OHIO BWC's efforts lower costs

Negotiating lower hospital fees helped the agency save on health-care costs.
COLUMBUS -- Even with health-care costs climbing, the Ohio Bureau of Workers' Compensation said its cost-cutting efforts resulted in an 8.5 percent decrease in injured worker medical expenditures in fiscal 2004.
The state agency spent $854 million on health-care costs for public and private employers between July 1, 2003, and June 30, 2004, down from $858 million in fiscal 2003.
Spokesman Jeremy Jackson said the results were surprising to some because independent actuaries had projected BWC's health-care expenses would be $80 million higher for the year.
Agency officials started looking for ways to cut back when health-care expenses started rising at unprecedented levels, increasing more than 48 percent between 1999 and 2003. The most dramatic increases were in hospitalization, up 68 percent, and drug costs, which spiked 104 percent.
Reduction efforts
To reduce those bills, bureau officials negotiated new cost-cutting fee schedules with hospitals, a change that saved about $20 million in 12 months, Jackson said.
They also eliminated payment for some services, such as nonemergency care in emergency rooms, saving about $10 million in the first year.
BWC administrator and chief executive James Conrad touted the reduced health care as a huge success for Ohio's workers' compensation system but said more work is needed to keep costs low.
Drug costs are the biggest challenge, he said, noting that the prescription drug payouts was the one category which exceeded the actuaries' projections. Drug billing was $141 million, about $9 million higher than the experts expected, Jackson said.
To cover the higher costs, the agency increased premiums by 2 percent for private employers in 2003 for the first time in more than 10 years.
The BWC noted in a press release that premiums still remain an average of 32 percent lower since 1995. The average company that paid $10,000 in premiums in 1995 now pays about $7,310, the bureau reported.