Hospital costs, in-patient stays continue to decline in comp

Hospital costs in workers compensation continue to decrease, likely due to fewer surgeries, changes in reimbursement and a shift from hospital in-patient care to outpatient care, according to research presented Friday at the Workers Compensation Research Institute’s 36th Annual Issue and Research Conference.

“There’s a fairly steady shifting from in-patient care to outpatient care,” said Carol Telles, senior analyst at Cambridge, Massachusetts-based WCRI. “Much of that shift was driven by technological changes … procedures provided in an in-patient setting can now be provided in an outpatient setting.”

Surgery rates, too, appear to be declining, she said, noting that most states studied by WCRI reported decreases in surgeries ranging from 2% to 12%, likely due to nonsurgical alternatives such as pain management, physical medicine and physical therapy, as well as education initiatives to inform decision making.

Inpatient hospital payments accounted for about 17% of total medical payments, according to WCRI research, and the percentage of claims with a hospital in-patient stay decreased from an average of about 8% in 2006 to an average of about 6% in 2017. However, this varied by state. Minnesota experienced the most substantial decrease in percentage of claims with in-patient hospital care at 2%, whereas Michigan saw an uptick of more than half a percent in claims with in-patient episodes.

Median hospital payments grew for comp claims with and without surgery in most states, with Louisiana, Tennessee and Massachusetts seeing the biggest average increase of between 10% and 12% between 2012 and 2018.

Changes in reimbursement did have a positive impact on states that implemented fee schedules during the study period. Between 2014 and 2016, Indiana, Minnesota and North Carolina instituted changes in their hospital in-patient reimbursement via fee schedules, with Indiana and Minnesota capping reimbursement at 200% of Medicare and North Carolina tying reimbursement to a percent of Medicare with decreasing multipliers. All three states showed decreases in in-patient reimbursement after the change, with North Carolina experiencing the most significant drop from an average in-patient payment of just under $40,000 in 2012 to about $25,000 in 2017.

“Not surprisingly, the in-patient trends in workers comp reflect national trends,” said Ms. Telles, noting that all in-patient hospital stays dropped more than 6% between 2005 and 2014.

This article was first published by Business Insurance.

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