top of page

Stay Ahead of the Game: Understanding the Impact of Facility Services on Workers' Compensation Costs




Workers' compensation medical costs have experienced a moderate level of inflation over the past decade. However, facility services have been the primary driver behind the increases in these costs. In this article, we will explore the impact of facility services on workers' compensation costs and the importance of understanding these trends to stay ahead of the game.


Facility Services and Workers' Compensation Costs

According to a recent publication by the National Council on Compensation Insurance (NCCI), facility costs accounted for about 40% of workers' compensation costs in Service Year 2021, increasing by an average of 3% per year over the past decade. This rate is more than twice as fast as physicians' costs.


Impact of the Current Economic Environment

Glen Pitruzzello, Chief Analytics Officer at WellRithms, points out in his article on the topic that the current economic environment will continue to drive these costs upward. A report from the American Hospital Association found that total hospital expenses were up 11% compared to 2019, with expenses per patient up 20.1% over the two-year period.


Analysis of Facility Services Across Different Types of Facilities

The NCCI publication analyzed three types of facilities: inpatient, outpatient, and ambulatory surgical centers (ASCs). The pay per visit for inpatient facilities increased by 6.6% annually, followed by ASCs at 5.4% and outpatient at 3.3%. In the Southeastern region, the paid per visit for inpatient and ASC facilities was roughly 25% higher than the national average. The report showed that increases in surgery costs were a significant driver behind these cost trends, with "Major Surgery" making up 39% of outpatient payments in 2021, up from 33% in 2012.


Importance of Analyzing Trends for Mitigating Medical Inflation Trends

Over the past 10 years, overall medical cost trends in workers' compensation have experienced a moderate level of inflation. However, Pitruzzello cautions that the past may not always predict the future. He says, "The report provides valuable insights into the overall cost structure of workers' compensation medical services and how facility services are increasing disproportionately to the overall costs. By analyzing these trends, carriers and third-party administrators can partner with solution providers like WellRithms that have deep analytical experience and sophisticated pricing methodologies to target bills and mitigate the medical inflation trends in workers' compensation."


It's crucial to shed light on the ever-changing landscape of workers' compensation medical costs and the impact of rising facility costs. By understanding this landscape, payers can stay ahead of the game and take the necessary steps to mitigate these cost trends and remain profitable. Analyzing trends can also help carriers and third-party administrators partner with solution providers to target bills and mitigate medical inflation trends in workers' compensation.


Written By, Marcie Traylor


bottom of page