Pennsylvania: Study finds comp costs, expenses grew steadily per claim

Workers' compensation costs per claim in Pennsylvania showed steady growth in costs and expenses, according to a report by the Workers Compensation Research Institute.

The study, CompScope^TM Benchmarks for Pennsylvania, 10th Edition, found that total costs per claim with 12 months of experience with more than seven days of lost time in Pennsylvania grew 6 percent in 2007. Researchers said this was driven by growth in medical, indemnity, and benefit delivery costs per claim.

The report also found that payments per claim for lost wages -- known as indemnity benefits -- with more than seven days of lost time increased by 7 percent in 2007 as a result of a 4 percent growth in the average weekly wage. Researchers said other components of indemnity costs either had flat growth or minimal contribution, however. The duration of temporary disability had a flat trend and did not contribute to the indemnity costs per claim increases.

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Study highlights. Among the highlights of the report, WCRI found that:

PPD/lump-sum settlements increased. The average permanent partial disability/lump-sum settlement per claim with such benefits grew 5 percent in 2007.
Medical payments jumped. The study reported that medical payments per claim with more than seven days of lost time in Pennsylvania grew 5 percent in 2007/2008, similar to that of the other 15 states included in the study. Prices paid for nonhospital services grew 2 percent and were a small contributor to total growth in medical payments per claim. However, researchers said changes in hospital payments per claim and/or changes in utilization among hospital and nonhospital providers most likely contributed to the most recent growth in overall medical payments per claim.
Total cost per claim were typical to other states. WCRI noted that Pennsylvania was typical among study states for total costs per claim based on all paid claims. The average cost per claim was approximately $7,000 for claims with 36 months of experience (2005/2008).

However, researchers said the total cost per claim with more than seven days of lost time in Pennsylvania was somewhat higher than the median study state, which masks several offsetting factors. On the one hand, the study noted that indemnity payments per claim were higher than a typical study state. This includes higher than typical PPD/lump-sum payments per claim in comparison to other wage-loss benefit states and higher benefit delivery expenses per claim. On the other hand, medical payments per claim with more than seven days of lost time were typical compared to the 15-state median. Researchers said this was due to multiple factors such as lower payments per claim to physicians with typical utilization, higher payments per claim to physical/occupational therapists and chiropractors with higher utilization and typical prices paid.

Read more at the WorkersComp Forum homepage.

August 30, 2010

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