Benchmark Report Measures Workers Compensation State Systems

Benchmark Report Measures Workers Compensation State Systems

Benchmark Report Measures Workers Compensation State Systems

The Workers Compensation Research Institute (WCRI) recently released a report measuring the performance of 16 different state workers compensation systems. The study examines how income benefits, overall medical payments, costs, use of benefits, duration of disability, litigiousness, benefit delivery expenses, timeliness of payment, and other metrics and system performance have changed per claim from 2007 to 2012, according to the WCRI.

The 16 states in the study include: Arkansas, California, Florida, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Texas, Virginia, and Wisconsin. These states represent nearly 60% of the nation’s workers’ compensation benefit payments.

How did the states fare? It’s a mix bag. For example, findings show that Louisiana continues to see cost increases per claims, despite the fact that it’s already higher than in most states. According to the WCRI report, total costs per claim were nearly 50% higher than the median of the states studied for 2009. Between 2006 and 2011, costs rose at an 8% per year average, the fastest growth rate of the states studied. Increases averaged between 7% and 9% for medical, indemnity and expenses per claim, the report said. Indemnity benefits increased by 9% annually, the fastest among the states and 40% higher than the 16-state median. Indemnity benefits were higher, the report said, because workers were off the job longer – an average of 33 weeks, which is eight to 10 weeks longer than other wage-loss study states such as Michigan and Pennsylvania and 13 to 16 weeks longer than Michigan and Virginia.


On the other side of the spectrum, Texas is keeping its overall costs per claim down and Illinois cut medical payments per claim, thanks to reforms in each state. In Texas, for example, the 2005 reform legislation allowed for the creation of certified medical networks and the use of treatment guidelines and utilization review. The report shows costs per claim were lower than typical for 2011, but were among the highest before the reforms were passed. Claims grew 3% to 6% in most years between 2006 and 2011, slower than most states, with medical costs accounting for 60% of the growth during that time. Medical costs per claim, however, were 17% lower than the median state for 2009 claims that were evaluated in 2012. What’s more, the Texas Department of Insurance recently credited the impact of its reform with closing the cost gap between network and non-network claims from 31% in 2010 to 4% in 2013.

California & Illinois

California, according to the report, revealed that workers received more permanent partial disability benefits and lump-sum payments compared with other states, although the payments were lower than most. Medical payments per claim were at the lower end of the middle group of states studied, but the amounts had risen in the 2005-2010 time period prior to leveling off.

In Illinois, medical payments per claim also dropped, thanks in part to 2011 regulatory reforms that included a 30% drop in fee schedule rates. WCRI cites earlier work in estimating that prices paid for professional services fell 24% between 2010 and 2012. After the fee schedule rate reduction, prices for services dropped in many areas, including a 34% cut in neurological/ neuromuscular testing, the new WCRI report said. Workers comp prices paid in Illinois are still 35% above the median study state price, but is favorably when compared to 2010 when prices were 88% above the median.

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Sources: WCRI, A.M. Best