The average cost per workers' compensation claim in New Jersey was 16 percent higher than the median of 16 states analyzed in a study by the Workers Compensation Research Institute (WCRI).
The higher costs per claim in New Jersey occurred, in part, because more injured workers there had at least one week off work (28 percent compared to 21 percent) than injured workers in the typical study state. As a result, cases in which New Jersey workers received workers' compensation income benefits were more frequent and those claims were more costly than cases with only payments for medical care.
The Cambridge, Mass.-based WCRI also noted that when using data on costs per claim and frequency from statistical reports of the National Council on Compensation Insurance (NCCI), the average cost per worker in New Jersey was typical—4 percent higher than the median state.
That result reflects offsetting factors, a higher average cost per claim but a lower frequency of claims per 100,000 workers. WCRI reports on costs per claim; claim frequency is not factored in.
Payments per claim for lost wages, known as indemnity benefits, with more than seven days of lost time in New Jersey were lower than typical of the study states.
WCRI found that indemnity payments per claim with more than seven days of lost time in New Jersey were 21 percent lower than in the median study state for 2006 claims analyzed in 2009 (at an average 36 months of experience) and accounted for a lower share of total costs per claim (39 percent) than in many study states.
The lower indemnity benefits per claim in New Jersey reflect the impact of several system features, including the statutory maximum benefit, permanent partial disability (PPD) benefits, and provisions that give workers an incentive to return to work.
The WCRI study Benchmarks for New Jersey, CompScope™ 11th Edition reported that the lower indemnity benefits per claim were offset by typical medical costs per claim and 14 percent higher benefit delivery expenses per claim.
These factors combined to produce costs per claim with more than seven days of lost time that were typical of the 16 study states - New Jersey was the median state.
Medical payments per claim with more than seven days of lost time were similar to the median of the study states, despite the fact that New Jersey does not regulate medical prices.
System stakeholders suggest that high use of medical networks and intensive medical management may have been important factors in typical medical payments per claim and slower medical growth in New Jersey, according to WCRI.
Expenses for medical management services were among the highest of the study states, at an average of just over $3,100 for 2006 claims with more than seven days of lost time and 36 months of experience.
Medical costs per claim in New Jersey increased 31 percent overall from 2003 to 2008 for claims with more than seven days of lost time at 12 months of experience, less than the growth in other study states that had no significant medical reforms during the period studied.
The study also reported that the process for resolving PPD benefits in New Jersey was attorney intensive but relatively efficient and predictable because of the experience of the parties involved.
WCRI also reported that injured workers in New Jersey received their first indemnity payments faster compared to many other study states. Faster injury reporting contributed to the faster first indemnity payment.
Some 58 percent of claims were reported to payor within 3 days of injury in New Jersey, versus 55 percent in the median study state.
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