PRE-REFORM ILLINOIS WORKERS’ COMPENSATION COSTS PER CLAIM WERE AMONG HIGHEST OF 14 STATES, WCRI STUDY REPORTS

Cambridge, MA, July 6, 2007– Workers’ compensation costs per claim for medical care of injured workers and payments for lost wages in Illinois were among the highest of 14 states studied prior to the enactment of 2005 Illinois reforms, according to a new study by the Workers Compensation Research Institute (WCRI). 

The study, Baselines for Evaluating the Impact of the 2005 Reforms in Illinois: CompScope™ Benchmarks, 7^th Edition, examined the performance of the Illinois system prior to the implementation of 2005 reforms. The report provides baselines for evaluating the impact of those reforms in the next few years.

Before the 2005 legislative changes, the average total cost per claim in Illinois was 31 percent higher than the 14-state median for injuries arising in 2002 with experience through part of 2005.

The major reasons for this result were much higher medical payments per claim and a higher percentage of more seriously injured workers – those who lost more than a week off work (6 percentage points higher than the 14-state median).

Illinois also experienced double-digit growth in total cost per claim over most of the study period prior to the reforms. In the most recent year, costs per claim were growing in Illinois at nearly double the rate of the median study state.

The major driver was the sustained growth in medical costs per claim – at or near double-digit rates each year.

The average medical payment per claim in Illinois was among the highest of study states at more than 60 percent higher than the 14-state median.

Although the average payment for lost wages, known as indemnity benefits, per claim with more than seven days of lost time in Illinois was typical of the other study states, this result masked offsetting factors.

The average duration of temporary disability was somewhat shorter in Illinois than in the median of the study states, but Illinois had a higher average weekly temporary total disability (TTD) benefit rate – in part the result of a higher-than-typical statutory maximum weekly benefit.

In addition, though permanent partial disability (PPD)/lump-sum payments per claim in Illinois were typical compared with the median of the 10 non-wage-loss study states, the percentage of claims with PPD/lump-sum payments in Illinois was among the highest of the 10 non-wage-loss study states.

The 2005 legislation included the creation of a medical fee schedule (effective February 1, 2006) indexed to the U.S. Consumer Price Index (CPI); the establishment of balance billing restrictions and a fraud unit dedicated to investigating charges of workers’ compensation fraud; increases in various income benefits to injured workers; and the addition of three more commissioners to expedite resolution of disputed claims.

WCRI reported that more claims were settled in Illinois than in other study states. The vast majority (93 percent) of the PPD/lump-sum claims in Illinois received lump-sum settlements but no periodic PPD payments, the highest proportion among the 10 non-wage-loss study states.

Benefit delivery expenses per claim were typical of the study states, masking two offsetting factors. Defense attorneys were involved in a much higher proportion of cases in Illinois – 31 percent compared to 20 percent in the median state. However, the average payment per claim to a defense attorney was among the lowest.

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

To purchase the report, visit WCRI’s web site at www.wcrinet.org.