Nationwide Workers’ Comp Trends from WCRI

At the 2019 WCRI Annual Conference, a session discussed some of the latest findings and trends seen across WCRI’s core benchmark studies, including WCRI’s 18-state CompScope™ Benchmarks reports.

The presenters were:
Moderator: Ms. Ramona P. Tanabe, WCRI
Speakers:
Ms. Carol A. Telles, WCRI, Facility Costs and Use: Factors in Interstate Differences and Trends 
Ms. Evelina Radeva, WCRI, Comparing Benefit Delivery Expenses
Dr. Rebecca Yang, WCRI, Frequency and Costs of Lump-Sum Settlements

Facility Metrics

Facility payments accounted for 9-25% of total medical costs across 18 states studied. The median was 17%. Facility payments are seen on 26-44% of total claims. There was wide variation between states in the percentage of facility payments from hospitals vs ambulatory surgical centers. There was also a wide range in terms of average payment to facilities with states on the high end being 4-5 times higher than the lower cost states. This is usually associated with different reimbursements rules across the states for facilities.

From 2011-2016 there was a notable shift in payments from hospital outpatient facilities to ambulatory surgical centers indicating wider use of ASC facilities for outpatient surgeries.

It was noted that during the study period there were some states that changed their reimbursement rules for facility services. In particular in North Carolina. This resulted in a rather significant change in reimbursements during the study period.

The study also found a slight decrease in surgery rates across the study period. This could be due to physicians opting for more non-surgical options. In addition, in many states there has been an emphasis in preventing unnecessary lumbar fusion surgeries which were a significant cost driver that provided little to no benefit to the injured workers.

In addition, in states like New Jersey it appears increased network participation by ambulatory surgical centers was a factor in their decrease in facility payments. New Jersey does not have a fee schedule so the networks are a key cost-savings tool.

Benefit Delivery Expenses

In addition to indemnity and medical expenses, the benefit delivery costs are a significant factor in the workers compensation system.

In a typical study state, indemnity benefits were 44% of total costs, medical was 41% of total and 15% was for benefit delivery. About half the benefit delivery costs were for litigation and the other half for medical management fees including bill review, UR, and nurse case management.

Across the study states, the range of benefit delivery costs was from 11% (WI) to 23% (CA). In terms of dollars, the low average was WI ($4208) and the high was LA ($11,769).

In most study states, medical cost containment fees were 15-20% of the total medical payments. Part of the variation seen between states is due to different regulatory requirements including mandatory utilization review and whether the state had a medical fee schedule.

Defense attorney payments were the largest share of litigation expenses in most states. The lowest litigation expenses were in TX ($2817) and the highest was LA ($9580) followed closely by PA. Texas has a fairly self-executing system which includes ombudsmen to assist injured workers and informal conferences. This structure has a significant positive impact on their litigation costs.

Medical cost containment expenses per claim grew about 5% per year since 2005 in most study states. New Jersey had a significantly higher rate of growth due to their lack of a fee schedule.

Lump Sum Settlements

The frequency and size of lump sum settlements in states varies based on whether the state uses a PPD benefit system vs a wage loss benefit system. The wage loss states are MI, MA, VA, PA and LA. The PPD states in the study were TX, WI, AR, MN, NJ, IN, IA, TN, FL, CA and IL. There are two states (NC, GA) which are a hybrid.

PPD settlements were most frequent in IL, FL and CA among the study states. The highest cost PPD settlement state was IA, at over $40,000/claim. The low cost state was TX at just over $10,000/claim.

It was noted that the settlements in wage loss states were usually higher than the PPD states, but there were less claims with lump sum settlements in wage loss states.

The percentage of claims with lump sum settlements increased in most study states since 2008. In 14 of 18 study states there was very little increase in the average lump sum settlement during the study period.