Report: Eight States are Failing in Workers' Comp Efforts

Data from OSHA Form 200's, covering all OSHA recordable injuries and illnesses, provides the basis for rating state-by-state workers' compensation performance in a new study, State Report Cards for Workers' Comp, prepared by Work Loss Data Institute (WLDI). And according to the study, some states aren't making the grade.

The study grades state workers' compensation programs based on six key outcomes measures: incident rates, cases missing work, median disability durations, delayed recovery rate, and key conditions, specifically, low back strain and carpal tunnel syndrome.

WLDI combined the six rankings for each state in each category into an overall ranking, and assigned 5 grades A, B, C, D and F based on where the overall ranking fell. So who passed and who failed?

Nine states received A's, including Georgia , Minnesota, Iowa, Nevada, Utah, Indiana, Arizona, Oregon and Arkansas. Eight states and territories, including Puerto Rico, West Virginia, New York, California, Texas, New Jersey, Louisiana and Rhode Island flunked.

As workers' compensation costs begin their upward spiral again, it becomes increasingly important to identify those factors contributing to the cost increases, especially those that may be controlled. History has shown that there are major differences in costs from state to state. This report shows that during the year 2000, the ratio of workers' compensation insurance costs from state to state was over four times from the highest cost state to the lowest cost state. These cost differences can play a major role in the competitiveness of companies operating in these states, and also on decisions to expand or relocate.

There are two major drivers of these workers' compensation costs. The first is outcomes, specifically the success within a state in preventing injuries, and when they occur, their success in returning the injured worker to health and productive endeavor, avoiding prolonged absence and medical treatment costs. The second driver of these costs is administrative burden, sometimes referred to as the "friction" inherent in that states' workers' compensation system. "Friction" is the accumulation of rules, procedures, disputes, delays, discretionary charges and patterns of practice that impact upon the resolution of claims.

Specifically, looking at the six key outcome measures, WLDI found:

  • 1) Incidence rates. Good workers' compensation outcomes start with prevention, according to WLDI, and proper attention to safety can minimize the chances of a claim ever happening in the first place. Specifically, WLDI looked at the incidence of claims involving days away from work for each state. The national incidence was 1.8 cases per 100 full-time workers. The rate varied from a low of 1.2 in Georgia to a high of 3.4 in West Virginia.
  • 2) Cases missing work. When an injury happens, many cases do not require any time off from work and these cases place minimal burden on the system. WLDI looked at the total number of cases within each state, and calculated percent of total cases missing work. For the United States as a whole, 29 percent of OSHA recordable cases required time off from work. This percentage varied from a low of 22 percent in Iowa and Kansas to a high of 77 percent in Puerto Rico.
  • 3) Median disability durations. When a case requires missed work, the longer the case is out the higher the indemnity costs. For the country as a whole, the median disability duration in 2000 was 6 days. This varied from a low of 4 days in Georgia, Indiana and Virginia to a high of 17 in Puerto Rico. The next highest are Texas at 10, and California and New York at 8 days.
  • 4) Delayed recovery rate. A key driver of workers' compensation costs is cases that fail to resolve in a relatively short period of time. The frequency of long-term injuries has a huge impact on workers' comp costs. Twenty-one percent of cases were out of work for 31 days or longer. This ranged from a low of 13.1 percent in Minnesota and 13.4 percent in Wisconsin, to highs of 34.9 percent in Puerto Rico and 31.8 percent in Texas.
  • 5) Key conditions: Low Back Strain. To investigate in depth the different variables in state-by-state workers' compensation outcomes, the study analyzed each condition within each state. The OSHA BLS system, based on the OSHA Form 200, does not use the ICD9 diagnostic coding system, but Work Loss Data Institute has been able to convert the OSHA claims to an ICD9 based system, based on a combination of OSHA's Nature of Injury codes and OSHA's Body Part codes. Using ICD9 code, WLDI provides disability duration outcome information for every reportable condition in the United States for the year 2000, and then provides the same information for each of the 44 states and territories where data was available for the year 2000. WLDI lists the top 10 Workers' Compensation Diagnoses for 2000, including rank, ICD9 code, condition, cases, medical costs (means and medians), lost work days (means and medians), restricted work days (means and medians), and average number of provider visits. The number one condition is back sprains and strains (ICD9 847), resulting in over 333,000 cases with lost workdays in the year 2000. In addition to being the most common condition, this is also a condition with a great deal of variability, as shown by the difference between the median and the mean disability duration. In comparing state-by-state outcomes for back sprains and strains, the states with the best outcomes for back strain are Minnesota, Maine, Nebraska and Iowa, and the worst states are Puerto Rico, New York, Texas and California.
  • 6) Key conditions: Carpal Tunnel Syndrome. While not as common as low back sprains, carpal tunnel syndrome also has a significant impact on workers' compensation costs. Among the most common workers' comp conditions, carpal tunnel syndrome is ranked 9th in frequency according to this study, and it has the longest average disability durations among conditions in the top 10. In comparing state-by-state outcomes for carpal tunnel syndrome, the best states and territories for carpal tunnel syndrome are the Virgin Islands, Arkansas, Arizona and New Mexico, and the worst states are West Virginia, Louisiana and Massachusetts.

Among those states not participating for the year 2000 were Colorado, Idaho, Mississippi, New Hampshire, North Dakota, Ohio, Pennsylvania, South Dakota and Wyoming.

The 168-page WLDI special report provides complete detail on all cases for participating states, based on all cases reported to OSHA for the year 2000. It is available in both electronic and hardcopy formats for $175 each by visiting www.disabilitydurations.com/specreportorder.htm, or by contact WLDI at (800) 488-5548.

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