FLORIDA WORKERS’ COMPENSATION REFORMS OF 2003 BEGIN TO SHOW IMPACT ON SYSTEM COSTS, WCRI STUDIES REPORT

CAMBRIDGE, MA, July 3, 2007 – Workers’ compensation costs per claim for medical care of injured workers and payments per claim for lost wages in Florida appear to have stabilized or declined in the wake of reforms enacted in 2003.

Medical payments per claim were stable in 2004, evaluated in mid-2005, following 6 percent growth in 2003 and 11 to 17 percent increases in the two previous years.

Payments per claim for lost wages, known as indemnity benefits, fell nearly 11 percent in 2004. While there was little change in this measure in 2003, double-digit growth had occurred in the three previous years.

These were among the findings of studies by the Workers Compensation Research Institute (WCRI) that analyzed early evidence of the impact of 2003 workers’ compensation reforms in Florida.

The 2003 legislation included revisions in the medical fee schedule; increased limits on chiropractic services; redefined eligibility standards for permanent total disability; revised benefit amounts for permanent partial disability; limited the number of independent medical examinations; and reduced plaintiff attorney fees.

The WCRI studies, CompScope™ Benchmarks for Florida and The Anatomy of Workers’ Compensation Medical Costs and Utilization, provide baselines for evaluating the impact of the 2003 reforms and an early look at their impact.

Relative to other states in the study, workers’ compensation costs in Florida remained high for the largely pre-reform but more mature claims:  the average medical cost per claim was 33 percent higher than the median of the 14 states studied and the average indemnity payment per claim for claims with more than seven days of lost time was 28 percent higher than the median for 2002 claims as of mid-2005. These data provide a good baseline for examining the full effect of the reforms over the next several years.

WCRI reported that recent payments to injured workers in Florida were being made at a slightly faster rate than in the past. The percentage of claims with initial indemnity payments made within 21 days of injury increased by one point.  Injury reporting time continued to improve.

Early evidence of the impact of the 2004 fee schedule changes suggests that, as might be expected, average prices paid increased for many nonhospital provider services.

Before the adoption of the 2004 fee schedule, average prices paid were among the lowest of the study states for most nonhospital service groups. The 2004 fee schedule increased prices paid to physicians, most noticeably for surgeons. The surgical fee schedule increased to 40 percent above Medicare rates. The fee schedule for nonsurgical physicians was increased to 10 percent above Medicare.

WCRI also observed that price increases for surgical procedures may be less dramatic than expected for major surgeries.

Although the surgical fee schedule increased significantly, the average price increase for major surgery services paid in 2004 compared with 2003 was just 6 percent.  The reasons for the small rise were that many surgeries were previously paid at rates well above the 2003 fee schedule.

The new fee schedule for certain nonemergency hospital outpatient services appears to have lowered average prices for these services substantially, down 38 percent from 2003 for physical medicine and lower by more than 15 percent for other hospital outpatient services.

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 reports, Early Evidence of the Impact of the 2003 Reforms in Florida: CompScope™ Benchmarks, 7th Edition and Baselines for Evaluating the Impact of the 2003 Reforms in Florida and an Early Look at the Impact of the 2004 Fee Schedule Changes: The Anatomy of Workers' Compensation Medical Costs and Utilization, 6th Edition, visit WCRI’s web site at www.wcrinet.org