A recent study by the Workers Compensation Research Institute (WCRI) sheds light on how rising inflation has affected workers’ compensation medical costs. The 2025 edition of the WCRI Medical Price Index, written by Dr. Rebecca Yang and Dr. Olesya Fomenko, looks at various medical services such as evaluations, physical therapy, surgery, and emergency care, typically billed by healthcare providers.
This annual study analyzes how fee schedules and network participation impact price trends in the system. It found significant differences in medical costs across states. For instance, in 2024, Florida’s medical service costs were 33% lower than the median across 36 states, while Wisconsin’s costs were a staggering 172% higher than the median. This discrepancy is largely due to Florida having a fee schedule in place, whereas Wisconsin does not.
The report highlights that states without fee schedules—like Indiana, Iowa, and Missouri—saw prices 35% to 177% higher than those with established fee schedules. From 2008 to 2024, states lacking fee schedules experienced a median price growth rate of 40%, compared to just 15% in states with fee schedules.
The study also examines how updates to fee schedules affect pricing. California, for example, uses a fee schedule linked to Medicare that is regularly updated, helping to control costs. States like Illinois saw slower cost increases after implementing their fee schedules, while Massachusetts faced rising costs due to an outdated schedule.
Another key finding is that medical provider networks help reduce costs. In Texas, insurers guide injured workers to preferred providers, resulting in a 10% to 20% decrease in expenses compared to non-network providers.
This latest research expands on data collected over 17 years, from 2008 to 2024, and includes price comparisons for 2023 and 2024 across the 36 states studied. Ramona Tanabe, president and CEO of WCRI, noted that many states have seen faster price growth for workers’ compensation medical services from 2021 to 2024, largely due to inflation. This trend is especially pronounced in states that adjust their fee schedules based on general price indexes instead of medical price indexes.
The findings are based on price data collected through June 30, 2024, revealing important trends that could shape the future of workers’ compensation medical costs.