Finally some good news about workers' comp costs - workers' compensation - Editor's Memo - Editorial

The bad news about workers' compensation is that claimants are treated longer and receive more medical services than group health claimants, according to a new study. The good news is that with effective case management or some other form of managed care, workers' comp costs could be controlled, the study's author says.

Total payments are 120% to 309% higher for workers' comp injuries than for non-comp injuries, says the study's author, David Durbin. For the study, 1,300 claims filed from 1988 through 1992 with the 15 largest comp insurers in Florida, Illinois, Oregon, and Pennsylvania were compared with similar claims filed under group insurance programs, says Durbin, an assistant vice president for claims research for the National Council on Compensation Insurance. The NCCI is an insurers' data-collection and analysis organization in Boca Raton, Fla.

The theory behind the study was that comp medical costs have been documented as more expensive than other forms of treatment for comparable injuries, and the difference in costs has often been attributed to price discrimination. In other words, analysts believed that comp claimants were simply charged more than non-comp patients.

"Our findings do not support the theory of price discrimination," says Durbin. "We found little or no difference in the unit costs of the services provided. What is different is the volume, duration, and mix of services consumed by injured workers."

Since comp claimants are typically treated in a traditional, fee-for-service environment, neither the injured workers nor their doctors have had any incentives to control costs, Durbin adds. "There's less use of oversight, less managed care, less use of treatment protocols, or guidelines of any kind," he says. "There's no utilization review or bill review, and the typical workers' comp plan covers everything.

"As a result, there's a lot of room for cost savings with managed care," he says. "The skills insurers and others have learned from the managed care world are directly applicable to workers' comp cases."

Since many states are moving to allow managed care for workers' comp cases, employers that move to adopt such strategies for comp injuries may finally have a chance to end the cycle of continuous increases.

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