Illinois: Study finds medical costs per claim high, but growth slowing
Medical costs per workers' compensation claim in Illinois were among the highest of 15 study states one year after the implementation of its first medical fee schedule in 2006. However, the Workers Compensation Research Institute found that growth in medical costs per claim slowed to 5 percent in 2007 claims evaluated in 2008 after double-digit growth rates before the fee schedule.
The study by the Cambridge, Mass.-based organization also found that indemnity benefits per claim with more than seven days of lost time in Illinois grew 7 percent in 2007 claims evaluated in 2008 -- the same rate as previous years. Researchers attributed the steady growth in indemnity benefits per claim in 2007 to a 6 percent increase in the duration of temporary disability and a 5 percent increase in the average permanent partial disability/lump-sum payment per PPD/lump-sum claim.
Among the highlights of the study, WCRI found that:
- Total costs in early post-reform period among the highest. Researchers found that the total costs per all paid claims in Illinois early post-reform were among the highest of the study states -- on average $11,224 per claim in 2005 claims evaluated in 2008. According to WCRI, several factors contributed to this result. Illinois had among the highest percentage of workers who lost more than a week from work -- 27 percent compared to 19 percent in the median of 15 states in 2005 claims evaluated in 2008. In addition, injured workers stayed off the job on average 20 weeks, which was four weeks longer than workers in other non-wage-loss states in 2005 claims evaluated in 2008.
- Lump-sum settlements more frequent. Another key driver of higher indemnity benefits per claim for claims with more than seven days of lost time were the more frequent lump-sum settlements in Illinois. Of the injured workers who lost more than a week off the job, 39 percent received a lump-sum payment compared to 22 percent of workers in the median of the 11 non-wage-loss study states in 2005 claims evaluated in 2008. On the other hand, researchers said the average lump-sum settlement per claim in Illinois was in the middle of the ranking of the non-wage-loss states.
- Benefits delivery, medical cost containment expenses typical. The WCRI study found that benefit delivery expenses per claim in Illinois were typical compared to other study states in 2005 claims evaluated in 2008. Medical cost containment expenses per claim with more than seven days of lost time in 2005 claims evaluated in 2008 were also typical among study states.
- More attorneys involved, but dispute resolution process common. Although there was a higher percentage of defense attorney involvement in Illinois -- 32 percent compared to 24 percent in the median study state -- researchers found that once attorneys were involved, the dispute resolution process was more routine. As a result, the average defense attorney payment per claim with more than seven days of lost time and defense attorney payment greater than $500 in Illinois was among the lowest of the study states -- at $2,883 per claim or 28 percent lower than the median of 15 study states in 2005 claims evaluated in 2008.
- Speed of first indemnity payment typical. WCRI also noted that the time from injury to first indemnity payment in Illinois was typical of the study states in 2007 claims evaluated in 2008. Researchers said there was little change in the percentage of workers who received their first indemnity payment within 21 days of injury over the study period.
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April 26, 2010
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