By Brian E. Clark
WisBusiness.com
Workers’ compensation costs for Wisconsin businesses continue to climb, but they remain low compared to other states, according to a study released Monday.
The report, by the respected Workers Compensation Research Institute, said average costs per claim in Wisconsin grew eight percent in 2002, following two years of double-digit increases.
The major factor behind the increase was growth in medical costs per claim for the treatment of workplace injuries resulting in more than seven days of lost time. These costs have risen 12 percent per year on average for the most recent three years studied, the report said.
John Metcalf, Human Resource Policy Director for Wisconsin Manufacturers & Commerce, said Wisconsin could do more to keep costs down.
He said hopes the state will follow Minnesota and Colorado and adopt a practice protocol to contain health care costs, which now make up 60 percent of workers compensation charges.
Metcalf, who serves on a Workers Compensation Advisory Council for the Legislature, said the protocol would create standards and restrain some health care practitioners who are too quick to order MRIs and other expensive diagnostic procedures.
Metcalf said one bright spot in the report showed that Wisconsin has excellent “return-to-work” outcomes, in part because employers encourage workers to come back with light duty.
The report said other drivers pushing up costs included rising benefit delivery expenses per claim and growth in average indemnity benefits per claim – wage replacement payments for lost-time injuries.
Notwithstanding these rising costs, the average cost per workers’ compensation claim in Wisconsin was among the lowest of the 12 states in the study, 42 percent lower than the median study state.
The study attributed the lower cost per claim in the state to lower medical costs per claim, shorter duration of temporary disability, lower indemnity benefits per claim, fewer payments for permanent partial disability (PPD) and lump-sum settlements.
Lump-sum settlements are agreements that typically close out a workers’ compensation claim and result in a single payment to the worker.
In addition, the study found Wisconsin’s benefit delivery expenses per claim – the costs of delivering medical and indemnity benefits to injured workers – were among the lowest of the 12 states studied, about 50 percent lower than the study median.
Key reasons included lower than typical medical cost containment expenses per claim and less frequent involvement of defense attorneys.
The study, CompScope™ Benchmarks for Wisconsin, 5th Edition, provides a meaningful comparison of the workers’ compensation systems in 12 large states.
It looked at 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 industry mix, wage levels and injury type.
In addition to Wisconsin, the other states in the study conducted by the Cambridge, Mass.-based WCRI were California, Connecticut, Florida, Illinois, Indiana, Louisiana, Massachusetts, North Carolina, Pennsylvania, Tennessee and Texas.
“Overall costs per claim in Wisconsin were low, but the rapid rise in medical costs per claim continued,” said Dr. Richard Victor, executive director of WCRI.
“The lack of a traditional fee schedule and the apparently lower use of medical cost containment mechanisms may have contributed to the increasing medical costs.”
Wisconsin was among the fastest of the states studied in getting indemnity payments to injured workers. The study reported that 53 percent of injured workers were issued their first indemnity checks within 21 days of injury. Once the payor received notice of injury, the speed of payments in Wisconsin was among the fastest of the 12 states studied.
To purchase the report, visit WCRI’s web site at www.wcrinet.org.
– 30 –
