Overview of Recent Workers Compensation Research Findings

1
Overview of Recent Workers Compensation Research
Findings
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• DC Campbell, Researcher
• Texas Department of Insurance, Workers
  Compensation Research and Evaluation Group

2
This presentation will highlight

• Medical costs and medical denial rates
• Return-to-work rates using Texas Workforce
  Commission (TWC) wage data
• Updates on WC network participation
• Recent pharmacy descriptive statistics and
• Descriptive statistics on recipients of permanent
  impairment income benefits.

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• Medical Costs and Medical Denial Rates

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Average Professional and Hospital Costs Per
Claim, Injury Years 2003 and 2006, One Year
Post-Injury
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group, 2007.
5
Percentage of Professional and Hospital Medical
Services Denied for the Top 25 Workers
Compensation Carriers for Service Years 1998-2007
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2008. 1 Denial rates for 2005 and 2007 should be
interpreted with caution since the data may be
incomplete. 2 House Bill (HB) 2600, a workers
compensation reform bill aimed at reducing
medical costs, was passed in 2001. 3 In August
2003, the most recent professional medical fee
guideline, which incorporated Medicares payment
policies, went into effect.
6
Percentage of Professional and Hospital Medical
Billing Lines Paid and Denied forWorkers
Compensation Network and Non-Network Claims,
Service Year 2007
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group, 2008.
7
Most Frequent Denial Reasons for Network and
Non-Network Claims, Service Year 2007
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2008. Note Percentages do not add up to 100
since insurance carriers may assign more than one
reason to each denial.
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• Return-to-Work Rates Using
• Texas Workforce Commission (TWC)
• Wage Data

9
Initial Return-to-Work Rate
Percentage of Injured Workers Back At Work for
the First Time 6 Months to 3 Years Post-Injury
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2007. Note 1 The study population includes
329,986 workers injured in 2001-2005 who also
received temporary income benefits (TIBs). Note
2 Although the increases of initial RTW rates
were small, they were statistically significant
at the 0.01 significance level. While this
reflects a improvement in the percentage of
workers who have initially returned to work, the
difference is not big enough to conclude that the
WC system improved substantially during this time.
10
Sustained Return-to-Work Rate
Percentage of Injured Workers Back At Work and
Remained for Three Successive Quarters Beginning
With the Initial RTW Quarter 6 Months to 3 Years
Post-Injury
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2007. Note 1 The study population includes
329,986 workers injured in 2001-2005 who also
received temporary income benefits (TIBs).
11
Mean and Median Days Off Workfor Injured Workers
Who RTW At Some Point Post Injury, Injury Years
2001-2004
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2007. Note1 The mean and median days off work in
2004 may be under-estimated due to data maturity
and should be viewed with caution. Note2 Days
Off Work was defined as days from the injury
date to the initial RTW date. Please note that
these numbers do not take into account any
additional time off work that may have occurred
after the initial RTW date. Note3 The analysis
was based on the claimants who returned to work,
and did not include those who did not return by
the end of 2006. Injury year 2005 was excluded
because of insufficient data.
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• Updates on WC Network Participation

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• Carrier Data Calls
• In Sept 2006, March 2007 and November 2007 TDI
  issued a data call to the top 13 insurance
  carrier groups (in terms of premium market share)
  to ask about WC health care network
  participation
• The top 13 groups represent approximately 82 of
  the WC premium written in Texas
• Network Data Call
• In February 2007, October 2007 and February 2008
  TDI issued a data call to all WC certified
  networks
• Data call included two parts
• Info on how many workers have been treated in
  network
• Info on how many insurance carriers the network
  has contracted with and for how long and

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Results of Carrier Data Call

• 12 out of 13 carrier groups have contracted with
  or established a certified WC network (an
  increase from 9 in Sept 2006)
• 11 of the 12 carrier groups with a network have
  already begun offering it to policyholders along
  with a premium credit
• Most premium credits offered for network
  participation are 10-12
• Network participation among policyholders varies
  widely for carriers
• as of March 1st, 2007 approx 29,000
  policyholders agreed to participate in networks
  compared to only 7,500 as of Sept 1st, 2006
• Most of these policyholders (81 were small and
  mid-sized employers)
• These carriers estimated that the number of
  claims treated in network would grow to over
  100,000 by CY 2009.

