IL: Workers’ Comp Medical Costs Per Claim Among Highest, But Growth Slowed

IL: Workers’ Comp Medical Costs Per Claim Among Highest, But Growth Slowed

CAMBRIDGE, MA - Workers’ compensation costs per claim for medical care of injured workers in Illinois were among the highest of 15 study states one year after implementation of its first medical fee schedule effective 2006, according to a new study by the Workers Compensation Research Institute (WCRI).

However, the study by the Cambridge, Mass.-based WCRI also found that as a result of the new fee schedule, growth in medical costs per claim slowed to 5 percent in 2007/2008 after double digit growth rates before 2005.

The WCRI study Monitoring the Impact of the 2005 Reforms in Illinois: CompScope™ Benchmarks, 10th Edition also found indemnity benefits per claim with more than seven days of lost time in Illinois grew 7 percent in 2007/2008 – the same rate as previous years.

The steady growth in indemnity benefits per claim in 2007 was driven by a 6 percent increase in the duration of temporary disability and a 5 percent increase in the average permanent partial disability (PPD)/lump-sum payment per PPD/lump-sum claim.

Total costs per all paid claims in Illinois early post-reform were among the highest of the study states, at, on average, $11,224 per claim in 2005/2008.

According to WCRI, several factors contributed to this result. Illinois had among the highest percentage of workers that lost more than a week from work, 27 percent compared to 19 percent in the median of 15 states in 2005/2008.

Furthermore, injured workers stayed off work on average 20 weeks, 4 weeks longer than workers in other non-wage-loss states in 2005/2008.

Another key driver of higher indemnity benefits per claim for claims with more than seven days of lost time in Illinois were the more frequent lump-sum settlements. Of the injured workers that lost more than a week off work, 39 percent received a lump-sum payment compared to 22 percent of workers in the median of the 11 non-wage-loss study states in 2005/2008.

On the other hand, the average lump-sum settlement per claim in Illinois was in the middle of the ranking of the non-wage-loss states.

WCRI reported that benefit delivery expenses per claim in Illinois were typical compared to other study states in 2005/2008. Medical cost containment expenses per claim with more than seven days of lost time in 2005/2008 were also typical among study states.

Although there was a higher percentage of defense attorney involvement in Illinois – 32 percent compared to 24 percent in the median study state – once attorneys were involved, the dispute resolution process was more routine.

As a result, the average defense attorney payment per claim with more than seven days of lost time and defense attorney payment greater than $500 in Illinois was among the lowest of the study states, at $2,883 per claim or 28 percent lower than the median of 15 study states in 2005/2008.

WCRI also noted that the time from injury to first indemnity payment in Illinois was typical of the study states in 2007/2008. There was little change in the percentage of workers that received their first indemnity payment within 21 days of injury over the study period.

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, health care, and disability issues. Its members include employers, insurers, governmental entities, insurance regulators and state administrative agencies in the , , and , as well as several state labor organizations.

To order this report, visit the WCRI website: www.wcrinet.org.

Source: Workers Compensation Research Institute