Minnesota: Report finds injury rates falling, but costs per claim on the rise
Workers' compensation claim rates are falling in Minnesota. However, it isn't all good news for employers. According to the recently issued annual report from the Minnesota Department of Labor and Industry, costs per claim continue to increase.
The report analyzed workers' comp data from 1997 through 2007, the most recent year available. According to researchers, the number of paid workers' comp claims fell 36 percent relative to the number of employees during the 10-year study period.
"While we have a very good workers' compensation system in Minnesota, we can improve efficiency and effectiveness by working together with labor and industry," said Steve Sviggum, DLI commissioner. "The data in this report is a basis for discussion about the changes that are needed to curb rising costs."
Sviggum said Minnesota's workers' comp system parallels nationwide trends. Total benefits increased relative to payroll from the mid-1990s to the early 2000s but have decreased somewhat in more recent years. This, he said, has reflected the combined effects of a consistently decreasing claim rate and increasing benefits per claim, particularly medical benefits. Total system cost, however, has been stable relative to payroll in the mid-2000s with minor fluctuation.
Among the highlights of the study, researchers found that:
- Claim rate continued its decline. The claim rate fell continually from 1997 through 2007.
- System cost has fluctuated little. Workers' comp system cost in Minnesota has fluctuated mildly relative to payroll since 1997, with a somewhat lower value for 2007 than for 1997.
- Average benefits per insured claim jumped significantly. Adjusted for average wage growth, average medical and indemnity benefits per insured claim rose substantially between 1997 and 2006. The increase in indemnity benefits per claim, researchers said, was due primarily to increasing benefit duration and increases in the frequency and amounts of stipulated benefits.
- Medical benefits continued to rise, while indemnity benefits fell relative to payroll. Relative to payroll, medical benefits have risen since 1997 while indemnity benefits have fallen. Researchers said this reflects the net effect of the falling claim rate and higher benefits per claim.
- Participation in vocational rehab increased, then leveled off. The vocational rehabilitation participation rate in Minnesota increased steadily between 1997 and 2003, but has changed relatively little since 2003. The average cost per participant rose steadily from 1998 to 2007, adjusting for average wage growth, while average service duration showed little change. Researchers said the percentage of participants with a job at the conclusion of services declined between 1998 and 2007.
- The dispute rate rose substantially from 1997 to 2007.
- Four areas dominated medical cost increases. According to medical cost data from a large insurer for 1997 to 2007, the service groups contributing the largest amounts to the recent increases in medical costs were outpatient facility services, inpatient hospital facility services, radiology and drugs. Service and provider groups not subject to the fee schedule showed the largest increases in cost per unit of service, the study found. A majority of the service and provider groups subject to the fee schedule showed decreases in unit cost.
July 2, 2009
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