New Jersey Workers’ Compensation Medical Cost Trends in 2024
New Jersey’s workers’ compensation system faced significant challenges in 2024 due to rising medical costs, legislative changes, and evolving treatment protocols. Understanding these developments is crucial for stakeholders navigating the state’s workers’ compensation landscape.
Rising Medical Costs
Rising medical costs are significantly impacting New Jersey’s workers’ compensation system. Key factors contributing to this trend include:
- Absence of a Medical Fee Schedule: New Jersey lacks a standardized medical fee schedule, relying instead on a “usual and customary” charge system, leading to higher medical expenses.
- Medical Inflation: Nationally, medical care costs have outpaced general inflation due to increased consumption of medical services, labor shortages, and higher wages for healthcare workers.
- Surgical Costs: New Jersey reports some of the highest surgical costs in the U.S., averaging 115% more than other states, attributed to the lack of fee schedules and prevalence of out-of-network providers.
- Medical Claim Petitions: The practice of medical providers filing petitions for additional compensation after accepting payments has led to increased payouts and administrative burdens.
Legislative Changes
Recent legislative changes in New Jersey have increased workers’ compensation costs for employers and insurers. In August 2024, legislation was enacted to raise the attorney fee cap in workers’ compensation cases from 20% to 25%. Additionally, the state increased the maximum allowable fee for evaluating physicians from $600 to $1,000 to ensure fair compensation for medical experts.
Evolving Treatment Protocols
The integration of advanced medical treatments and technologies has influenced workers’ compensation medical trends. “While these innovations can enhance patient outcomes, they often come with higher costs. The challenge lies in balancing the adoption of these advanced treatments with the need to manage expenses effectively,” said Dave Cucinotta, Director of Finance Strategy and Administration for Horizon Casualty Services, Inc.
The increasing prevalence of workplace-related mental injuries has prompted discussions about compensability and appropriate treatment protocols, requiring comprehensive approaches including counseling and therapy.
Comparative Analysis with Other States
New Jersey’s workers’ compensation medical costs are higher than average compared to other states. Studies by the Workers Compensation Research Institute indicate that medical payments per claim in New Jersey are notably higher than in other states, highlighting the need for continued evaluation of cost-containment strategies.
Impact on Stakeholders
The rising medical costs within New Jersey’s workers’ compensation system have significant implications for various stakeholders:
- Employers: Increased medical expenses lead to higher insurance premiums, affecting business operating costs.
- Employees: While access to advanced medical treatment is beneficial, escalating costs could influence the approval and provision of necessary care.
- Insurers: Insurance carriers face challenges in underwriting policies and managing claims effectively considering rising medical costs.
Future Considerations
To address these challenges, stakeholders might consider strategies such as promoting preventive care, enhancing loss control services, and improving case management to ensure injured workers receive appropriate and timely treatment.
How to Improve the Trend
Addressing the issues in New Jersey’s workers’ compensation requires a collaborative approach among policymakers, employers, insurers, and healthcare providers. Horizon Casualty Services, Inc. (HCS) plays a pivotal role in improving medical cost trends through its extensive provider network and innovative strategies. By contracting with top-tier providers and securing competitive rates, HCS significantly reduces costs while maintaining exceptional care standards.
“The most significant way to improve medical cost trends in NJ workers’ compensation is to evaluate who is pricing the claims,” said Cucinotta. HCS’s Outcomes Focused Network Strategy ensures injured workers receive care from providers who prioritize quality and adhere to evidence-based practices, reducing administrative costs and improving outcomes.
