Experts put climbing medical costs in comp under the scope: NCCI

ORLANDO, Florida — Pain management has been a balancing act for workers compensation payers, with medical claims costs slowly climbing despite efforts to reduce them, according to experts who spoke last week at the National Council on Compensation Insurance’s Annual Insights Symposium.

Medical cost severity increased by an average of 6% in 2024, compared with 2023, in the 38 states where NCCI provides rate-making services, said Donna Glenn, chief actuary for Boca Raton, Florida-based NCCI.

Ms. Glenn pointed to utilization as a primary cost driver. Injured workers are seeking more care, and that care is also costing more, she said.

“We have not seen a change of this magnitude since the mid-2000s,” Ms. Glenn said. “I can tell you it’s not due to large loss activity,” she said, noting that claim frequency has continued to drop, which she attributed to greater adherence to workplace safety measures.

Pain management is an area to watch, experts said.

For pain management alone, medical costs per claim have steadily increased by about 2% per year since 2012 despite efforts to reduce the use of pain medications, said Jon Sinclair, director and actuary at NCCI. During that period, opioid prescribing, along with the entire comp drug spend, has declined.

Yet expensive topical drugs, while remaining a small fraction of pain-management costs, have become a pain point for the industry. The prescribing of such drugs has increased 50% since 2012, and the cumulative costs for them has risen threefold, he said.

Still, as of 2023, the industry saw 14% fewer claims reporting any pain management treatment compared with 2012, Mr. Sinclair said, adding that “for those claims still reporting pain management treatment, the cost has grown slowly, averaging just over 1% per year.”

However, “costs from all other treatments are now outpacing declining drug costs,” he said, showing how the shift has caused more money to be spent earlier in the claim, with less medication leading to more care from physicians and other providers.

Ms. Glenn cited a 7% increase in physician visit costs per claim from 2023 to 2024. Major surgeries and physical medicine, such as physical therapy visits, each saw the most significant increases, compared with areas such as evaluations and imaging

Raji Chadarevian, NCCI executive director of actuarial research, said there has also been a shift in the types of care and surgeries comp patients are receiving. Some of those surgeries tend to cost more, meaning medical costs overall continue to climb; the shift, however, has resulted in fewer drug prescriptions long term and better outcomes for injured workers, he said.

“This is indicative of changing treatment patterns that are more dependent on physical medicine than on medication,” Mr. Chadarevian said.

To date, about 70% of medical utilization is for doctors, he said, with an annual growth rate of about 3.4% that will likely continue, he said.

Mr. Chadarevian cautioned that “disruptions do happen, be it fee schedules with an impact on price trends, or technological advancements that expand the use of the procedures taking place in an outpatient setting.”