I don’t have any statistics or studies to back this up, but after conversations with several large and medium workers comp payers it is apparent facility costs are on the rise. And the increase looks to be higher than projections,
The reasons appear to be several.
Fee schedule changes in several jurisdictions appear to be a contributor, albeit a relatively minor one.
A bigger problem appears to be increased facility charges, especially those with stop-loss provisions, that have resulted in a greater percentage of inpatient cases exceeding the stop loss limit.
Finally, the industry’s standard way of reducing hospital costs, the comp PPO, appears to be losing some of its effectiveness. Workers comp networks tend to have less buying power than their group health cousins – and in networks, the golden rule applies. The golden rule I’m referring to is “she who has the gold rules”, and in this case the lady with the gold goes by the name of Wellpoint, Kaiser, Horizon, or Aetna. Without buying power, it is all but impossible for workers comp networks to negotiate effectively with facilities and health care systems.
(Although Coventry’s acquisition of Concentra does make it the largest-by-a-moon-shot workers comp PPO, it is still much smaller than all but the smallest regional health plan.)
Meanwhile, Aetna and Wellpoint have still not made significant inroads into the workers comp payer market, although sources indicate both are about to expand their client bases.
But for now, comp payers are seeing their facility costs inch up.
