Study Provides Baseline to Measure Impact of Reforms on Illinois Workers' Compensation System

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A new study, CompScope™ Benchmarks for Illinois, 12th Edition, by the Workers Compensation Research Institute (WCRI) provides useful baseline data to measure the future impact of 2011 reforms in Illinois, which are designed to ensure that the state’s workers’ compensation costs are reasonable and competitive.

Chart Showing Illinois Has Among The Highest Medical Costs Per Claim In 2007/10
While it is too early to see results from the 2011 legislative changes, WCRI’s study can provide insight into the major reforms enacted in 2006 and see in what areas Illinois may experience medical costs higher or lower than that of a typical state.

A new study, CompScope™ Benchmarks for Illinois, 12th Edition, by the Workers Compensation Research Institute (WCRI) provides useful baseline data to measure the future impact of 2011 reforms in Illinois, which are designed to ensure that the state’s workers’ compensation costs are reasonable and competitive.

The reform legislation addressed key cost drivers in the workers’ compensation system, especially medical prices, by reducing fee schedule rates by 30 percent, introducing preferred provider networks for selecting treating physicians, implementing American Medical Association (AMA) guides for evaluating impairment, and requiring clinical reports by physicians.

“While it is too early to see results from the 2011 legislative changes,” said Ramona Tananbe, WCRI’s Deputy Director and Counsel, “WCRI’s new study can provide insight into the results of major reforms enacted in 2006 and see in what areas Illinois may experience medical costs higher or lower than that of a typical state.”

For example, WCRI found that the 2006 price regulations had a short-term impact on the trend on medical payments per workers’ compensation claim. Medical payments per claim grew two percent from 2005 to 2006, following the direct impact of the new fee schedules. However, medical payments per claim increased an average of nine percent per year after 2006. This was similar to the growth prior to the introduction of the 2006 fee schedule, which limited growth rates in the fee schedule rates to changes in the general consumer price index or CPI. The main driver of this post-reform growth was related to hospital inpatient and outpatient payments per claim, according to WCRI.

Another key cost driver in the Illinois workers’ compensation system during the study period was indemnity benefits, which include payments for temporary disability, permanent partial disability and lump-sum settlements. Indemnity benefits per claim with more than seven days of lost time were, on average, 33 percent higher in Illinois than in the typical state. Several factors produced this result. Illinois had longer duration of temporary disability and more frequent and costly lump-sum settlements.

In addition to providing baseline information on medical costs, the WCRI study provides other key metrics to monitor the impact of the 2011 legislation on additional cost drivers, including indemnity benefits, lump-sum settlements, and medical-legal expenses - such as expenses for medical reports and independent medical examinations. The study also shows how the Illinois workers’ compensation system compares to the other 16 states in the study on these and other key metrics.

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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