Determinants of escalating costs in low risk workers' compensation claims.
ABSTRACT To identify and quantify attributes that lead to unanticipated cost escalation in workers' compensation claims.
We constructed four claim categories: low initial reserve/low cost, migrated catastrophic (low initial reserve/high cost), high initial reserve/low cost, and catastrophic (high initial reserve/high cost). To assess the attributes associated with the increased cost of migrated catastrophic claims, we analyzed 36,329 Louisiana workers' compensation claims in the four categories over a 5-year period.
In the 729 claims initially thought to be low-cost claims (migrated catastrophic), the most significant predictors for cost escalation were attorney involvement and claim duration, followed by low back disorder, married/single/divorced status, male gender, small company size, high premium, reporting delays, and older age. These injuries accounted for 2% of all claims but 32.3% of the costs. Accelerated escalation of costs occurred late in the claim cycle (2 years).
Certain attributes, particularly attorney involvement and claim duration, are associated with unanticipated cost escalation in a small number of claims that drastically affect overall losses. The results of this study suggest that these cases may be identified and addressed before rapid escalation occurs.
Full-textDOI: · Available from: Xuguang Grant Tao, Mar 24, 2014
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ABSTRACT: The goal of the AMA Guides to the Evaluation of Permanent Impairment (AMA Guides) is "to provide a standardized, objective approach to evaluating medical impairment" (6th ed, p 20). The appropriate application of the processes defined in the Guides should result in reliable, reproducible impairment ratings. Interrater consistency is critical for the purposes for which impairment ratings are used. However, our review of 6,233 impairment ratings between July 2006 and January 2010, reflecting 11,991 ratable diagnoses, demonstrated poor interrater reliability, with a 78% disagreement rate. A previous study, completed in 2005, evaluated 2,100 cases referred for impair-ment rating review and found that 80% of ratings resulted in different outcomes when reviewed by an expert reviewer. 1 Ratings are used throughout insurance liability systems in the United States, and espe-cially in workers' compensation, to assist in the determination of appropriate payments to injured parties. Utilization of a detailed guide based on standards developed by con-sensus of a large group of expert physicians results in reliability and predictability, thereby promoting key goals of the insurance systems: transparency, simplicity, and consistency. In other words, by using the Guides, parties can consistently evaluate what the injured party's impairments are and ensure that benefits are the same for all individ-uals with a specific condition. Time-consuming and costly litigation can be avoided if ratings are predictable and consistent. In the current study, there was an average difference of 10.0% whole person permanent impairment (WPI) between the original WPI ratings calculated with the Fifth Edition and the revised ratings, as opined by an AMA Guides expert reviewer. In the 2005 study there was a similar difference, 9.9% WPI. The reasons for poor interrater reli-ability with Fifth Edition ratings are many, including inaccurate clinical and causation analysis, failure to use the Guides appropriately, and bias; however, good interrater reli-ability can be achieved.
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ABSTRACT: To determine the relationship between attorney involvement, claim duration and workers' compensation claim costs. We identified and compared 738 claims with attorney involvement and 6191 claims without attorney involvement submitted by individuals injured between August 1, 2003 and July 31, 2004 whose claims were paid by the Louisiana Workers' Compensation Corporation (LWCC). At the time of assessment (March 20, 2006), 97.7% of claims not involving attorneys and 57.5% of claims involving attorneys were closed (resolved). After controlling for lost time (temporary/total days paid), attorney involvement was associated with consistently higher medical, indemnity and claims handling costs, as well as increasing claim duration (accident date to closing date). Attorney involvement in workers' compensation claims is associated with increasing claims duration and costs.Journal of occupational and environmental medicine / American College of Occupational and Environmental Medicine 10/2008; 50(9):1013-8. DOI:10.1097/JOM.0b013e31816fd696 · 1.63 Impact Factor
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ABSTRACT: Workers' compensation data are an important source for evaluating costs associated with construction injuries. We describe the characteristics of injured construction workers filing claims in Illinois between 2000 and 2005 and the factors associated with compensation costs using a robust regression model. In the final multivariable model, the cumulative percent temporary and permanent disability-measures of severity of injury-explained 38.7% of the variance of cost. Attorney costs explained only 0.3% of the variance of the dependent variable. The model used in this study clearly indicated that percent disability was the most important determinant of cost, although the method and uniformity of percent impairment allocation could be better elucidated. There is a need to integrate analytical methods that are suitable for skewed data when analyzing claim costs.Journal of occupational and environmental medicine / American College of Occupational and Environmental Medicine 09/2009; 51(11):1306-13. DOI:10.1097/JOM.0b013e3181ba46bb · 1.63 Impact Factor