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Study: Cost Per Claim for Injured Workers Trending Higher in Indiana

Posted on: December 3, 2013 by Caitlin Morgan

Study Cost Per Claim for Injured Workers Trending Higher in Indiana

Study: Cost Per Claim for Injured Workers Trending Higher in Indiana

A new study recently released by the Workers Compensation Research Institute (WCRI) indicates that the cost per claim to treat injured workers is higher in Indiana than in other states. Moreover, this trend, according to the study, is growing rapidly. The WCRI is an independent, not-for-profit research organization based in Cambridge, Massachusetts. WCRI’s members include employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia, and New Zealand.

In the report, Benchmarks for Indiana, CompScope™ 14th Edition, it was found that medical costs per workers compensation claim in Indiana were 17% higher than typical of the 16 states in the WCRI study.  At an average of 8% per year from 2006 to 2011, medical costs per claim grew faster in Indiana than in the other study states. The other states along with Indiana in the study were: 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.

The study did note, however, that recent legislation in Indiana addresses hospital costs, a key driver of the higher medical payments. The measure, House Bill 1320, enacted a hospital fee schedule, effective July 2014, with reimbursement set at 200% of Medicare. The law also caps the price of medical implants, and mandates that repackaged drugs cannot be sold for a higher price than the average wholesale price established by the original manufacturer.

“The study will help policymakers and other stakeholders understand how the Indiana workers’ compensation system measures up with other states and serves as an invaluable tool in monitoring system changes,” said Ramona Tanabe, WCRI’s deputy director and counsel.

The study also found that overall workers’ compensation costs per claim were lower in Indiana than in many of the 16 study states, as lower indemnity payments (income benefit payments) offset higher medical costs. Also, indemnity payments per claim were among the lowest of the 16 states, in part because of lower maximum statutory benefits, also addressed by House Bill 1320. Moreover, it took longer, on average, for injured workers to receive their first indemnity payment.

Caitlin-Morgan specializes in providing workers compensations solutions to clients of all sizes. In addition, Caitlin Morgan along with RTW is proud to be an endorsed Indiana nursing home workers compensation solution for IHCA, Hope, and Leading Age members. Please call 877.226.1027 to find out more about how we can help your insureds with their workers comp programs.

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Posted in: Insurance News Workers Comp Workers Compensation