MEDICAL COST TRENDS THEN AND NOW - NCCI Holdings Inc. · 2017-05-18 · NCCI analysis is based on Medical Data Call for medical services provided during the year of injury and paid

AIS2017© Copyright 2017 NCCI Holdings, Inc. All Rights Reserved.

MEDICAL COST TRENDSTHEN AND NOW

BARRY LIPTON, FCAS, MAAAPRACTICE LEADER AND SENIOR ACTUARYNCCI

© Copyright 2017 NCCI Holdings, Inc. All Rights Reserved.

AIS2017

WC Average Medical Cost per Lost-Time ClaimPrivate Carriers and State Funds—NCCI States

p Preliminary based on data valued as of 12/31/2016Source: Severity: NCCI Financial Call data, developed to ultimate, excludes high‐deductible policies; 1995–2015: Based on data through 12/31/2015Includes all states where NCCI provides ratemaking services; WV is excluded through 2007

$8.9

$27.7

$29.1

+5.1% +7.4%+10.1% +8.3%

+10.6% +7.3%+13.5%

+8.8%+7.7%

+5.4%+7.8%

+5.8%+5.9%

+7.0%+4.4% +0.2% +2.4% +1.1% +1.8%

+4.0% -1.4%+5.0%

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16p

Accident Year

$ Thousands


AIS2017

WC Change in Medical Cost per Lost-Time ClaimComparison to Change in Personal Health Care (PHC) Spending per Capita

p Preliminary based on data valued as of 12/31/2016Sources: Severity: NCCI Financial Call data, developed to ultimate, excludes high‐deductible policies; Accident Years 1995–2015: Based on data through 12/31/2015

Includes all states where NCCI provides ratemaking services; WV is excluded through 2007PHC Spending per Capita included in National Health Expenditure Data as published by the Centers for Medicare & Medicaid Services at https://www.cms.gov/Research‐Statistics‐Data‐and‐Systems/Statistics‐Trends‐and‐Reports/NationalHealthExpendData/index.html; Calendar Years 1995–2015: Based on historical data

7.4

10.1

8.3

10.6

7.3

13.5

8.8

4.5 4.6 4.8 4.96.0

7.5 7.4

Year

Annual Growth Rate (AGR)

WC: 9%PHC: 6%

Medical Cost per Lost-Time Claim

PHC Spending per Capita

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html


AIS2017




7.7

5.4

7.8

5.8 5.97.0

4.4

7.1 6.55.8 5.4 5.3

3.8 4.2

Year

AGR

WC: 6%PHC: 5%


PHC Spending per Capita



AIS2017




0.2

2.41.1

1.8

4.0

-1.4

3.0 2.8 3.32.2

4.45.2

Year


PHC Spending per Capita Period WC AGR PHC AGR

1995–2002 9% 6%

2002–2009 6% 5%

2009–2015 1% 3%



AIS2017

What were the drivers of the AY 2015 decline?


AIS2017

Physicians Contribute to the AY 2015 Medical Payments per Claim DeclineAY Payments Through 12 Months; Includes Medical-Only Claims, Does Not Include Case Reserves

NCCI analysis is based on Medical Data Call for medical services provided during the year of injury and paid within three months after the end of the year. For example, Accident Year 2013 includes payments reported by March 31, 2014, for services rendered in 2013 for claims with an accident date in 2013. An analysis is based on claims with at least one medical service during the accident year. Data includes the states where NCCI provides ratemaking services. Data used with permission.

$1,232 $1,246 $1,267 $1,232

$996 $1,017 $1,053 $1,069

$494 $511 $553 $541

2012 2013 2014 2015Accident Year

All Other

Hospitals

Physicians

–2%

+2%

–3%


AIS2017

Utilization Drives the AY 2015 Decline in Physician Paid per ClaimPhysician Price and Utilization Changes by Accident Year Valued at 12 Months

NCCI analysis is based on Medical Data Call for medical services provided during the year of injury and paid within three months after the end of the year. For example, Accident Year 2013 includes payments reported by March 31, 2014, for services rendered in 2013 for claims with an accident date in 2013. Analysis is based on claims—including Medical‐Only claims—with at least one medical service during the accident year. Data includes the states where NCCI provides ratemaking services. Data used with permission.

1% 1%0%0%

1%

-3%

1%

2%

-3%

Change in Price

Change in Utilization

Change in Physician Payments per Claim

2012 to 2013 2013 to 2014 2014 to 2015


AIS2017

Why the mild growth of WC medical costs since AY 2009?


