Paduda: Comparing Work Comp to Group Health

Wednesday, May 22, 2019 | 0

Barry Lipton, a senior actuary at the National Council on Compensation Insurance, did a quick review of a few ways work comp and group health differ, and how they are sometimes comparable.

Joe Paduda

The biggest difference is that workers’ comp is very focused on return to work, and more broadly, we care more about functionality. In group health, not so much.

Differences: Other than the obvious, WC means ortho and trauma; group health means everything.

• Price differences are 12% higher for work comp than group health.
• Utilization is 60% higher for workers’ comp.
• Total costs are 77% higher.

This differs by state, with Alabama, Missouri and Virginia showing the biggest cost difference compared to national averages, and Colorado and South Dakota with the lowest cost compared to that average.

It also differs by type of service. Not surprisingly, physical medicine is used much more in workers’ comp, driven almost entirely by more utilization.

That’s not surprising, as comp conditions are predominantly musculoskeletal injuries and focused on return to functionality, while group health deals with many more conditions, and RTW is irrelevant.

There’s also a big difference in the cost of imaging.

Medicare pays way less than work comp. The impact of Medicare’s change in reimbursement in 2013 started to really impact workers' comp as regulators adopted/factored in/used Medicare’s rate for reimbursement in their state.

What does this mean for you?

Price utilization equals cost. But one has to factor in RTW in comp, a focus that is nonexistent in group health.

Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.