"in
California the average cost of a workers' compensation claim
with more than seven days of lost time is $29,745 - 28
percent higher than the median"
Your
Workers' Comp Cost per Claim Continues Rapid
Growth
California
workers' compensation costs per claim in
California continue to grow rapidly,
increasing 15 percent from 2000 through 2001
(as of 2002) and are accelerating, according
to a new study from the Cambridge, Mass.-based
Workers Compensation Research Institute.
California has more cost drivers and more
persistent cost growth than any other state in
the study of 12 large states.
The study noted that in California the average
cost of a workers' compensation claim with
more than seven days of lost time is $29,745 -
28 percent higher than the median of the study
states (1999 claims as of 2002, with 36 months
of experience).
Significant cost drivers in California
include:
*Medical costs per claim that were 20 to 52
percent higher than the 12-state median,
resulting primarily from higher use of
services, not higher prices.
*Duration of periods of temporary disability
for injured workers that were three to eight
weeks longer than typical of the study states.
*A higher percentage of claims with more than
seven days of lost time (24 percent versus the
study median of 21 percent).
"The upward trend in California workers'
compensation claims costs has not
abated," said Dr. Richard Victor,
executive director of the Cambridge,
Mass.-based WCRI. "There are a large
number of cost drivers that make the
California system so expensive."
The recent rate of growth in California's
workers' compensations cost per claim was
driven by 17 percent growth in average medical
costs per claim; 12.5 percent in indemnity
benefits per claim (wage replacement payments
for lost-time injuries) and 18 percent growth
in allocated costs to manage claims, known as
benefit delivery expenses.
Factors behind the growth in indemnity
benefits per claim were a higher percentage of
claims with more than seven days of lost time,
longer duration of temporary disability and
higher percentage of permanent partial
disability (PPD)/lump-sum claims.
PPD claims represent the more serious and
costly injuries. Lump-sum settlements are
agreements that typically close out a workers'
compensation claim and result in a single
payment to the worker.
The study of 12 states, which represent about
60 percent of workers' compensation benefits
paid nationally, also reported that expenses
to manage claims in California for 1999 as of
2002 accounted for 12 percent of total claim
costs, among the highest of the 12-state
study.
These benefit delivery expenses per claim
surged nearly 20 percent between 2000 and 2001
as of 2002, after moderating between 1998 and
2000 as the result of higher medical cost
containment expenses per claim, rising
expenses of medical-legal exams and higher
defense attorney payments per claim.
Other states in the WCRI study, CompScope(TM)
Benchmarks: Multistate Comparisons, 4th
Edition, are Connecticut, Florida, Illinois,
Indiana, Louisiana Massachusetts, North
Carolina, Pennsylvania, Tennessee, Texas and
Wisconsin.
"Despite high medical costs and use of
medical management services in
California," Victor observed,
"injured workers there report less
satisfactory outcomes than in two states where
the costs and quantity of medical care is
lower," referring to another WCRI study.
That study, Outcomes for Injured Workers in
California, Massachusetts, Pennsylvania, and
Texas, analyzed the workers' perceived
recovery of physical health and functioning,
return to work, access to health care and
satisfaction with health care in four
important states.
The study reported that worker outcomes in all
categories were generally less satisfactory in
California than in Massachusetts and
Pennsylvania, two states where the average
medical costs per claim were 53 percent and 24
percent lower than California, respectively.
The Workers Compensation Research Institute (WCRI)
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 regulatory
agencies, as well as several state labor
organizations.
