Rising Medical Costs Lead to Hike in Cost Per WC Claim in N.J.: Study

October 23, 2012

The cost per workers’ compensation claim in New Jersey rose following the end of the recession, according to a new study by the Workers Compensation Research Institute (WCRI).

The study said a 10 percent increase in medical payments per claim in 2010 was the main driver of the overall increase in workers’ compensation costs per claim. The study examined claims involving workplace injuries which resulted in more than seven days of time away from work.

“WCRI’s annual benchmarking provides policymakers and system stakeholders with the information they need to monitor the workers’ compensation system in their state and can keep the system on a balanced and cost-effective course,” said Ramona Tanabe, WCRI’s deputy director and counsel.

Medical payments per claim in New Jersey rose faster in 2010 than in other study states, the WCRI study found. Medical cost containment expenses per claim — fees for bill review, case management, preferred provider networks, and utilization review — also grew rapidly in New Jersey, increasing five percent in 2010, following increases of 12 percent per year from 2005 to 2009. This rate of growth was faster than any other state in the study.

The WCRI study also noted that indemnity benefits per claim were lower than the 16-state median, reflecting system features and processes that might have created incentives for faster return to work in the New Jersey workers’ compensation system.

The study further observed that while indemnity benefits per claim increased five percent from 2009 to 2010, New Jersey was one of few study states that did not show a large increase in indemnity benefits per claim during the 2007–2009 recession.

The WCRI is an independent, not-for-profit research organization based in Cambridge, Mass. The Institute provides information about public policy issues involving workers’ compensation systems. WCRI’s members include 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.

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