Florida Workers’ Compensation Reforms Lowered Costs for a Year

Workers’ compensation costs per claim in Florida appear to have decreased in 2004 in the wake of reforms enacted in 2003, but the decrease did not continue in 2005, according to a new study by the Workers Compensation Research Institute.

This one-time change is consistent with what might be expected, given the nature of the 2003 reforms.

In 2005/2006 (the second-year post-reform), the average total cost per claim in Florida increased 5 percent, a more moderate pace than in the pre-reform period. This growth was driven mainly by increasing medical costs.

In 2004/2005 (the first-year post-reform), the average total cost per claim in Florida fell nearly 5 percent, a shift from three prior consecutive years of very rapid growth. In contrast, most study states continued to show moderate-to-rapid growth in 2004/2005. All major cost components (medical, indemnity, and benefit delivery expenses per claim) showed decreases or little change in Florida in 2004, in each case a shift in the direction of the trend from the years just before the reforms.

The average medical payment per claim with more than seven days of lost time in Florida increased 8 percent in 2005/2006. One factor underlying this increase might be the fee schedule increases for physical medicine services in May 2005, WCRI reported.

In 2004/2005, medical costs per claim were stable, after continuous rapid growth in the three years before the reforms.

Indemnity benefits were stable in 2005/2006, following an 11 percent decrease in 2004/2005. Before the reforms, this measure had double-digit growth.

The 2003 legislation included revisions to the medical fee schedule; increased limits on chiropractic services; redefined eligibility standards for permanent total disability (PTD) benefits; revised PPD benefit amounts; limits on the number of independent medical examinations; and reduced fees for workers’ attorneys.