Analysis shows Massachusetts fared better than other states after recession

Unemployment in Massachusetts was less severe than the national trend during the recession. That may have been a key factor in workers' comp-related data, according to new research.

The Workers Compensation Research Institute said costs per workers' comp claim decreased 6 percent in 2010 -- the largest decline among all 16 states included in a new study. Indemnity benefits per claim, the largest component in total payments in Massachusetts, decreased 11 percent from 2009/10 to 2010/11.

The findings are included in the 13th edition of CompScope Benchmarks for Massachusetts. The study looked at cost components and cost drivers in the state's workers' comp system during the early post-recession period and compared them with other study states.

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The report says part of the reason for the 11 percent decrease in indemnity benefits per claim with more than seven days of lost time was because of lump-sum settlements. The average lump-sum payment decreased 11 percent in 2010/2011 after large increases in the previous two years. "System participants in Massachusetts indicated that from 2007 to 2009 there were more incentives for both employers and injured works to settle cases because of uncertainty regarding future jobs and income due to the economy," the report says.

Medical payments per claim changed little in Massachusetts in 2010/2011 after an increase of 7 percent in each of the prior four years. One component, the prices paid for professional services, stabilized after large growth due to an increase in fee schedule rates in 2009.

Massachusetts had the lowest average medical payment per claim with more than seven days of lost time compared to the other states studied. The report suggests "lower average prices paid for many nonhospital and hospital outpatient services and fewer visits per claim and services per visit."

Massachusetts' process of speeding dispute resolution through conciliations and conferences and faster initial indemnity payments are credited with lower average payments to defense attorneys per claim and use of defense attorneys. Additionally, the expenses per claim related to medical reports, depositions, and independent medical examinations used for legal purposes were among the lowest of the states for the period 2008/2011. "In Massachusetts during the dispute and once the case is brought before the administrative judge at a hearing, the impartial medical report is the only medical evidence that can be presented," the report noted.

Additional findings included:

59 percent of injured workers received their first indemnity payment within 21 days of injury -- the fastest of the study states in 2010/2011. The state's pay-without-prejudice option was cited as allowing earlier payments and avoiding litigation as factors in faster time to first indemnity payments.
Medical cost containment expenses per claim with more than seven days of lost time were 20 percent lower than in the typical state studied, "not surprising given the lower utilization of medical services in Massachusetts. Fewer visits per claim and/or services per visit may mean fewer bills to review and process," the report says. "In addition, Massachusetts had a lower percentage of payments made within health care networks, which is the result of an already low fee schedule and thus offers less incentive for cost containment practices."

Read more at the WorkersComp Forum homepage.

December 3, 2012

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