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Results of Network Data Call

• 18 of the 31 networks certified by TDI had
  treated injured workers as of Feb 1st, 2008
• A total of 39,991injured workers treated by these
  18 networks (2 networks alone treated 77 of
  these workers)
• About 6 percent of the workers treated in network
  had legacy claims (i.e., injuries prior to the
  network cert date)
• About 40 percent of the workers treated in
  network had lost-time claims, meaning at least
  one day of lost time was recorded
• As of Feb 1st, 9 of the 31 networks certified by
  TDI did not have any insurance carrier contracts
  in place

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Geographic Distribution of Lost-Time Claims
Treated by TDI-Certified Networks as of February
1, 2008
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2008. Note Lost-time claims are claims in
which at least one day of lost-time was recorded.
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Pharmacy Descriptive Statistics
18
Distribution of Medical Payments in the Texas
Workers Compensation System, Service Years 2005
- 2006
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2008. Note 1 Percent of Total Payments may not
add up to 100 because of rounding. Note 2 The
California Workers Compensation Institute (CWCI)
estimates that in 2005 Californias Pharmacy cost
was 7 percent of that states medical costs.
19
Injured Employees Receiving Prescriptions in the
Texas Workers Compensation SystemPrescription
Years 2005 - 2006
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2008.
20
Distribution of Pharmaceutical Utilization and
Payments by Injury Year Prescription Year 2006
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2008.
21
Average Pharmaceutical Utilization and Payments
Per Injured Employee by Injury Year,
Prescription Year 2006
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2007.
22
Distribution of Pharmaceutical Prescriptions by
Therapeutic Classification GroupPrescription
Year 2006
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2008. Note Texas WC prescriptions in 2006 were
for 6,001 unique Drug Names from 626 Subclasses.
The Subclasses fall into 89 distinct Therapeutic
Classification Groups as defined by the Medi-Span
classification system
23
Generic Substitution Rate Where Generics Were
Available Prescription Year 2006
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2008. Note Approximately 85,000 prescriptions
(5 percent) did not have generics available
24
Generic Substitution RatesTherapeutic
Classification Groups Prescription Year 2006
Source Texas Department of Insurance, Workers
Compensation Research and Evaluation Group,
2008.
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• Descriptive Statistics on Recipients of Permanent
  Impairment Income Benefits in the Texas WC System

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Five types of income benefits are payable under
the Texas Workers Compensation Act

• Temporary Income Benefits (TIBs) paid during
  the period of temporary disability (lost time
  from work) while the worker is recovering from an
  on-the-job injury
• Impairment Income Benefits (IIBs) paid to
  injured workers for permanent impairment
  (impairment evaluations are currently based on
  the Guides to the Evaluation of Permanent
  Impairment, 4th Edition, published by the
  American Medical Association)
• Supplemental Income Benefits (SIBs) paid to
  injured workers for ongoing disability after IIBs
  have been exhausted, with all eligibility for
  SIBs ending at 401 weeks after the date of
  injury Only workers with a 15 percent
  impairment rating and who are unemployed or
  underemployed as a result of their work-related
  injuries are eligible to receive SIBs
• Lifetime Income Benefits (LIBs) paid for the
  life of the injured worker for specific
  catastrophic injuries as set forth in Section
  408.161 of the Texas Labor Code and
• Death Benefits (DBs) and Burial Benefits paid
  to the deceased workers spouse or eligible
  beneficiaries as a result of a death from a
  compensable injury.

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Purpose of This Analysis

• This study aims to provide basic descriptive
  information regarding the frequency and amount of
  Impairment Income Benefits (IIBs) and
  Supplemental Income Benefits (SIBs) received by
  injured workers in the Texas workers
  compensation system from 1996 to 2005.
• This analysis focuses on IIBs and SIBs since
  these benefits are paid to severely injured
  workers who generally have the hardest time going
  back to work after an injury.

