Medical costs for workers’ compensation claims are on the rise again after several years of steady prices, according to a recent report from the Workers Compensation Research Institute (WCRI). The increase is linked to more medical services being used, higher prices for those services, and updates to state fee schedules.
The WCRI study looked at 18 states, representing about 60% of all workers’ compensation benefits paid in the country. It found that after years of little change, medical payments per claim started climbing in several states.
In California, medical payments per claim went up by 5%, driven mainly by higher payments for non-hospital services like physical therapy. Delaware saw a faster growth rate, with medical costs rising 7% annually from 2021 to 2023. This was due in part to price increases for professional care and hospital outpatient services. Delaware’s fee schedule adjusts based on the Consumer Price Index for All Urban Consumers, which influences these changes.
Pennsylvania experienced the largest jump, with a 14% increase in medical payments per claim in 2023. This followed years of decline and was linked to bigger recent hikes in the state’s medical fee schedule, which is tied to the state’s average weekly wage.
Meanwhile, Wisconsin saw a 6% annual growth in medical payments per claim between 2021 and 2023. This comes after a period of relatively small changes. The state recently passed laws creating a new medical fee schedule for hospital services. Notably, Wisconsin already had some of the highest medical costs per claim among the states studied.
The report covers medical claims made before the COVID-19 pandemic through March 2024. It highlights how shifts in prices, usage, and state policies are now pushing medical costs upward once again. This trend could affect how much employers and insurers pay for workers’ compensation healthcare in the near future.