Finding the Right Rx for Your Workers' Compensation Program: Despite a Decline in the Number of Workplace Injuries, Workers' Compensation Costs Continue to Climb, with a Sharp Rise in the Utilization of Medical Services to Blame

By Pennachio, Frank | Occupational Hazards, June 2008 | Go to article overview

Finding the Right Rx for Your Workers' Compensation Program: Despite a Decline in the Number of Workplace Injuries, Workers' Compensation Costs Continue to Climb, with a Sharp Rise in the Utilization of Medical Services to Blame


Pennachio, Frank, Occupational Hazards


Those who oversee safety in the workplace have every right to be proud. There is no doubt that today's workplace is safer than ever.

Since 1991, the frequency of workplace injuries is down approximately 50 percent, thanks to the hard work of safety professionals and engineers, the advent of OSHA in the 1970s, safe workplace practices, cordless tools, modular construction and even robotics, which have lessened human interaction with potentially dangerous machinery.

So if this increased attention to safety has led to a decline in the number of workplace accidents--which has resulted in fewer claims and lower rates--then why has the cost of the claims risen dramatically over the years? Why have some workers fallen through this safety net? The answer is simple: Rising medical costs are directly linked to the alarming increase in utilization of medical services.

What's Driving Medical Severity?

According to a recent study by NCCI, the factor driving medical severity is the growth in the number and mix of medical treatments. The study compared 2001-2002 to 1996-1997 and found that the number of treatments for all diagnosis increased 45 percent, while the increase for injuries such as knee and leg sprains was as high as 80 percent.

Through negotiations, doctors have been cajoled to lower fees, and to counteract these lower fees, medical treatments have increased. Think of it like squeezing a balloon; when you pinch one end, it expands on the other. Doctors are, for the most part, not following evidence-based treatment protocol as set forth by the American College of Occupational and Environmental Medicine (often referred to as the ACOEM Guidelines). And by not doing so, we are witnessing medical treatment plans that are misdirected and unnecessary, coupled with increased levels of treatment, additional testing and the high cost of doctors to run those tests.

What we aren't seeing is anyone challenging these recommendations. The reason is quite simple: no claims adjuster wants to be the first to be fired for agreeing with a doctor's recommendation. The bottom line is that the only thing more costly than a good doctor is a bad doctor.

Employee Mindset

Another major danger with over-utilization is that the steady stream of doctor's visits, MRIs, prescriptions, therapy sessions, etc., creates in the employee a mindset that says, "If I'm undergoing all this treatment, I must really be hurt." The injured employee then slips into "secondary-gain behavior," where his or her decisions are driven more by emotions than economic well-being, often resulting in litigation and the loss of a valuable employee. …

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