Workers’ Compensation In Wisconsin Employers’ Costs And Workers’ Outcomes

Today’s Outline Introduce WCRI as a resource for public officials in Wisconsin Summarize major findings for WI from many WCRI studies  Employer costs and cost drivers  Worker outcomes  How WI compares to other states  What are the trends in WI

About WCRI Not-for-profit public policy research organization Diverse membership  Employers, governments, insurers, managed care firms, healthcare providers, labor Focus on benefit delivery system, not insurance market & pricing issues Not make recommendations nor take positions on issues

WI Workers’ Compensation System: A National Perspective Nationally, Wisconsin WC historically seen as very well-functioning  Costs to WI employers lower than average  Worker outcomes better than average  Typical for most statutory income benefits Historically stable system  Advisory committee process/legislative discipline controls costs and improves worker outcomes State regulatory approach  High trust, active monitoring

Major Findings From WCRI Studies Worker outcomes better than average Cost per claim lower than average Medical costs high and growing rapidly  Medical prices high and growing rapidly  WI is 1 of 6 states with no formal state fee schedule

Major Findings (continued) Lower income benefits per claim  Statutory benefit structure not lower in most respects  Faster return-to-work and more certain PPD  PPD benefit design provides strong incentives to return to work  PPD benefits paid per claim were lower than average WI workers get first payment faster  Active monitoring by state WC agency incents faster payment

Benefit Cost Per WI Worker Was Lower Than The Average State Average Of Policy Years 2004–2006 Source: NCCI Annual Statistical Bulletins, 2008–2010, Exhibits XI And XII WI Cost Per Worker ILMNIA MIIN

WI Employers Paid Among The Lowest Cost Per Claim Of States Studied

WI Cost Per Claim Similar To 3 Of 5 Nearby States

Wisconsin Workers Report Fastest Return To Work (pre-recession) Source: Belton and Liu How Have Worker Outcomes and Medical Costs Changed in Wisconsin?

WI Workers’ Recovery Of Health Better Than Most States Studied Source: Belton and Liu How Have Worker Outcomes and Medical Costs Changed in Wisconsin?

Wisconsin Workers Report Highest Overall Satisfaction With Care Source: Belton and Liu How Have Worker Outcomes and Medical Costs Changed in Wisconsin?

Medical Cost Per Claim In Wisconsin Was 17% Higher Than Average Average Medical Cost/Claim 2006/09 Claims With > 7 Days Of Lost Time, Adjusted For Injury/Industry Mix CA, FL, IL, TN, TX: Reforms Focused On Medical Cost

Nonhospital Prices Paid In WI Double The Median Study State Source: WCRI Medical Price Index For WC, Third Edition (Forthcoming) Average Prices Paid For Nonhospital Services, 2008 * No Medical Fee Schedule

Highest Prices Paid In WI For Common “Established Patient Office Visit” * Non Fee Schedule States **** Prices Paid For Nonhospital Services, 2008 CPT Source: WCRI Medical Price Index For WC, Third Edition (Forthcoming) **

Highest Prices Paid In WI For Arthroscopic Shoulder Surgery * Non Fee Schedule States **** Prices Paid For Nonhospital Services Rendered In Calendar Year 2008 CPT Source: WCRI Medical Price Index For WC, Third Edition (Forthcoming) **

Highest Prices Paid In WI For Lumbar MRI * Non Fee Schedule States **** Prices Paid For Nonhospital Services Rendered In Calendar Year 2008 CPT Source: WCRI Medical Price Index For WC, Third Edition (Forthcoming) ***

WI Medical Cost Trends % Change, WIHighest State Median State Avg. Medical Cost Per Claim58% Average Nonhospital Prices22% Hospital Outpatient: Average Price Per Service 42% Hospital Inpatient: Average Payment Per Claim 50%

WI Medical Cost Per Claim Grew More Rapidly Than Other States % Change, WIHighest State Median State Avg. Medical Cost Per Claim58% 38% Average Nonhospital Prices22% Hospital Outpatient: Average Price Per Service 42% Hospital Inpatient: Average Payment Per Claim 50%

Nonhospital Prices Rose Faster Than Other States Studied % Change, WIHighest State Median State Avg. Medical Cost Per Claim58% 38% Average Nonhospital Prices22% 12% Hospital Outpatient: Average Price Per Service 42% Hospital Inpatient: Average Payment Per Claim 50%

Hospital Outpatient Prices Rose Rapidly – Among The Fastest % Change, WIHighest State Median State Avg. Medical Cost Per Claim58% 38% Average Nonhospital Prices22% 12% Hospital Outpatient: Average Price Per Service 42%48%20% Hospital Inpatient: Average Payment Per Claim 50%

Hospital Inpatient Costs Rose Rapidly – As In Most States % Change, WIHighest State Median State Avg. Medical Cost Per Claim58% 38% Average Nonhospital Prices22% 12% Hospital Outpatient: Average Price Per Service 42%48%20% Hospital Inpatient: Average Payment Per Claim 50%83%58%

WI Indemnity Benefits Per Claim 37% Lower Than Average

Why Were Income Benefits Lower? Not because statutory benefits were lower than typical in most respects Important factors  System designed to encourage return to work  System features encourage more frequent voluntary resolution

Statutory Benefit Structure In Wisconsin Is Typical Weekly temporary (TD) benefits are typical  2/3 of wage loss  Maximum = 110% of WI average weekly wage  See handout Permanent partial (PPD) benefits not low  Benefit structure encourages return to work  2 tier structure  Weekly amount paid in a “long thin stream”

System Features Encourage Voluntary Resolution WI has an efficient disability evaluation process  Reliance on treating physician ratings  Final offer adjudication process  Minimum payment required for surgery Lump-sum settlements discouraged Few other states have this, and often have disputes and settlements over PPD

WI Workers Less Likely To Receive PPD Benefits And Lump-Sum Settlements PPD/Lump-Sum Claims As % Of 2006/09 Claims With > 7 Days Of Lost Time, Adjusted For Injury/Industry Mix % Of Claims With PPD/Lump Sums * States With Reforms That Targeted PPD/Lump-Sum Cost

WI Workers Got First Indemnity Payments Faster

WI Workers’ Compensation System: A National Perspective Nationally, Wisconsin WC historically seen as very well-functioning  Costs to WI employers lower than average  Worker outcomes better than average  Typical for most statutory income benefits Historically stable system  Advisory committee process/legislative discipline controls costs and improves worker outcomes State regulatory approach  High trust, active monitoring

Major Findings From WCRI Studies Worker outcomes better than average Cost per claim lower than average Medical costs high and growing rapidly  Medical prices high and growing rapidly  WI is 1 of 6 states with no formal state fee schedule

Major Findings (continued) Lower income benefits per claim  Statutory benefit structure not lower in most respects  Faster return-to-work and more certain PPD  PPD benefit design provides strong incentives to return to work  PPD benefits paid per claim were lower than average WI workers get first payment faster  Active monitoring by state WC agency incents faster payment

Address Questions Or Comments To: Richard A. Victor