WCRI: North Carolina Workers Comp Indemnity Benefits Higher Than Other States

North Carolina’s workers’ compensation system had the highest indemnity benefits per claim of 17 states in a recent Workers Compensation Research Institute (WCRI) study, which can serve as a baseline to observe the effects of 2011 reforms to the state’s workers’ compensation system.

The WCRI study, Baseline for Monitoring Effects of Recent Legislation in North Carolina: CompScope Benchmarks, 15^th Edition, found that the duration of temporary disability was longer in North Carolina than in the typical state WCRI studied, and lump-sum settlements were larger than in many states―both of which drove indemnity benefits higher.

In North Carolina and all study states, settlements (including payments for future medical and future indemnity) are included in indemnity benefits.

The 2011 reforms, House Bill 709, addressed both issues by capping the duration of temporary disability, refining the definition of suitable post-injury employment, and improving worker access to vocational rehabilitation. The law applied to injuries occurring on or after June 24, 2011.

WCRI’s study used data reflecting claims up to 27 months after that, which is too soon to observe much impact from the legislation given the time it takes to settle workers’ compensation claims. WCRI recommends using its study as a baseline against which changes in metrics of workers’ compensation benefit system performance can be tracked.

Both medical and indemnity costs per claim changed little since 2009 and both had grown 8 percent annually between 2003 and 2009. Factors that contributed to the stability in medical costs per claim since 2009 include a decrease or little change in utilization of medical care, stable nonhospital prices paid (through 2012), and little change in hospital payments for inpatient care. Offsetting changes helped to produce the little change in indemnity benefits per claim from 2009 to 2013. Wages of injured workers increased slightly, offset by a decrease in duration of temporary disability.

The study also reported that North Carolina’s hospital costs were among the highest of the study states and the focus of fee schedule changes in 2009 and 2013. New fee schedule rules effective in 2015 tie reimbursement for all nonhospital and hospital services to Medicare.

In North Carolina, the average total cost per claim after 36 months of experience was 33 percent higher than the typical state WCRI studied. Indemnity costs were 62 percent higher, and medical costs were typical. The expense to handle claims was 27 percent above the 17-state median.

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, Mass. WCRI’s membership includes employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia and New Zealand.

Source: Workers Compensation Research Institute