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Large workers compensation claims are subject to higher cost inflation and slower payouts for medical services compared with smaller claims, according to a report released Tuesday by NCCI Holdings Inc.
In its “Medical Services by Size of Claim” study, the Boca Raton, Fla.-based rating and research organization found that hospital services and prescription drugs account for 40% of benefits paid out for lost-time claims of greater than $100,000.
Hospital service costs increased 82% from 2001 to 2010, driving faster-than-average cost inflation for larger claims, according to the report. Meanwhile, NCCI found slower payout rates for hospital services and prescription drugs compared with other types of medical treatments, including office visits, physical therapy and emergency services.
In particular, less than 20% of prescription drug costs are paid within six years of an initial claim, NCCI said.
NCCI studied services used by workers comp claimants during a 36-month period from 2004 to 2006. The report breaks out services and costs for nine claim-size groups ranging from less than $1,000 to more than $1 million.
The study found that claims ranging from $100,000 to $500,000 represented 7.3% of claims, but accounted for 41.3% of claim costs—the most of any group in the NCCI study. Claims in that range represented 59.7% of total prescription drug costs and 43.4% of hospital services costs, according to the report.
Claims in the $10,000 to $50,000 range represented the largest claim group at 35.5%, but only accounted for 23.6% of costs, NCCI said.
The report is available at www.ncci.com.