WCRI study finds 12% increase in medical costs per claim in Wisconsin

The increased cost and more frequent use of medical care provided to injured workers in Wisconsin drove up the average medical payments per workers' compensation claim in recent years, according to a new study by the Cambridge, Mass.-based Workers Compensation Research Institute (WCRI).

The study, CompScope™ Benchmarks for Wisconsin, 11^th Edition, found that the 12 percent growth in medical costs per claim in Wisconsin for claims arising in the October 2007 through September 2008 period and evaluated as of March 2009 was faster than in the other study states, where the median growth was 9 percent.

As a result of this growth, medical payments per claim in Wisconsin became higher than the median of the 16 study states for 2006/2009 claims. As recently as 2003/2006, medical payments per claim in Wisconsin were fairly typical of the states in the study.

Previous WCRI research reported that the prices paid for services delivered by nonhospital providers, such as physicians, physical/occupational therapists and chiropractors, grew 28 percent from 2002 to 2007, and payments per hospital outpatient services grew 43 percent. The growth in medical payments per claim was also driven by an increase in the utilization of medical services by nonhospital providers. From 2002 to 2007, utilization grew 26 percent, faster than the growth in the median state of 11 percent.

In contrast to the higher and rapidly rising medical payments per claim, historically, Wisconsin has had among the lowest indemnity benefits per claim - payments for lost wages - paid to injured workers compared to the 16-state median. The lower indemnity benefits per claim with more than seven days of lost time resulted from several factors: a shorter duration of temporary disability, a shorter duration of medical treatment, a lower percentage of workers that lost more than a week off work, and less frequent and less costly permanent partial disability (PPD)/lump sum payments per claim.

The study reported that indemnity benefits per claim grew 20 percent in Wisconsin from 2003/2006 to 2006/20009, faster than the growth in the median study state (15 percent). This growth may have been driven by the early stages of the recession, an increase in the average weekly wage, and a rise in the duration of temporary disability.

Costs for all paid claims in Wisconsin were 30 percent lower than the typical study state in 2006/2009. Several factors contributed to this result: injured workers in Wisconsin had shorter duration of temporary disability, fewer cases involved PPD/lump-sum payments, and a lower average PPD/lump-sum payment per claim.

System features such as a two-tier PPD benefit structure, limits on lump sums, and an efficient dispute resolution process might explain the lower indemnity benefits per claim in Wisconsin, according to the study.

Injured workers in Wisconsin received their first indemnity payment faster than the workers in most of the study states in 2008/2009, with 52 percent of the workers in Wisconsin receiving indemnity payments within 21 days of injury, compared to 44 percent in the median of the 16 study states.