The variation in the cost to manage work comp clams varies wildly across states – from a low of less than $4000 in Wisconsin to more than twice that in Louisiana.
And, these costs are steadily increasing at annual rates betwen 4% and 11%.
Litigation is a big cost driver in several states, accounting for more than half of expenses in CA MN FL and LA. WCRI’s Carol Telles described the factors contributing to those differences, noting bill review, networks, and other medical cost management efforts are a factor particularly in non-fee schedule states. Other drivers are choice of medical provider and mandated medical management tools including UR and guidelines.
Telles contrasted Texas and New Jersey, states that have quite different approaches to medical managment and the regulation thereof. Somewhat counter-intuitively, Texas is highly regulated, while NJ is most assuredly not. NJ has no fee schedule, treatment guidelines or UR, but does have employer direction and has allowed networks since 2011.
TX has required medical guidelines and UR, a drug formulary, and eliminated “informal” networks several years ago. Networks are highly regulated and there is a medicare-based fee schedule.
To paraphrase Ms Telles, “Medical management may reduce costs, but there is a cost associated with that effort.” She made that statement while discussing Texas – the data indicates medical management costs have stablized at 21% of medical costs per claim since 2011 (however medical costs per claim continue to increase).
Telles provided some excellent insights into litigation rates, costs, and drivers as well; factors contributing to expenses include:
- complexity and length of dispute resolution process
- process for obtaining and challenging medicl opinions on MMI
- settlement usage
Notably, defense attorney expense was the largest single component in most states; however as plaintiff attorney fees are usually included in the indemnity fees we don’t know what the plaintiff attorney expenses were.
I feel like people get hurt at their work pretty frequently. I worked a blue collar job for quite some time when I was younger. I was always getting my fingers smashed and forearms cut or bruised. I don’t know if I could have gotten compensation for that kind of thing.