Geographic variation in expenditures for Workers' Compensation hospitalized claims

Objective Past literature finds considerable variation in the cost of physi cian care and in the utilization of medical procedures. Variation in the co st of hospitalized care has received little attention. We examine injury co sts of hospitalized claims across states. Design Multivariate regression analysis is used to isolate state variations , while controlling for personal and injury characteristics, and state char acteristics, Setting Injuries to workers filing Workers' Compensation lost workday claim s. Participants About 35,000 randomly sampled Workers' Compensation claims fro m 17 states filed between 1979 and 1988. Main Outcome Measure Medical payments per episode of three injury groups: u pper and lower extremity fractures and dislocations, other upper extremity injuries, and back strains and sprains. Results Statistical analyses reveal considerable variation in expenditures for hospitalized injuries across states, even after controlling for case mi x and state characteristics. A substantial portion of the variation is expl ained by state rate regulations; regulated states have lower costs. Conclusions The large variation in costs suggests a potential to affect the costs of hospitalized care. Efforts should be directed at those areas that have higher costs without sufficient input price, quality or case mix just ification. Am. J. Ind. Med. 35:103-111, 1999. (C) 1999 Wiley-Liss, Inc.