Wisconsin Workers' Compensation Costs Per Claim Continued to Grow, WCRI Study Reports

Business Wire, April 2, 2008

Average Costs per Claim Still Among the Lowest of 14 Study States

CAMBRIDGE, Mass. -- The average workers' compensation total cost per claim in Wisconsin grew rapidly for four of the five years in the study period including 8 percent in 2005/2006 claims, according to a new study by the Workers Compensation Research Institute (WCRI). This growth was driven primarily by the increase in the medical payments per claim.

Medical costs per claim with more than seven days of lost time grew throughout the study period, with double-digit growth in four of the five years in the study period, including 14 percent in 2005/2006.

The study by the Cambridge, Mass.-based WCRI also noted that the average total cost per claim in Wisconsin was among the lowest of 14 states - 36 percent lower than the median of the study states for 2003/2006 claims.

On nearly all measures examined in the study, Wisconsin was lower than typical. An exception was that medical costs per claim with more than seven days of lost time were fairly typical for 2003/2006 claims. According to another WCRI study, Wisconsin had the highest average prices paid among the study states, but this was offset by lower utilization of medical services.

Several factors played a significant role in the lower cost per claim in Wisconsin, including faster return to work; much lower permanent partial disability (PPD)/lump-sum payments per claim; and among the lowest expenses per claim for delivering indemnity and medical benefits to injured workers.

The average indemnity benefit per claim with more than seven days of lost time in Wisconsin grew by nearly 9 percent in 2005/2006, following little change in the prior year.

This was due to small changes in a number of factors according to WCRI: an increase in the average duration of temporary disability; growth in the average weekly wage; an increase in the average permanent partial disability (PPD)/lump-sum payment per PPD/lump-sum claim; and a moderate increase in the frequency of PPD/lump-sum claims.

Benefit delivery expenses per claim with more than seven days of lost time and expenses rose 15 percent in 2005/2006, driven mainly by medical cost containment expenses.

Medical cost containment expenses per claim increased 21 percent in 2005/2006. Although growing at a rapid rate, the average medical cost containment expense per claim with expenses in Wisconsin was still the lowest of the 14 study states at all claim maturities, WCRI noted.

WCRI reported that Wisconsin was among the fastest of the study states in terms of timeliness of first indemnity payment. Fifty-three percent of injured workers in Wisconsin were issued their first checks within 21 days of injury, compared to the 14-state median of 41 percent. Faster payments may have been influenced by the state agency's efforts to monitor timely payments and to provide payors with feedback about their performance.

The WCRI study, CompScope[TM] Benchmarks for Wisconsin, 8(th) Edition, provides a meaningful comparison of the workers' compensation systems in Wisconsin and 13 other important states on key performance measures such as benefit payments and costs per claim, timeliness of payments, and defense attorney involvement by analyzing a similar group of claims and adjusting for interstate differences in industry mix, wage levels, and injury type.

The other states in the study were Arkansas, California, Florida, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, North Carolina, Pennsylvania, Tennessee, and Texas.

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, and governmental entities, insurance regulators and state administrative agencies in the U.S., Canada, Australia and New Zealand, as well as several state labor organizations.

The report may be purchased on the WCRI web site: www.wcrinet.org.