It may not be news to experienced claims professionals that a significant portion of auto injury insurance claim payments go to pay for (or reimburse) treatment that is not considered to be part of conventional medicine. Chiropractors, for example, have been treating injuries from automobile accidents for years, and often with good results. What appears to have escaped attention, however, is the fact that the utilization of alternative treatment, including chiropractic, has grown to the point where, by 2002, more than one-third of all claim payments for treatment were associated with alternative care, as one out of three auto injury claimants countrywide received some form of alternative treatment.
Also largely escaping attention is the fact that most of the recent growth has been driven by the emergence and expansion of forms of treatment - primarily acupuncture and massage therapy - that previously were rarely associated with auto injury claims. While chiropractic care still dominates alternative treatment overall, other forms of alternative treatment have secured a firm foothold in the auto injury compensation systems of some states.
Reviewing the role of alternative treatment in different states reveals another fact that raises important questions about the appropriateness of treatment received by many auto injury claimants. Claimants in some states are two or three times as likely as claimants elsewhere to receive alternative treatment. Extreme variation in the use of alternative treatment across states is unlikely to be explained by differences in the nature and severity of injuries and suggests either that there is substantial disagreement about how best to treat auto injuries or that the treatment standards that do exist are not being uniformly applied. In either case, extreme variation in treatment indicates that many auto injury claimants are likely receiving inadequate, excessive, or otherwise inappropriate care.
The Cost of Alternative Treatment
In 2004, automobile insurance companies paid out more than $23 billion dollars countrywide under the coverages that normally pay for the treatment of crash injuries. A recent study by the Insurance Research Council (IRC) found that 36 percent of all charges for treatment under bodily injury (BI) coverage in 2002 came from providers of alternative treatment-up from 32 percent five years earlier. The experience under personal injury protection (PIP) coverage was similar, with the proportion of charges from alternative treatment providers rising from 27 percent to 31 percent. The increasing cost of alternative treatment tracks closely with an increase in the utilization of alternative treatment. In 2002, 35 percent of all BI claimants and 32 percent of all PIP claimants countrywide received some form of alternative treatment. (See Figure A.)
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According to the IRC, auto injury claims involving alternative treatment are more costly than claims that do not involve alternative treatment. Additionally, the average cost of claims involving alternative treatment, particularly PIP claims, are increasing more rapidly than claims that do not involve alternative treatment. While claim cost data does not measure or reflect all dimensions of treatment outcomes, they are clearly of great importance to the auto insurance and claims community, and for consumers of auto insurance products who ultimately pay for the entire auto insurance system.
Average total claim payments for BI claims with alternative treatment were 4 percent higher than for BI claims without alternative treatment in 2002, and had grown 19 percent from five years earlier, compared with 15 percent for BI claims without alternative treatment. The differences were much greater for PIP claims. Average total payments for PIP claims with alternative treatment were 88% higher than for PIP claims without alternative treatment, and grew much more rapidly-32 percent compared to 15 percent.
Higher claim payments could simply be a reflection of more serious injuries, but, in fact, injuries involving alternative treatment actually appear to be less serious than injuries that do not involve alternative treatment. Two indicators of the seriousness of injury are whether the claimant experienced restricted physical activity after the injury, and whether the claimant, if employed, lost time from work as a result of the injury. According to the IRC, 2002 claimants with alternative treatment were less likely to experience any days of restricted activity or days away from work following their accidents than were claimants receiving only conventional medical treatment. By these measures, claimants with alternative treatment were less seriously injured, on average, than claimants receiving only conventional treatment.
Acupuncture and Massage Therapy
The most common form of alternative treatment is chiropractic, accounting for more than 90 percent of all alternative treatment. But most of the recent growth in the use of alternative treatment in auto injury claims has involved forms of treatment other than chiropractic. Between 1997 and 2002, the utilization rate for chiropractic treatment increased from 32 percent to 33 percent for BI claims, and from 27 percent to 29 percent for PIP claims. In contrast, the percentage of PIP claimants receiving non-chiropractic alternative treatment more than doubled, from 3 percent, in 1997, to 8 percent, in 2002. For BI claimants, the utilization rate doubled, from 2 percent to 4 percent.
