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Inflation affected medical spending in comp in few states: Report

workers comp

Workers compensation prices rose more quickly in states that update their fee schedules based on measures of price changes in the general economy rather than price changes in the medical sector, according to a study released Thursday by the Workers Compensation Research Institute.

The report noted Alabama, Delaware, Illinois and Oregon as states that adjust workers comp medical fee schedules based on inflation in the general economy — which the report highlighted as 9% by June 2022. Other states, which generally use Medicare rates as the basis for fee schedules, saw smaller increases in costs for treating injured workers, according to the study by the Cambridge, Massachusetts-based institute, which examined general economy versus medical inflationary trends up to 2023.

Overall, with state-by-state variances that showed medical cost increases of between 2% and 10% in comp, more than 40% of states saw prices in comp go up — many due to factors other than inflation. That upward trend will likely continue, WCRI researchers said, adding that hospital payments “have been and will likely continue” to be the main driver of medical cost growth in workers compensation, especially “in the face of ongoing provider consolidation trends and medical labor shortages.”

Utilization of medical services, which started to recover from the disruptions in the first two years of the pandemic, is likely to remain a key factor behind the growth in workers compensation medical payments, WCRI said.