The Basics of Workers Compensation Impairment Ratings

We often hear the phrase “impairment rating” when there is a discussion of an employee's workers compensation claim. Most people understand impairment means the employee was hurt and unable to work, but do not fully understand how impairment impacts a workers compensation claim.
 
 

Impairment
is a problem in the function of a body part. It can be either temporary or permanent. When it is temporary, the employee is unable to work while recovering from the injury. When the impairment is permanent, the employee retains a residual of the injury after the medical treatment has ended. (WcxKit) A permanent impairment's impact on the employee's life can range from a very mild impact to a life altering impact.
 
 
In a workers compensation claim impairment can be defined as:
1.     An inability of the employee to use his musculoskeletal system – his limbs, joints, muscles, bones, tendons and ligaments – at the level of use the employee had prior to the injury, or
2.     An inability of the employee to control his/her neurological functions – the brain, spinal cord, and peripheral nerves – at the level of use the employee had prior to the injury.
 
A medical provider treating an injured employee will utilize various medical approaches and treatments until the medical provider believes the employee's medical condition will not improve further. Either the employee has fully recovered from the injury, or the employee's medical improvement has stopped and the employee has reached his/her maximum medical improvement. When the medical provider believes there is nothing more that can be done medically for the employee, the medical provider will assess whether or not the employee has lost any functional ability.
 
 

If the employee
has any decrease in functional ability, the medical provider will assign an impairment rating, also known as a disability rating. In 42 states the medical providers will use one of the various editions of the American Medical Association Guides to the Evaluation of Permanent Impairment to establish the level of impairment. In 8 states – Florida, Illinois, Minnesota, New York, North Carolina, Oregon, Utah, and Wisconsin – the medical providers use a state specific guide for the establishment of an impairment rating.
 
 

In workers compensation
there are two types of benefits, medical and indemnity. The indemnity benefit is divided into four categories (in most states). While the terminology for the types of disability will vary by state, the four categories are:
 
1.     temporary total disability (TTD),
2.     temporary partial disability (TPD),
3.     permanent partial disability (PPD), and
4.     permanent total disability (PTD).
 

Impairment is normally not associated with TTD. If the employee fully recovers from the injury and has no impairment, the employee returns to work and TTD ends.

 
 

In some situations,
the impairment will prevent the employee from returning to full duty, but the employee is able to work either reduced hours or at a less demanding job. If either occurs and causes the employee to earn less than the employee was earning before the injury, the employee will receive TPD indemnity benefits to make up for a portion of the lost income caused by the impairment.
 
 

When the employee
has a permanent impairment, but is able to return to work, the employee is compensated for the permanent impairment by the payment of a PPD reward. The statutes of each state establish how much the employee will be compensated for the permanent impairment. In 36 states, there is a table (also referred to as a schedule) that list how much an employee will be paid in PPD indemnity benefits for the impairment of an arm, hand, thumb, finger, leg, foot, toe, vision or hearing. In the other 14 states – Alaska, Florida, Maine, Maryland, Massachusetts, Minnesota, Montana, Nevada, New Mexico, North Dakota, Rhode Island, Texas, Vermont and Wyoming – there are statutes that outline how the employee will be compensated for an impairment.
 
 

When an employee
is injured to the point that the employee can never return to work, the employee is paid PTD indemnity benefits for the severe or total impairment. Impairment this severe will drastically alter the course of the employee's life. (WcxKitz)
 
 

The employer
needs to take time to understand the employee's level of impairment and work with the employee to return the employee to work within the restrictions caused by the impairment.

Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact:RShafer@ReduceYourWorkersComp.com or 860-553-6604.

 
 
 

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.
 

© 2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
Info@ReduceYourWorkersComp.com.

The Intricacies of How to Interpret Impairment Ratings from State to State

Pity the workers' compensation claims coordinator who needs to know the impairment rating systems of several (or even all) of the states. While there are some similarities between the states, each state has its own interpretation as to how an impairment rating is both determined and applied.
 
To complicate things, some states use “impairment” and “disability” interchangeably, while other states make a distinction between impairment and disability. To be medically precise, using the fifth edition of the American Medical Association's Guides to the Evaluation of Permanent Impairment, (AMA Guide):
 
An impairment is “an alteration of an individual's health status, a deviation from normal in a body part or organ system and its functioning.”
 
A disability is “an alteration of an individual's capacity to meet personal, social, or occupational demands because of an impairment.”
 
For our purpose, we combine the two definitions to define an impairment rating as the alteration of an employee's body function impacting the ability of employee to meet the occupational demands of the job.
 
An impairment rating is given when the treating physician feels the injured employee has recovered to maximum function and the current medical condition will not improve further in the future. The terminology for maximum recovery varies with “maximum medical improvement” (MMI) and “permanent and stable” (P&S) being used in most states.
 
