WCRI Finds Faster Growth In California WC Indemnity Costs Per Claim May Reflect Impact Of Recession

Indemnity costs per claim – payments for lost wages, loss of earning capacity, or permanent impairment or disability – grew at an annual rate of seven percent between 2007 and 2009, after the large decrease of nearly 30 percent from 2002 to 2005 due to reforms. This growth in indemnity costs per claim was faster than the average growth rate from 2005 to 2007, and indicated some impact of the recession in California.

The study noted that the average weekly wage of injured workers in California changed little from 2007 to 2009, slower than the four percent growth rate in prior years as wage growth declined during the recession period. At the same time, the average duration of temporary disability benefits increased by nearly one week per year, likely indicating the slower return to work because there were fewer jobs available.

The study also reported that rapid growth in medical payments per claim to injured workers in California – eight percent per year for claims with more than seven days of lost time – resumed since 2005, after large decreases from the reforms in earlier years. In addition, medical payments per claim grew rapidly in all regions in California after 2005.

In spite of the recent growth in average medical payments per workers' compensation claim in California, the interstate ranking of the state shifted significantly due to the reforms, from being the highest of the 16 WCRI study states pre-reform to being lower than typical post-reform.

Recent growth in medical payments per claim stemmed from multiple factors, including an increase in prices paid for office visits due to a fee schedule increase; growth in payments per service for facilities associated with surgical procedures; more complex office visits with higher prices billed more frequently; and moderate increases in services per visit for physical medicine.

Medical-related expenses per claim also grew continuously over the study period, including the average medical cost containment expense per claim and the average medical-legal expense per claim.

The Cambridge-based WCRI is recognized as a leader in providing objective, credible, and high-quality information about public policy issues involving workers' compensation systems.

The study is available for purchase at WCRI's Website: CompScope™ Benchmarks for California, 12th Edition

Share This Article: