CAMBRIDGE, Mass.–(BUSINESS WIRE)–Workers’ compensation costs per claim in Tennessee decreased in recent years following reforms enacted in 2004, according to a new study by the Workers Compensation Research Institute (WCRI).
The study by the Cambridge, Mass.-based WCRI found that total costs per claim in Tennessee for claims from 2005 evaluated in the first quarter of 2009 decreased 6 percent, or $2,100 per claim, likely due to the 2004 legislation, which included reforms related to the state’s medical fee schedule, permanent partial disability (PPD) provisions, the dispute resolution process, and timeliness of first indemnity payment.
On average, total costs per claim with more than seven days of lost time stabilized after the reforms, growing less than 1 percent per year from 2005/2006 through 2008/2009.
The WCRI study, CompScope™ Benchmarks for Tennessee, 11th Edition, reported that for 2008 claims evaluated at the end of the first quarter in 2009, indemnity benefits – payments to injured workers for lost wages – grew 1 percent in Tennessee, while most of the other study states experienced growth of 7 to 8 percent.
The stabilization of growth rates in Tennessee resulted from offsetting factors: a 4 percent growth in the average weekly wage of workers and a 5 percent increase in the duration of temporary disability were offset by a 10 percent decrease in the average PPD/ lump-sum payment per claim.
The study observed that provisions of the reforms related to PPD or lump-sum payments had a large and sustained impact on the average PPD/lump-sum payment per claim with more than seven days of lost time and PPD or lump-sum settlement.
For claims with 48 months of experience that likely reflected the ultimate impact of the reforms, the average PPD/lump-sum payment per claim decreased by 10 percent.
In 2008/2009, or two full years after the implementation of the first time medical fee schedule in Tennessee, medical costs per claim with more than seven days of lost time remained stable, in contrast to many study states where those costs rose between 7 and 10 percent in the same time period.
The study also pointed out that the reforms significantly impacted the average defense attorney payment per claim with more than seven days of lost time and payment greater than $500, decreasing by 17 percent in 2005/2008.
Affected by penalty assessments for late first indemnity payments, the percentage of claims with the first indemnity payment within 21 days of injury improved in Tennessee from 33 percent in 2004 to 38 percent in 2007, and changed little in 2008. However, the study found that it took longer for injured workers in Tennessee to receive their first indemnity payment than the typical study state, where 44 percent of injured workers received their first indemnity payment within 21 days of injury.
The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, healthcare and disability issues. Its members include employers, insurers, insurance regulators and state administrative agencies in the U.S., Canada, Australia and New Zealand as well as several state labor organizations. To order this report, visit the WCRI web site: www.wcrinet.org.