California Hospital Workers’ Comp Survey Shows Moderating Losses, Higher Adjustment Expenses

August 24, 2017

A survey from 18 hospital systems and more than 44 individual facilities within California shows average losses paid per indemnity claim rose 2.9 percent annually over the past 10 years.

Keenan HealthCare and actuarial consultant Milliman on Thursday released the 2017 results of their California Hospital Workers’ Compensation and Payroll Benchmarking Survey.

The survey provides data on more than 4,300 annual claims. The survey analysis also relied on payroll and medical utilization information obtained from the California Office of Statewide Health Planning and Development website.

The survey identified the following workers’ comp trends in the hospital sector:

  • Projected loss cost for accidents occurring during 2016 and 2017 were at $2.10 per $100 of payroll.
  • Average losses paid per indemnity claim rose 2.9 percent annually over the past 10 years.
  • Medical loss trends abated in recent years. Indemnity loss trends are less than long-term averages. Combined, these have resulted in a lower annual rate of severity increase as compared to prior versions of this study.
  • However, annual allocated loss adjustment expenses increased significantly during this time period, representing an increasing share of the total cost of claims.

“Looking forward, we expect longer term trend rates closer to 5 percent or 6 percent to prevail, with stronger medical and indemnity loss trends than the recent past, and ALAE trends remaining high,” Bill Poland, marketing director of property/casualty for Keenan, said in a statement. “We believe these key indicators will be valuable in developing plans to modify or adjust programs where necessary with the goal of improving results.”

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