Workers’ Comp Costs per Claim Rise in Minnesota

Workers’ compensation costs per claim for injured workers in Minnesota have grown, but at a slower pace than other study states, according to a study by the Workers Compensation Research Institute (WCRI).

Minnesota’s costs per claim remain among the lowest of the study states – 29 percent lower than the median of the 16 states studied.

The study by the Cambridge, Mass.-based WCRI found that the costs per claim for medical care were the primary driver of growth in costs per claim.

The study Benchmarks for Minnesota, CompScope 11th Edition reported that workers’ compensation costs per claim in Minnesota rose 5 percent per year on average from 2003 to 2008 (evaluated in 2009) for claims with an average maturity of 12 months.

Although fairly similar to the growth in the typical study state, the overall growth rate in Minnesota was slower than typical among states that did not have major reforms during the study period, according to WCRI. In particular, costs per claim in Minnesota grew more slowly than in most study states between 2007 and 2008, evaluated in 2009.

The study said that medical payments were the main driver of the growth in costs per claim, accounting for about two-thirds of the increase from 2003 to 2008. Earlier WCRI research found that growth in payments per claim to both nonhospital and hospital providers drove the increase in medical costs per claim through 2007.

Payments per claim for lost wages, known as indemnity benefits, were relatively stable through much of the study period, reflecting mainly changes in wages and the duration of temporary disability.

However, benefit delivery expenses per claim – such as the costs of medical management and litigation – grew rapidly at 9 percent per year, mainly due to growth in medical cost containment expenses per claim.

Income benefits per claim in Minnesota were lower than typical of the 16 study states because workers in Minnesota returned to work faster and fewer injured workers received permanent partial disability (PPD) benefits or lump-sum settlements.

Indemnity benefits per claim with more than seven days of lost time in Minnesota were 24 percent lower than in the median study state for 2006 claims at an average of 36 months of experience – an important factor in lower costs for all paid claims, WCRI reported.

The study also found that workers in Minnesota returned to work faster than in most other study states. Fewer workers were off work for at least one week (17 percent compared to 21 percent in the median of the 16 states), and the average duration of temporary disability (13 weeks) was two weeks shorter than the typical study state for 2006 claims at an average of 36 months of experience.

The average PPD/lump-sum payment per claim in Minnesota was typical of many study states, but the percentage of PPD/lump-sum claims was the lowest (11 percentage points lower than the median of the study states).

The study pointed out that medical payments per claim accounted for the largest share of total costs per claim in Minnesota – 44 percent – compared to 40 percent for indemnity benefits for 2006 claims at 36 months of experience. Medical payments per claim with more than seven days of lost time were fairly typical of the study states.

Defense attorney payments per claim with that expense in Minnesota were among the highest of the 16 study states, although defense attorneys were involved in significantly fewer cases than typical.

WCRI also found that expenses per claim for delivering medical and income benefits to injured workers were 13 percent lower in Minnesota than in the median study state. However, this result masked offsetting factors.

Minnesota had lower medical cost containment expenses per claim and lower defense attorney involvement compared to the typical study state, but higher defense attorney payments and higher medical-legal expenses per claim (for claims with that particular expense).

The use of vocational rehabilitation services in Minnesota was more frequent and more costly than in the typical study state. Sixteen percent of claims with more than seven days of lost time had vocational rehabilitation services in Minnesota, compared to about 3 percent in the typical state. WCRI noted that the measures it reports reflect only the payor portion of the costs of vocational rehabilitation services as reported in the insurance data and not the portion provided through state agencies, which could be significant in some states.

Vocational rehabilitation provider expenses per claim was also highest in Minnesota – at just over $6,200 per claim with these expenses

Injured workers in Minnesota received their first indemnity payments faster compared to most other study states, driven mainly by faster payment once the claims payor was notified of the injury.

Source: Workers Compensation Research Institute

Topics Trends Claims Workers' Compensation Minnesota