Acupuncture and massage therapy are the most common forms of alternative treatment after chiropractic, and the growing utilization of these services is driving much of the overall growth in alternative treatment utilization and cost. Countrywide, 3 percent of all PIP claimants and 1 percent of BI claimants were treated by acupuncturists. Two percent of BI claimants and 4 percent of PIP claimants, in 2002, received massage therapy.
Unexplained Variation in Treatment
The treatment provided to a person injured in an automobile accident may depend as much on where the person lives as it does on the nature and severity of their injury. The IRC has found surprising variation in the utilization of alternative treatment in different states. For example, utilization rates for chiropractic services in 2002 ranged from 13 percent in Michigan and 15 percent in Indiana to 67 percent in North Dakota, 64 percent in Minnesota and 50 percent in California. Utilization rates for massage therapy ranged from one percent or less, in more than half of all the states, to 13 percent in Washington and 37 percent in Hawaii. For acupuncture, utilization rates ranged from less than one percent in most states to 23 percent in New York. (See Figure B.)
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Wide variation in the utilization of alternative treatment is prima facie evidence that many accident victims are receiving inadequate, excessive, or otherwise inappropriate treatment. To be sure, some variation in treatment can be explained by differences in the physical characteristics of those injured, or by differences in the seriousness of injuries. These factors, however, are unlikely to explain much, if any, of the variation in utilization described here. Either too few claimants in Michigan and Maryland, for example, or too many claimants in Minnesota and California are receiving chiropractic care. And either New York claimants receive too much acupuncture or injured claimants in other states receive too little.
Wide variation in the treatment of auto injuries that cannot be explained by differences in the nature and severity of injuries is a consequence of either a lack of universally-accepted standards and guidelines defining appropriate treatment or a failure to apply existing standards and guidelines. The treatment of back and neck sprains and strains has been a difficult and contentious subject for guideline development efforts. However, guidelines for the treatment of these injuries have been developed by a number of organizations, including, among others, the American College of Occupational and Environmental Medicine and the Council on Chiropractic Practice. Unfortunately, these and other guidelines differ markedly in their prescription for treatment and, therefore, are not universally or consistently applied. In many instances, the past practices and traditions of local provider communities govern treatment decisions, and guidelines are either ignored or injudiciously applied.
A final complication is the litigious and adversarial nature of the auto injury compensation insurance system in some states. Strategies for maximizing insurance recoveries may influence treatment decisions, including the utilization of alternative forms of treatment. Indeed, injured claimants represented by attorneys are more than twice as likely to utilize alternative treatment as are non-represented claimants. (See Figure C.)
An Uncertain Future
Newton's first law of motion states that an object in motion will continue to move in the same direction and speed unless and until an opposing force is applied. In a similar manner, the utilization and cost of alternative treatment are likely to continue growing unless steps are taken to slow or reverse these trends. Extreme variation in the treatment of similar injuries also is likely to continue until widely accepted treatment standards and guidelines emerge and are judiciously applied.
The auto insurance claims community faces a difficult challenge. The ability to control the growing utilization and cost of alternative treatment is limited by multiple treatment standards and guidelines which often prescribe different treatment paths, as well as an uncertain legal basis for responding when treatment deviates from whatever standards are applied. The overall current health of the private passenger auto line of business may minimize the importance of confronting these trends at the current time. However, as utilization and costs continue to grow, and offsetting trends begin to wane, the urgency to act will also grow.
[The views and opinions expressed here are solely those of the author and do not reflect the positions or views of the Insurance Research Council or its member companies.]
David Corum is vice president with the Insurance Research Counsel, a division of the American Institute for CPCU. Mr. Corum can be reached at corum@cpcuiia.org.