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Impairment Income Benefits (IIBs)

• Workers may receive IIBs once TIBs have ended
  (either as a result of the worker reaching
  maximum medical improvement or going back to
  work) however, workers may receive IIBs (unlike
  TIBs) while back at work.
• IIBs are generally paid weekly and are equal 70
  percent of the worker's average weekly wage.
• An injured worker becomes eligible for IIBs the
  day after the worker reaches maximum medical
  improvement (MMI).
• IIBs are currently calculated based on the
  injured workers impairment rating, which is
  assigned by a doctor using the American Medical
  Associations Guides to the Evaluation of
  Permanent Impairment, 4th edition.
• Workers receive three weeks of IIBs for every
  percentage point of impairment assigned. For
  example, if an injured worker has an impairment
  rating of 6 percent, the worker would receive 18
  weeks of impairment income benefits.

29
Total Number of Injured Workers Who Received
IIBs Injury Years 1996-2005

Source Texas Department of Insurance Workers
Compensation Research and Evaluation Group,
2008. Note 1 Injury year 2005 data should be
interpreted with caution since data may not be
complete. Note 2 Claims that did not have a
valid claim, benefit and impairment rating record
on file with the Division of Workers
Compensation were excluded from this analysis.
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Percentage of Workers Receiving Medical Services
in 2003 Who Also Received IIBs or SIBs
Source Texas Department of Insurance Workers
Compensation Research and Evaluation Group,
2008. Note Medical services include
professional and hospital services rendered
during 2003. Pharmacy services are excluded from
this analysis since pharmacy data was not
available for 2003.
31
Average IIBs Duration Per Worker Injury Years
1996-2005

Source Texas Department of Insurance Workers
Compensation Research and Evaluation Group,
2008. Note 1 Injury year 2005 data should be
interpreted with caution since data may not be
complete. Note 2 Claims that did not have a
valid claim, benefit and impairment rating record
on file with the Division of Workers
Compensation were excluded from this analysis.
32
Distribution of Most Recent Impairment Rating
Received by IIBs Recipients, Injury Years
1996-2005

Source Texas Department of Insurance Workers
Compensation Research and Evaluation Group,
2008. Note 1 Injury year 2005 data should be
interpreted with caution since data may not be
complete. Note 2 Claims that did not have a
valid claim, benefit and impairment rating record
on file with the Division of Workers
Compensation were excluded from this analysis.
33
IIBs Recipients Who Received Statutory Maximum
and Minimum Weekly IIBs

• The statutory maximum IIBs benefit payable to
  injured workers is 70 of the State Average
  Weekly Wage (SAWW)
• The SAWW for WC purposes is based on 88 of the
  average weekly wage for all covered employment as
  calculated by the Texas Workforce Commission
  (TWC)
• As of 2006, approximately 21 of workers
  receiving IIBs were capped at the statutory
  maximum weekly IIBs rate currently 498/week
• As of 2006, approximately 2 of workers receiving
  IIBs received the statutory minimum weekly IIBs
  rate currently 107/week
• Statutory changes made by HB 7 in 2005 to the
  calculation of the statutory maximum weekly
  benefit increased the maximum weekly IIBs payment
  from 378 in FY 2006 to 498 in FY 2008, which
  should result in a lower percentage of workers
  being capped at the statutory maximum in future
  years

34
Impairment Income Benefits (IIBs)

• Workers may receive IIBs once TIBs have ended
  (either as a result of the worker reaching
  maximum medical improvement or going back to
  work) however, workers may receive IIBs (unlike
  TIBs) while back at work.
• IIBs are generally paid weekly and are equal 70
  percent of the worker's average weekly wage.
• An injured worker becomes eligible for IIBs the
  day after the worker reaches maximum medical
  improvement (MMI).
• IIBs are currently calculated based on the
  injured workers impairment rating, which is
  assigned by a doctor using the American Medical
  Associations Guides to the Evaluation of
  Permanent Impairment, 4th edition.
• Workers receive three weeks of IIBs for every
  percentage point of impairment assigned. For
  example, if an injured worker has an impairment
  rating of 6 percent, the worker would receive 18
  weeks of impairment income benefits.

