What is Medical Inflation and how does it affect worker’s compensation claims?

Medical inflation refers to the rising cost of healthcare services over time, particularly in the context of workers’ compensation claims. The cost of healthcare plays a critical role in increasing the overall cost of claims and it can impact how insurers and employers manage costs. There are several key factors which may affect medical inflation in workers’ compensation. These include:

  • Escalating costs of hospital stays and surgical procedures
  • The growing use of advanced medical technologies and diagnostic tools
  • The consolidation of healthcare providers leading to price variability
  • Evolving treatment protocols leading to cost adjustments that can be higher or lower, depending on the treatment: i.e. earlier adoption of injections or surgical interventions.

Understanding these potential medical inflationary causes becomes an essential part of controlling healthcare costs. Claims professionals, insurers, and employers need to work with a trusted Center of Excellence (COE) like BICMD to optimize care delivery and maintain sustainable workers’ compensation programs in the face of ongoing medical cost increases.

How does medical inflation impact claims management in Workers’ Compensation?

Medical inflation significantly affects claims management by increasing both the complexity and cost of handling workers’ compensation cases. Insurers have to set aside more money for medical and wage-related costs because treatment is getting more expensive and recovery is taking longer. Employers and insurers may find it difficult to plan financially how much coverage to reserve to adequately cover their workers.

Medical inflation can also lead to increased litigation and treatment disputes as both employers and insurers question medical necessity and the pricing of certain medical procedures or technologies. The uncertainty between appropriate care and cost justification can cause more contested claims and delays in resolution. Prolonged treatment and higher medical expenses for workers naturally extends the life of a claim and inflates the ultimate payout. For claims managers, these challenges necessitate more proactive oversight. Forming strategic partnerships with medical experts like BICMD who offer data-driven decision-making, help control costs, and improve outcomes in a rapidly changing healthcare landscape.

How does Best In Class MD (BICMD) help mitigate inflationary trends in Workers’ Compensation?

Best In Class MD (BICMD) plays a critical role in helping employers and insurers mitigate the impact of medical inflation within the workers’ compensation system. BICMD offers a range of services designed to improve clinical outcomes while reducing unnecessary medical expenses. These include:

  • On-demand expert medical opinions
  • Access to Centers of Excellence (COEs) for high-quality, cost-predictable surgical procedures
  • Age of Injury Reports, which assess the likely causation and timing of injuries to prevent unrelated claims from being tied to work-related incidents

BICMD’s solutions directly address inflationary pressures by reducing unnecessary surgeries and treatments. For example, clients utilizing BICMD have seen up to 40% reductions in surgery approvals after obtaining expert second opinions, which often recommend more conservative and effective treatment paths. This results in substantial cost savings, often saving tens of thousands of dollars per claim. By integrating BICMD into the claims process, organizations gain greater control over medical decision-making. BICMD helps reduce litigation exposure and creates a more data-driven, inflation-resistant approach to workers’ compensation claims management.

Why should you use BICMD to stay ahead of rising healthcare costs?

Proactive medical claims management is essential for controlling costs, improving outcomes, and mitigating the impact of medical inflation in workers’ compensation claims. By addressing treatment decisions early and leveraging expert medical insight, employers and insurers can reduce unnecessary procedures, shorten claim duration, and enhance insurance-cost accuracy. Partnering with a trusted resource like Best In Class MD ensures access to expert opinions, evidence-based guidance, and strategic tools that drive better clinical and financial results. Contact us at Best In Class MD today to learn how we can strengthen your claims strategy and help you stay ahead of rising healthcare costs.