The steep growth in consumer prices for energy, food, and housing over the last few years created concerns about potential rising inflation in medical care. This study examines to what extent the recent sizable price growth for all goods and services spread to the health care sector in general and to workers’ compensation in particular.

The study brings together information on changes in workers’ compensation medical prices and external data on consumer price inflation and medical sector inflation over the 2012 to 2022 period. It identifies the main drivers of the workers’ compensation medical cost growth and focuses on the price components associated with the major provider types. It discusses how state-specific workers’ compensation price regulations allow for adjustments in reimbursement rates during inflationary price growth periods. How fee schedules shape the growth in professional prices and hospital outpatient facility payments is also addressed.

In addition, the study discusses several mechanisms through which faster increases in medical prices and payments in workers’ compensation may be possible in the future, as health care price increases may lag behind inflation in the overall economy.

Insights into Medical Inflation in Workers’ Compensation—A WCRI FlashReport. Olesya Fomenko and Rebecca Yang. August 2023. FR-23-01.

Copyright: WCRI