AIS2017

Drivers of Workers Compensation Medical Costs per Claim

Fee Schedules

HospitalCosts

Medicare Set-Asides

NewMedical

Treatments

Drugs/ Opioids

ProviderNetworks


AIS2017

States With Physician Fee Schedules as of Year-End 197912 States in Total

No Fee Schedule

Fee Schedule


AIS2017

States With Physician Fee Schedules as of Year-End 199940 States in Total

No Fee Schedule

Fee Schedule


AIS2017

States With Physician Fee Schedules as of Year-End 201644 States in Total—33 of Which Have a Medicare-Based Schedule

No Fee Schedule

Non-Medicare

Medicare-Based


AIS2017

Network Share of Physician Payments Slows Medical Cost Growth

Source: Calendar Years 1997–2004 period is based on sample data provided by carriers for 25 states. Calendar Years 2011–2015 is based on data carriers reporting Medical Data Call for 37 states for which NCCI provides ratemaking services, excluding Texas. Data includes Medical‐Only claims. 2011–2015 shares are similar to shares shown when restricted to the carriers and states used for the analysis of Calendar Years 1997–2004.

1997–20042011 2012

20132014

2015

50%58% 59% 60% 62% 65%

Calendar Year


AIS2017

What contributed to the increase in hospital payments per claim?


AIS2017

WC Payments per Inpatient Stay and Outpatient Visit Are RisingAY Payments Through 12 Months; Includes Medical-Only Claims, Does Not Include Case Reserves

NCCI analysis is based on Medical Data Call for medical services provided during the year of injury and paid within three months after the end of the year. For example, Accident Year 2013 includes payments reported by March 31, 2014, for services rendered in 2013 for claims with an accident date in 2013. Analysis is based on claims with at least one medical service during the accident year. Data includes the states where NCCI provides ratemaking services. Data used with permission.

$19,514 $22,944 $24,558 $25,320+18% +7% +3%

$756 $782 $820 $822+3% +5% 0%

Hospital Inpatient Paid per Stay(Accident Year)

Hospital Outpatient Paid per Visit(Accident Year)

2012 2013 2014 2015


AIS2017

Medicare Reimbursement Rate Changes Put Pressure on WC Prices

This slide shows how WC costs in states where NCCI provides ratemaking services would have changed if all WC payments were made according to the federal Medicare reimbursement schedules as published by the Centers for Medicare & Medicaid Services and the number and mix of medical services were held constant.Source: NCCI analysis is based on Medical Data Call—including Medical‐Only claims—and conversion factors and relative value units as published by the Centers for Medicare & Medicaid Services

-0.4%

2.0%

-0.6%

0.1%

3.6%

2.2%

-0.8%

2.9%

8.9%

-0.4%

1.0%

8.5%

0.2%1.0% 0.8%

Physician Hospital Inpatient Hospital Outpatient

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016


AIS2017

What about Medicare Set‐Asides (MSAs)?


AIS2017

Approved vs. Submitted MSA Gap Appears Steady Since 2013

Source: NCCI analysis of data provided by ExamWorks Clinical Solutions and PMSI Settlement Solutions, LLC, an entity of Optum, for MSAs completed between January 2010 and December 2015 for submissions to the Centers for Medicare & Medicaid Services between September 2009 and December 2015. Data includes District of Columbia and all states except North Dakota and Wyoming.

$120,205

$113,010

$97,890

$111,793 $112,352

$103,288

$76,055 $78,767

$81,048

$101,260 $101,084

$88,911

2010 2011 2012 2013 2014 2015

Year in Which Determination Letter Was Received

Average Approved MSA

Average Submitted MSA

$44,150 $34,243

$10,533

$16,842

$11,268

$14,377


AIS2017

Processing Time for MSAs in 2015 Lowest in Recent History

99

202

240

116 115

73

2010 2011 2012 2013 2014 2015

Year in Which Determination Letter Was Received

Average Processing Time in Days

Source: NCCI analysis of data provided by ExamWorks Clinical Solutions and PMSI Settlement Solutions, LLC, an entity of Optum, for MSAs completed between January 2010 and December 2015 for submissions to the Centers for Medicare & Medicaid Services between September 2009 and December 2015. Data includes District of Columbia and all states except North Dakota and Wyoming.


AIS2017

Summary

Most physician fee schedules have been in place since 2000

Higher provider network penetration reaps benefits of system efficiencies

Opioid utilization is declining

CMS processing time for MSAs has decreased

A myriad of new medical treatments are on the horizon

Recently, hospital costs have been rising faster than overall WC medical costs


AIS2017

A look into the future


AIS2017

Into the Future

Medical treatment and practice will continue to change

Some new treatments will increase costs

But some new treatments will restore full functionality, enabling a full return to work

What does this mean for the concept of permanent disability?

NCCI will continue to track trends affecting workers compensation costs

Documents

MEDICAL COST TRENDS THEN AND NOW - NCCI Holdings Inc. · 2017-05-18 · NCCI analysis is based on Medical Data Call for medical services provided during the year of injury and paid