North Carolina Cost Drivers Studied

North Carolina had higher income benefit payments per claim among 16 states in a recent study, slower return to work resulting in longer duration of temporary disability, and larger lump-sum settlements than in many study states.

The study, Baseline for Evaluating Impact of 2011 Reforms in North Carolina: CompScope Benchmarks, 12th Edition, by the Workers Compensation Research Institute (WCRI), provides data to measure the future impact of 2011 reforms on the workers’ compensation system.

Ramona Tanabe, WCRI deputy director and counsel, said WCRI intends to monitor post-reform performance of the North Carolina system. She said policymakers and stakeholders must keep in mind that the recession may have shaped what they observe about performance metrics. “For example, reforms could be very effective in speeding return to work and lowering employer costs, but we nonetheless might observe longer duration of temporary disability and higher income benefits per claim due to slower return to work because there are fewer jobs available,” Tanabe said.

The latest study examines how overall medical costs per claim in North Carolina compare to other study states and how those costs have changed over time. New fee schedule rules, effective July 2009, reduced maximum hospital reimbursement rates. Prior to the reductions, hospital costs per workers’ compensation claim in North Carolina were among the highest of the 16 states included in the CompScope reports by WCRI, and the main driver of growth in medical costs per claim.

From 2008 to 2009, growth in North Carolina medical costs per claim was more moderate at 3 percent, compared with average yearly growth of 8 percent from 2004 to 2008.