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NCCI research analyzes decline in late-term medical costs as claimants age
By Roger Rabb, Special Correspondent for the LexisNexis Workers’ Compensation eNewsletter
When comparing the costs associated with providing medical treatment for injuries, even job-related injuries, the “common-sense” conclusion might be that costs for a claim will increase as the claimant gets older. However, that conclusion may not be true. In a January 2013 study, researchers for the National Council on Compensation Insurance (NCCI) found that the average annual workers’ compensation medical payments made for late-term care to claimants who were younger than 60 years of age at the time of treatment exceeded the average annual payments for claimants who were older than 60 when treated. In a subsequent research brief published in October, “The Impact of Claimant Age on Late-Term Medical Costs,” NCCI researchers examined this cost differential by looking at three variables:
> The number of medical services provided and the overall average prices paid;
> The mix of injury types; and
> Prescription drug use.
For this research, the “late-term care” studied was provided in 2011 and 2012 to workers’ compensation claimants for injuries that were sustained 20 to 30 years earlier, between 1983 and 1990. The NCCI divided the workers’ compensation claimants into two “cohorts,” one group with claimants born between 1920 and 1950 (the “older cohort” of claimants over age 60 at the time of treatment), and a second group with claimants born between 1951 and 1970 (the “younger cohort” of claimants no older than 60 years of age).
Cost Differences by Age
The NCCI research found that 57% of the late-term medical costs during the 2011-2012 period were paid for claims by members of the younger cohort, although that cohort accounted for only 45% of the claims made during that period. Consistent with this data, their research also found that average annual medical costs per claim decreased gradually as the age of the claimant increased, from an average annual cost per claim of about $14,000 for claimants in their early 40s to an average annual per claim cost of about $3,500 for claimants who were in their 80s and early 90s.
Comparing the number of services provided per claim and the average cost of those services, the NCCI found that members of the younger cohort averaged 50 late-term medical care services per claim to 36 on average for the members the older cohort, while the average cost per service was about $213 for the younger group, compared to $183 per service for members of the older group. The researchers concluded from this that the number of services per claim was a greater contributor to the difference in claims payments between the two groups than was the cost per service.
Mix of Injury Types
In looking at the type of injuries for the two groups, the NCCI found that diseases accounted for about 70% of late-term claims for both cohorts, and other injury types were generally distributed in similar percentages in the two cohorts. However, some differences were noted. For example, the percentage of quadriplegic and paraplegic claims was almost 4 times higher for the younger cohort, 2.52% to only .66% for the older cohort.
The NCCI researchers noting that this discrepancy between the incidence of quadriplegic/paraplegic injuries between the two cohorts might be the result of the shorter life expectancy associated with those who have these types of severe spinal cord injuries. Asked to comment on the NCCI findings, Vernon Sumwalt, of The Sumwalt Law Firm, Charlotte, NC, a board-certified specialist in workers’ compensation law, added that he “would not normally expect to find older workers (60 years+) in heavy labor jobs. This might account for more severe injuries requiring more significant treatment in the younger group. The higher incidence of paraplegia and quadriplegia in the younger group is consistent with this . . ..”
The seemingly slight difference in the rate of serious spinal cord injuries between the two groups had a larger impact on claim costs. The data collected by the NCCI showed that despite the small percentage of quadriplegic/paraplegic injuries, the cost of treating those claims was proportionately higher, with 16% of the claim costs in the younger cohort going to treat those injuries, compared to 8% of the claim costs in the older cohort.
As noted more generally in the NCCI report, the mix of injuries accounted for about 60% of the difference in average costs between the two comparison groups. Their calculations indicated that of the $4,200 difference in the average annual medical cost per claim between the two groups ($10,700 for the younger cohort compared to $6,500 for the older cohort), the mix of injuries accounted for $2,400 of that difference, with the greater incidence of quadriplegic/paraplegic injuries in the younger group accounting by itself for $1,400 of the difference. Thus, in simple terms, the younger cohort was found to have a more costly mix of injuries than did the older cohort.
The NCCI research found that the proportion of costs allocated to each service category, such as surgery, general medical, and facility costs, was similar between the two groups, with each category in one age group falling within one or two percentage points of the corresponding category in the other group. The research also showed that prescription drugs was the largest single category of expenses for both age groups, comprising 40% of the costs for the older cohort and 38% of the cost for the younger cohort. In comparison, their research indicated that for early-term care provided within 20 years of the date of injury, drug costs only averaged about 10% of the total medical costs.
The NCCI report attributes at least a part of the difference between drug costs in early-term care compared to late-term care to a greater emphasis on pain relief associated with late-term care. Deborah G. Kohl, The Law Offices of Deborah G. Kohl, Fall River, MA (co-author of LexisNexis Practice Guide Massachusetts Workers’ Compensation), commenting on the NCCI results, also noted that “individuals over the age of 60 even with long-term medical problems arising out of workers’ compensation claims tend to have additional medical issues resulting in a decreasing emphasis on the work-related treatment and an increased emphasis on age-related medical treatment.”
In looking at the drug data, the NCCI also discovered that 8 of the top 13 drugs prescribed for claimants in the younger cohort were narcotics, compared to only 4 of the top 13 drugs for claimants in the older cohort, with narcotics comprising 32% of the total share of prescription drug costs in the younger group to 26% for the older group. Their calculations showed that the younger cohort’s average annual prescription drug cost per claim was about $1,000 more than for members of the older cohort, with narcotics making up about half of that difference. Overall, prescription drugs made up about 20% of the difference between the two age groups in average annual late-term medical costs. The NCCI research noted that the difference in patterns of prescription drug use between the two groups might be explained at least in part by the increase in possible adverse drug affects in older claimants, who are more likely to be on multiple prescriptions, as well as by a decrease in the body’s ability to absorb drugs as it gets older. As noted by Ms. Kohl, “The NCCI findings reveal that medication expense is once again a primary trigger for increased medical costs even 20-30 years post injury.”
As we see from the NCCI research, there are a number of factors that might have contributed to explain why the late-term medical costs were higher per claim, rather than lower, for claimants under the age of 60 than for claimants over the age of 60: the claimants under the age of 60 received a greater number of late-term services for claim than did their older counterparts; the mix of injuries being treated was more expensive on average for the younger cohort, with the largest differential being the higher share of treatments for relatively more expensive quadriplegic/paraplegic injuries in the younger cohort; and prescription drug use, especially the use of narcotics, was higher in the younger cohort than in the older cohort.
It should be stressed that the factors explored in the NCCI report might not tell the whole story, however. As Mr. Sumwalt noted, “the risk of cost-shifting for the age group over 60 years . . . has yet to be studied, particularly for those who are at least 65 years old. How much is Medicare paying for injury-related treatment that was left out from the claims studied? This would be useful information to evaluate, just to make sure that the conclusions reached by the [NCCI] data are valid.”
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