Thirty-seven states use the AMA Guide to establish an impairment rating for a permanently injured employee.
 
Simple. You Think?
1.     Two states, Oregon and Colorado use the Third Edition of the AMA Guide published in 1990.
2.     Eight states use the Fourth Edition of the AMA Guide published in 1993.
3.     Sixteen states use the Fifth Edition of the AMA Guide published in 2000.
4.     Ten states use the Sixth Edition of the AMA guide published in 2007.
5.     Connecticut requires the AMA Guide to be used without specifying which edition.
6.     Thirteen states  do not use the AMA Guide for the establishment of an impairment rating.
7.     Seven states use their own state specific guidelines
8.     Six states do not specify how an impairment rating is to be determined.
For an excellent chart showing what each state uses for establishing its  impairment rating see www.impairment.com.
 
Most states specify the injured employee be given an impairment rating based on the specific injured body part. For instance, if in the workplace accident the employee tore a ligament in the knee and requires surgery to repair the knee, the impairment rating is given as a percentage of the loss of use of the leg. The employee then makes an excellent recovery following the surgery. Once the employee reaches MMI, the physician assigns a 5% impairment rating to the knee.
 
A few states specify the impairment rating be given on the “body as a whole” and the physician might assign a 2% impairment rating for the whole body following the knee surgery.
 
Whether in the states allowing the employer to select the physician or in the states where the employee selects the physician, the usual process is for the physician to state an impairment rating when the employee has reached MMI. If the employee and the adjuster agree the impairment rating assigned by the treating doctor is accurate, then the employee and the adjuster move the claim forward to compensating the employee for the impairment. 
 
The resolution of the impairment rating is different if the employee and the adjuster do not agree on the percentage given for the impairment rating. If the employer selected the treating physician, the employee often obtains a second opinion, known as an independent medical examination (IME). If the employee selected the treating physician, the employer often obtains the IME. [In a few states, if the employee or employer does not agree with the treating physician impairment rating, the state provides or selects a physician to do the IME.] 
 
If both doctors are using the same AMA Guide or state specific guidelines, you would think they would calculate the same impairment rating for the employee. It rarely happens.
 
Both physicians, the treating physician and the IME doctor, use their clinical judgment to determine what is normal for the employee and how much has changed from the pre-injury condition to the post-injury condition. Each physician determines a range of impairment. Both physicians may place the employee in the same range, for example 15% to 25% of the body as a whole for a surgically repaired back injury.
 
However each physician has to select a number within the impairment range he/she believes is most correct based upon his/her own interpretation of the state guidelines and his/her own clinical judgment. The conservative employer's physician estimate of the severity of the medical condition could result in a 15% whole body rating while the liberal employee's physician may state the impairment rating is 25% of the whole body. 
 
As plaintiff attorneys know the doctors giving liberal impairment ratings, defense attorneys know the doctors giving conservative impairment ratings. More often than not, the impairment ratings are different, sometimes significantly different, in claims where the employee has obtained an attorney. The states vary in how the final determination of the impairment rating is reached:
 
1.     In some states the Workers’ Comp Board averages the two ratings, or splits the difference to determine the impairment rating.
2.     In some states, the Workers’ Comp Board has their own board appointed physician perform an IME to establish the impairment rating.
3.     In other states the Workers’ Comp Board averages the impairment rating of the employee's doctor, the employer's doctor and the state's own doctor.
4.     And, of course almost all Workers’ Comp Boards will approve a negotiated rating agreed to by the employee's attorney and the adjuster.
 
Just as the states vary in how an impairment rating is determined, they also vary in how the impairment rating will be applied.
 
Most states use an Income Benefits ($) for Schedule Injuries chart. If the employee's rating is 100% of a body part the employee gets a set dollar amount (X) as a lump sum award. If the employee rating is 15% of the body part, the employee gets 15% of X. The same approach applies to the body as a whole.
 
Other states use a similar schedule, but pay out the award amount in weekly installments, instead of a lump sum. A few states allow the employee to accept a slightly smaller lump sum instead of weekly installments. 
 
Eight states do not use a Schedule, but pay the benefits based on the degree of impairment. Within these eight states there are states using one of the editions of the AMA Guidelines and there are states using their own state specific guidelines.
 
When the impairment rating to the body as a whole is less than 100%, the insurer pays out the rating as a lump sum or in weekly (or bi-weekly or monthly) installments until the dollar amount for the impairment rating is paid in full. The installments in most states equal the weekly income benefit previously paid to the employee while the employee was classified as temporary disabled prior to reaching MMI.
 
