Rising Workers’ Compensation Expenses Linked to Facility Services Costs

A report from the National Council on Compensation Insurance (NCCI) examining countrywide medical cost trends revealed that health care facility services costs accounted for 40% of workers’ compensation expenses during 2021 and increased by an average of 3% throughout the past decade. Although specific trends varied by facility type, the report found that the two primary cost drivers of facility services were the amount paid per visit and the number of visits per workers’ compensation claim. Read on for more key findings from the NCCI report.

Trends by Facility Type

The report identified three types of health care facilities: inpatient, outpatient and ambulatory surgical centers (ASCs). Regarding the contribution to change in facility-paid costs per claim, outpatient facilities noted the largest increase, rising by 1.6% between 2012 and 2021. During the same time period, these contributions grew by 1% and 0.7% among ASCs and inpatient facilities, respectively.

Focusing on the average annual change in workers’ compensation costs paid by facility type between 2012 and 2021, ASCs displayed the most substantial change, jumping by 5.7% each year. Outpatient and inpatient facilities also recorded cost increases throughout this time period, rising by 3.3% and 2.1% per year, respectively. Inpatient facilities saw the most significant change in the share of medical costs paid by facility type—which encompasses the frequency of services provided and the price per visit—in the last decade, decreasing from 35% in 2012 to 31% in 2021. Alternatively, the share of medical costs paid among ASCs rose from 15% to 18% during this time, while costs paid by outpatient facilities increased from 50% to 51%. The report stated that factors such as the types of injuries treated, relative procedure expenses, the accessibility levels of each facility type, workers’ compensation fee schedules, and contractual changes between coverage providers and policyholders may have contributed to these shifts throughout the years.

Main Cost Drivers of Facility Services

As previously mentioned, the amount paid per visit and the number of visits per claim served as the principal cost drivers of facility services across all types of health care facilities from 2012 to 2021, thus contributing to the overall inflation of workers’ compensation expenses during the past decade.

Inpatient facilities saw the most substantial average annual change in amount paid per visit by facility type, spiking by 6.6% each year. ASCs and outpatient facilities also noted considerable cost increases during this time period, rising by 5.4% and 3.3% per year, respectively. On the other hand, the average annual change in the number of visits per claim by facility type was not as large, with both outpatient facilities and ASCs recording less than 1% increases each year. Further, visits per claim decreased by 3% annually among inpatient facilities.

For More Information

It’s important to note that this data represents countrywide findings. Read the full NCCI report for additional information and a breakdown of regional data. Contact us today for further workers’ compensation resources.

This document is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. All rights reserved.