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Impairment Income Benefits (IIBs)

• Workers may receive IIBs once TIBs have ended
  (either as a result of the worker reaching
  maximum medical improvement or going back to
  work) however, workers may receive IIBs (unlike
  TIBs) while back at work.
• IIBs are generally paid weekly and are equal 70
  percent of the worker's average weekly wage.
• An injured worker becomes eligible for IIBs the
  day after the worker reaches maximum medical
  improvement (MMI).
• IIBs are currently calculated based on the
  injured workers impairment rating, which is
  assigned by a doctor using the American Medical
  Associations Guides to the Evaluation of
  Permanent Impairment, 4th edition.
• Workers receive three weeks of IIBs for every
  percentage point of impairment assigned. For
  example, if an injured worker has an impairment
  rating of 6 percent, the worker would receive 18
  weeks of impairment income benefits.

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Supplemental Income Benefits (SIBs)

• An injured worker may receive SIBs if
• the worker has an impairment rating of 15 percent
  or more and
• the worker has not returned to work because of
  the impairment, or has returned to work but is
  earning less than 80 percent of his pre-injury
  average weekly wage because of the impairment
  and
• the worker did not take a lump sum payment of
  impairment income benefits and
• the worker has tried to find a job that matches
  his or her ability to work.
• Injured workers must meet SIBs eligibility
  requirements on a quarterly basis (the first
  quarter the DWC makes the SIBs eligibility
  determination all subsequent quarters, the
  injured worker must apply to the insurance
  carrier for eligibility, but may dispute to DWC
  if denied).
• SIBs are paid on a monthly basis and equal 80
  percent of the difference between 80 percent of
  the worker's average weekly wage and the weekly
  wage after the injury.
• An injured worker becomes eligible for SIBs the
  day after IIBs end.

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Total Number of Injured Workers Who Received
SIBs Injury Years 1996-2004

• Source Texas Department of Insurance Workers
  Compensation Research and Evaluation Group, 2008.
• Note 1 Injury year 2004 data should be
  interpreted with caution since data may not be
  complete. Injury Year 2005 was excluded from
  this analysis since few workers injured in 2005
  have exhausted their IIBs and are eligible to
  receive SIBs.
• Note 2 Claims that did not have a valid claim,
  benefit and impairment rating record on file with
  the Division of Workers Compensation were
  excluded from this analysis.

38
SIBs Recipients Who Received Statutory Maximum
SIBs

• The statutory maximum SIBs benefit payable to
  injured workers is 70 of the State Average
  Weekly Wage (SAWW)
• The SAWW for WC purposes is based on 88 of the
  average weekly wage for all covered employment as
  calculated by the Texas Workforce Commission
  (TWC)
• As of 2006, approximately 19 of workers
  receiving SIBs are currently capped at the
  statutory maximum weekly SIBs rate currently
  498/week
• There is currently no minimum weekly SIBS rate
  payable to injured workers
• Statutory changes made by HB 7 in 2005 to the
  calculation of the statutory maximum weekly
  benefit increased the maximum weekly SIBs payment
  from 378 in FY 2006 to 498 in FY 2008, which
  should result in a lower percentage of workers
  being capped at the statutory maximum in future
  years

39
Estimated Number and Percent of SIBs Recipients
Who Reached 401 Weeks Statutory Benefit Maximum
Duration, Injury Years 1996-2000

Source Texas Department of Insurance Workers
Compensation Research and Evaluation Group,
2008. Note 1 Injury year 2000 data should be
interpreted with caution since data may not be
complete. Injury Years 2001-2004 was excluded
from this analysis since workers injured in
2001-2004 have not had the opportunity to receive
401 weeks of SIBs. Note 2 Claims that did not
have a valid claim, benefit and impairment rating
record on file with the Division of Workers
Compensation were excluded from this analysis.
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Upcoming Research Reports

• Update on claim and medical denial rates
• Update on use of medical peer reviews (results
  from recent data call)
• Analysis of access to care for non-network
  claims
• Update of employer participation estimates in the
  Texas WC system and employee coverage rates
• Next WC network report card (due in Sept)
• Biennial report on impact of HB 7 on
  affordability and availability of WC insurance
  for Texas employers (due December 1, 2008)
• Biennial report on impact of HB 7 on medical
  costs, quality of care and medical dispute
  resolution (due December 1, 2008).