WISCONSIN WORKERS’ COMPENSATION COSTS PER CLAIM LOWER, BUT MODEST GROWTH CONTINUED, SAYS NEW WCRI STUDY  

State May Be Missing Opportunities to Control Medical Costs

Milwaukee, WI, March 6, 2003 – Although the average cost of a workers’ compensation claim in Wisconsin was lower than most states, average cost per claim continued to grow moderately, according to a new study by the Workers Compensation Research Institute (WCRI).

The study of 12 states representing 50 percent of the nation’s workers’ compensation benefits paid also found that the less intense use of medical cost containment services in Wisconsin may be related to higher than expected medical payments per claim made for the treatment of injured workers.

This finding suggests that there may be opportunities to reduce medical costs per claim with broader adoption of medical cost containment initiatives, the study observed.

Lower workers’ compensation costs per claim in the state were driven by shorter duration of temporary disability, lower indemnity benefits per claim – wage replacement payments for lost-time injuries – and fewer and less costly claims for permanent partial disabilities (PPD) and lump-sum settlements.

Costs per claim for a similar set of claims were lower in Wisconsin than in most of the 12 study states. At an average of $2,182, total costs per all paid claims in Wisconsin were about half the average in Texas, the state with the highest total costs per paid claims.

The study, CompScope™ Benchmarks:  Multistate Comparisons, 1994-2000, provides a meaningful comparison of the workers’ compensation systems in 12 large states on key performance measures. In addition to Wisconsin, the other states in the study conducted by the Cambridge, Mass.-based WCRI were California, Connecticut, Florida, Georgia, Illinois, Indiana, Massachusetts, North Carolina, Pennsylvania, Tennessee and Texas.

The study noted that costs per claim in Wisconsin grew 6 percent from 1998 to 1999 (evaluated as of mid-2000), about the same rate of moderate growth – averaging over five percent per year – between 1995 and 1998.

Indemnity benefits per claim rose 4.5 percent, medical payments per claim grew 6 percent and benefit delivery expenses per claim increased 12 percent in 1999 as of mid-2000, according to the study. Growth in temporary disability duration drove the increase in indemnity benefits per claim.

The study pointed out that given Wisconsin’s lower claim costs overall, medical payments per claim were higher than expected – $1,462 versus the 12-state median of $1,406.  At the same time, medical cost containment services, such as bill and utilization reviews, case management, and preferred provider fees, were used with less intensity than in other states.

“Public policymakers in Wisconsin should keep a close eye on rising workers’ compensation costs per claim,” said Dr. Richard Victor, executive director of WCRI. “In particular, the state may be missing an opportunity to control its higher than expected medical costs by not utilizing medical cost containment services,” he said.

For example, the study reported that Wisconsin claims had lower expenses for medical cost containment services than in any other study state – $460 per claim, less than half the amount for the median of the 12 states ($958) for 1999 claims with more than seven days of lost time (evaluated as of mid-2000).

Rather than a traditional fee schedule, Wisconsin has relied on certified databases that list formula amounts for medical reimbursement.

Wisconsin also does not use treatment guidelines and uses utilization reviews in a more limited way than other study states. While managed care is permitted, it is not regulated by the workers’ compensation agency.

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