New WCRI Study Provides Baseline to Measure Impact of 2011 Reforms on North Carolina Workers' Compensation System

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A new study, Baseline for Evaluating Impact of 2011 Reforms in North Carolina: CompScope™ Benchmarks, 12th Edition, by the Workers Compensation Research Institute (WCRI) provides useful baseline data to measure the future impact of 2011 reforms on the North Carolina workers’ compensation system, including key cost drivers.

Baseline: North Carolina Indemnity Benefits Per Claim Highest Among Study States
Reforms could be very effective in speeding return to work and lowering employer costs, but we might also observe longer duration of temporary disability and higher income benefits per claim due to slower return to work since there are fewer jobs.

A new study, Baseline for Evaluating Impact of 2011 Reforms in North Carolina: CompScope™ Benchmarks, 12th Edition, by the Workers Compensation Research Institute (WCRI) provides useful baseline data to measure the future impact of 2011 reforms on the North Carolina workers’ compensation system, including key cost drivers.

Findings in this and earlier WCRI studies indicate that North Carolina had higher income benefit payments per claim among the 16 states in the study, slower return to work resulting in longer duration of temporary disability, and larger lump-sum settlements than in many study states.

“After major reforms, many states utilize WCRI studies to quantify whether the reforms met their goals and if unintended consequences developed,” said Ramona Tanabe, Deputy Director and Counsel. “WCRI intends to monitor post-reform performance of the North Carolina system.”

WCRI observed that when policymakers and stakeholders evaluate the impact of the reforms, they must keep in mind that the recession may have shaped what they observe about system performance metrics. “For example, reforms could be very effective in speeding return to work and lowering employer costs, but we nonetheless might observe longer duration of temporary disability and higher income benefits per claim due to slower return to work because there are fewer jobs available,” Tanabe said.

The new study examines how overall medical costs per claim in North Carolina compare to other study states and how those costs have changed over time. New fee schedule rules, effective July 2009, reduced maximum hospital reimbursement rates. Prior to the implementation of the reductions, hospital costs per workers’ compensation claim in North Carolina were among the highest of the 16 states included in the CompScope™ 12th edition reports by WCRI, and the main driver of growth in medical costs per claim.

From 2008 to 2009 (evaluated in 2010), growth in North Carolina medical costs per claim was more moderate at 3 percent, compared with average yearly growth of 8 percent from 2004 to 2008. The 2009 data consider experience on cases through March 2010 and, therefore, only reflect eight months of experience following the hospital fee schedule reduction. WCRI will analyze the drivers of medical costs, including the very early impact of the fee schedule reductions, in CompScope™ Medical Benchmarks, 12th Edition, forthcoming in early 2012.

The Cambridge-based WCRI is recognized as a leader in providing high-quality, objective information about public policy issues involving workers' compensation systems. For more information about WCRI or to purchase this study, visit: http://www.wcrinet.org

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 with its 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.

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Andrew Kenneally
Workers Compensation Research Institute
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