which Was Expected To Reduce Use And Longer-Term Use Of Opioids



Frequency Of Drug Testing Was Low, Even After Considerable Increases

Nonsurgical Claims With > 7 Days Of Lost Time That Were Identified As Longer-Term Users Of Opioids, Injury Years 2007 & 2009, Average 24-Month Snapshots. Source: Longer-Term Use of Opioids (2012)

% Of Claims With Longer-Term Use Of Opioids That Received Urine Drug Testing

21-State Median

MN

2007/2009 14% 5%

2009/2011 24% 15%


Nonsurgical Claims With > 7 Days Of Lost Time That Were Identified As Longer-Term Users Of Opioids, Injury Year 2009, Prescriptions Filled Through March 2011, Average 24-Month Snapshots. Source: Longer-Term Use of Opioids (2012)

Psychological Evaluations And Treatment Performed Infrequently

% Of Claims With Longer-Term Use Of Opioids That Received…

21-State Median

MN

Psychological Evaluations

2009/2011 7% 7%

Psychological Treatment

2009/2011 4% 4%




Much Lower Percentage Of Prescriptions Were Dispensed By Physicians In MN

0%

10%

20%

30%

40%

50%

60%

MA

NY TX AR MN LA VA NC WI

KS IA

SC

* NJ

TN*

MO PA MI*

IN*

GA* CT* MD

IL*

FL*

CA*%

Of A

ll R

x Fo

r Ph

ysic

ian-

Dis

pens

ed R

x

49

In MA, NY, & TX, Physician Dispensing Not Allowed In General; Prescriptions For 2011/12 Claims With > 7 Days Of Lost Time. Source: The Prevalence And Costs Of Physician-Dispensed Drugs (2013)

* States With Reforms Aimed At Reducing Prices Paid For Physician-Dispensed Rx

© Copyright 2014 WCRI. All Rights Reserved.

Minnesota Among Lowest Of Study States In Physicians’ Share Of Rx Costs

0%

10%

20%

30%

40%

50%

60%

MA

NY TX AR MN NJ

VA KS IA NC WI

IN* LA MO

MI*

SC

*

TN*

GA* PA CT*

CA* MD

FL*

IL*

50

In MA, NY, & TX, Physician Dispensing Not Allowed In General; Prescriptions For 2011/12 Claims With > 7 Days Of Lost Time. Source: The Prevalence And Costs Of Physician-Dispensed Drugs (2013)

% O

f Rx

Paym

ents

For

Phy

sici

an-

Dis

pens

ed R

x

* States With Reforms Aimed At Reducing Prices Paid For Physician-Dispensed Rx

© Copyright 2014 WCRI. All Rights Reserved.



▪ Benchmarks for Minnesota, CompScope™ 14th Edition (2013)▪ Medical Benchmarks for Minnesota, CompScope™ 13th Edition (2013)▪ WCRI Medical Price Index, Fifth Edition (2013)▪ Hospital Outpatient Cost Index for WC (2013)▪ The Prevalence and Costs of Physician-Dispensed Drugs (2013)▪ Workers’ Compensation MCC: National Inventory, 2013 (2013)▪ Longer-Term Use of Opioids (2012)▪ Designing WC Medical Fee Schedules (2012)▪ Workers’ Compensation Laws (2012) ▪ Interstate Variations in Use of Narcotics (2011)▪ Prescription Benchmarks, 2nd Edition: Trends and Interstate Comparisons

(2011)▪ National Inventory of WC Fee Schedules for Hospitals and Ambulatory Surgical

Centers (2010)

Other WCRI Studies Of Interest For Minnesota


Sharon Belton Senior Public Policy Analyst

[email protected]

orRamona Tanabe

Deputy Director and CompScope™ Program Manager

[email protected]

Please Direct Questions And Comments About WCRI Findings To:




An In-Depth Look at Workers’ Compensation Medical Costs … · An In-Depth Look at Workers’...

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