Workers’ Comp Costs Vary Greatly From State to State

In a study looking at 33 states, hospital rates for surgery, which are key factors in determining workers’ compensation rates, vary greatly across the nation.

The “Hospital Outpatient Payment Index: Interstate Variation and Policy Analysis,” covered 33 U.S. states and, with help from the Workers’ Compensation Research Institute, revealed that certain states with set fee schedules have much lower costs for injured workers.

According to the U.S. Bureau of Labor Statistics, of the nearly 3 million occupational illnesses and injuries in 2014, wholly 95.1% (2.8 million) were injuries. If the costs for each of these injuries greatly different from state to state so much, the location of these occupations and injuries plays an even more important role.

Insurance Business America reports that the states without a workers’ compensation fee schedule for hospital outpatient reimbursement have costs that are 63% and 150% higher than the average of the states in the median of the study.

“This report found that hospital outpatient payments per surgical episode varied significantly across states,” said Dr. Olesya Fomenko, co-author of the study and WCRI economist.

According to WorkersCompensation.com, public policymakers and hospital stakeholders throughout the country are taking a look at potential reform options after this study.

“We have included a comparison of workers’ compensation hospital outpatient payments and Medicare rates,” said Ramona Tanabe, executive vice president at WCRI. “Medicare rates capture payments to hospital outpatient providers for similar services by a large payor, and the report offers an additional benchmark that helps states better understand their hospital payments.”

The states included in this study are Nebraska, Oregon, Nevada, New Jersey, South Carolina, Alabama, New York, Texas, Virginia, North Carolina, Oklahoma, Missouri, West Virginia, Pennsylvania, Wisconsin, California, Kentucky, Colorado, Georgia, Louisiana, Arizona, Kansas, Connecticut, Maryland, Iowa, Indiana, Minnesota, Illinois, Georgia, Florida, Mississippi, Massachusetts, and Michigan.