However, there are states that adjust the installments amount downward for permanency benefits and there are states that adjust the installments upward for permanency benefits.
 
When the impairment rating to the body as a whole is 100% [permanent total disability (PTD)], the states again vary significantly in how the employee is paid. An impairment rating of 100% is normally paid out for a specific number of weeks or is paid as a lifetime benefit. In the states that pay the 100% whole body rating over a specific number of weeks, the number of weeks for PTD vary tremendously by state from 104 weeks to 700 weeks. A few states allow the employee to be paid from the state's Subsequent Injury Fund after the employee exhausts the maximum number of weeks of benefits available from the insurer. 
 
The states also disagree on what a the definition of a “lifetime benefit.” In some states a lifetime permanency benefit means  until the employee dies. Other states end lifetime permanency benefits on the day the employee reaches the age for full social security retirement benefits. (workersxzcompxzkit)
 
As both the methods of determining the impairment rating and compensating the employee for the permanent impairment varies significantly among the states, the workers' compensation claims coordinator for the employer has a tough job in keeping track of impairment-rating systems in multiple states.
 
The U.S. Chamber of Commerce publishes an Analysis of Workers' Compensation Laws with  excellent tables showing how impairment ratings are paid in each state. We would also be pleased to assist you with any questions you have on impairment ratings.

Author Rebecca Shafer,
J.D.Consultant, has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at:  RShafer@ ReduceYourWorkersComp.com or 860-553-6604.

Podcast: KNOW the New OSHA Recordkeeping Rules — OR Risk Fines and Criminal Penalties. Click Here:   http://www.workerscompkit.com/gallagher/podcast/Non_Compliance_with_Recordkeeping_Standards/
 

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.
 
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com 

10 Things Everyone Should Know About Impairment Ratings

When impairment  is assessed at maximal medical improvement (MMI), it is turned into a “rating” that is translated into permanent disability payments to injured workers. The AMA Guides to the Evaluation of Permanent Impairment define a structured approach with the goal of verifying a rating is valid and reliable – two physicians should come up with the same rating. Statistics indicate that over 70% of ratings performed by doctors are incorrect.

Ten Things You Need to Know
1. Impairment ratings  are the measure of the loss of medical functionality at maximum medical improvement. They are typically based on the AMA Guides to the Evaluation of Permanent Impairment which is used in over 40 states and throughout the federal system as the starting point to arrive at a permanent partial disability payment.
2. Impairment ratings  drive an estimated $20 billion costs in state workers’ compensation systems.
3. Most cases  should be at maximal medical improvement (MMI) within one year and, therefore, ratable. This is usually the optimum trigger to drive case closure.
 4. Most impairment  ratings are erroneous – typically twice what they should be – and most of the time these errors are missed. Potential lost cost is typically over $10,000 per claim.
 5. Physicians do not  learn how to rate impairment in medical school or residency; therefore, the vast majority of physicians do not know how to assess impairment or disability. This is even truer for adjusters and lawyers.
 6. Treating physicians  often inflate ratings in their advocacy role for their patients – resulting in needless impairment and disability costs (human and financial).
7. The process  of assessing impairment has evolved – the most current standard is the Sixth Edition of the AMA Guides to the Evaluation of Permanent Impairment; this is used by a minority of state jurisdictions and used by the Federal government within the Office of Workers’ Compensation Programs (FECA).
8.   It is not reasonable  to expect adjusters to be able to reliably identify and fix erroneous ratings – this is a specialty skill and requires interaction with physicians knowledgeable in the use of the Guides.
9.   There are  specific interventions, often jurisdiction specific, which will result in reduced errors.
10. Recognizing and  managing erroneous impairment ratings typically provides several fold return on investment (ROI) – Impairment Resources, LLC has unique solutions consistently achieving this ROI.
If you are  interested in seeing how your claims management system is scoring in this critical area, contact Impairment Resources, attention Candace LaChapelle at clachapelle@impairment.com or call her toll free at 866-848-9205. http://www.impairment.com
Author: Candace LaChapelle, Vice President of Business Development. 

Impairment Resources, LLC  (formerly Brigham & Associates), provides its clients with unique, proven strategies that drive accurate impairment ratings and result in a superb return on investment. IR combines the expertise and resources of national leaders in the areas of the AMA Guides to the Evaluation of Permanent Impairment, workers’ compensation cost containment, and recovery services. With offices in Portland, Maine; San Diego, California; and Kailua, Hawaii, it offers a proprietary suite of products and services, educational resources, training, certification and strategies to produce quality ratings.

Podcast/Webcast: How To Prevent Fraudulent Workers' Compensation Claims Click Here http://www.workerscompkit.com/gallagher/podcast/Fraudulent_Workers_Compensation_Claims/index.php

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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.
 
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com

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