Broad Metrics Show Virginia to be a Lower Cost State, but Medical Costs per Claim Higher than Most States and Rising, Says New WCRI Study

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Broad metrics of workers’ compensation costs show that Virginia is a lower cost state, largely due to a lower frequency of claims, according to the Workers Compensation Research Institute (WCRI). The WCRI study, Benchmarks for Virginia, CompScope™ 12th Edition, found the average cost of medical care per claim for injured workers in Virginia is among the highest of the states included in the study.

Medical Accounted For Nearly 70% Of Growth In Virginia Costs/Claim From 2004–2009
This study will help stakeholders in the Virginia workers’ compensation system understand how the state compares with others on a broad set of metrics.

Broad metrics of workers’ compensation costs show that Virginia is a lower cost state, largely due to a lower frequency of claims, according to the Workers Compensation Research Institute (WCRI). The WCRI study, Benchmarks for Virginia, CompScope™ 12th Edition, found the average cost of medical care per claim for injured workers in Virginia is among the highest of the states included in the study.

“This study will help stakeholders in the Virginia workers’ compensation system understand how the state compares with others on income benefits, costs, use of benefits, duration of disability, litigiousness, benefit delivery expenses, timeliness of payment, and other metrics,” said Ramona Tanabe, Deputy Director and Counsel. “The benchmarks in this study will provide them with a valuable tool in monitoring the effect of system features.”

When comparing Virginia broadly, WCRI said, insurance premium rates there were 32 percent lower than the median of the 50 states plus the District of Columbia.[1] This reflects lower claim frequency in Virginia and higher-than-average cost per claim. In addition, the average cost per worker in Virginia was 27 percent lower than the median of 46 jurisdictions -- resulting from a somewhat higher average cost per claim but a lower frequency of claims per 100,000 workers.[2]

The WCRI study said medical costs per claim with more than seven days of lost time in Virginia were 22 percent higher than the median of the 16 states in the study. The study found growth in medical costs per claim in Virginia was the main driver of the growth in overall costs per claim from 2004 to 2009, increasing an average of eight percent per year for the period.

Despite higher medical costs per claim, the overall costs per workers’ compensation claim in Virginia was close to the median of the study states, in part because fewer workers there had more than one week off work. As a result, cases in which workers received indemnity benefits -- payments for lost wages -- were less frequent.

The study also found that:

  • The average lump-sum settlement per claim was lower than in most of the other wage-loss states.
  • Vocational rehabilitation was used more often in Virginia than most of the other wage-loss states.
  • Benefit delivery expenses per claim for medical cost containment services and litigation related activities were typical of the study states.

Click here for more information about this study or to purchase it.

About WCRI:

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Since 1983, WCRI has been a catalyst for significant improvements in workers' compensation systems through objective, credible, and high-quality research. 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. For more information, visit: http://www.wcrinet.org/.

Footnotes:

[1] Oregon Workers’ Compensation Premium Rate Ranking, Calendar Year 2010 (2011). Note that the Oregon study uses the Oregon industry mix as the base.

[2] Data on costs per claim and frequency per 100,000 workers come from the National Council on Compensation Insurance (NCCI) Annual Statistical Bulletins from 2009 through 2011.

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Andrew Kenneally
Workers Compensation Research Institute
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