TENNESSEE Sees Relief in Workers Comp Claim Costs

Once again, the Workers Compensation Research Institute (WCRI), reports another state, Tennessee, experienced a decline in costs in some specific areas of the workers’ compensation system as a result of reforms enacted in 2004.
The study discovered the reform provisions related to permanent partial disability (PPD) or lump-sum payments had a large and sustained impact on the average PPD/lump-sum payment per claim with more than seven days of lost time and PPD or lump-sum settlement. The average PPD/lump-sum payment per claim in Tennessee decreased 11% for claims with 36 months of experience.

The reforms also resulted in stable growth rates of the average PPD/lump-sum payment per claim for less mature claims. Since 2005, the average PPD/lump-sum payment per claim grew in line with the changes in wages.

Although the average PPD/lump-sum payment per PPD/lump-sum claim declined 11% for more mature claims, Tennessee ranked second highest among the other 10 non-wage loss states in 2005/2008. Prior to the reforms, Tennessee was 30% greater than the second highest state for the average PPD/lump-sum payment per PPD/lump-sum claim.

These were among the findings of the WCRI study Monitoring 2004 Reforms in Tennessee: CompScope™ Benchmarks, 10^th Edition, which monitors the impact of the 2004 reforms on certain specific areas.

Other Highlights

* Tennessee implemented medical fee schedules for services delivered on or after July 1, 2005. Due to the medical reforms, the average medical cost per claim with more than seven days of lost time saw a one-time decrease of 11% in 2006/2008.

* Even though Tennessee implemented a fee schedule relatively higher compared to the median of 42 states with fee schedules in 2006, prices paid for services delivered by non-hospital providers were reduced. Overall, non-hospital prices paid went from 24% higher than the median of 25 study states prior to introduction of the fee schedule to 12% higher than the median of 25 states in 2007 (post-reform), according to another WCRI study.

* The introduction of the new fee schedule may also have created incentives to increase the use of evaluation and management services (office visits) and reduce the use of invasive and specialty care. The price paid for evaluation and management services grew 23% from 2004 to 2006 and an additional 6% in 2007 – the latter increase was in line with Medicare annual updates to the fee schedule.

On the other hand, prices paid for invasive care (major surgery such as arthroscopic knees and shoulders) decreased 18% from 2004 to 2006. Furthermore, prices paid for major radiology services (MRI, CT scan) decreased 6% and minor radiology (X-Rays) decreased 27% from 2004 to 2006.(workersxzcompxzkit)

* The 2004 reforms also addressed the timeliness of the first indemnity payment to injured workers by implementing a penalty program for late payments. As a result of the penalty program, since 2005 more injured workers in Tennessee received their first indemnity check within 21 days of injury. Despite this improvement, Tennessee remained slightly below the typical study state in 2007/2008.

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.