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Illinois workers comp claim costs remain high despite reforms

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Total cost per claim has decreased 6.4% since a reduction in medical fee schedule rates, but workers compensation costs in Illinois remain higher than other states, according to a recent study by the Workers Compensation Research Institute.

Indemnity benefits per claim were higher than other states from 2010 to 2015 due to longer duration of temporary disability and costly permanent partial disability/lump sum settlements, the Cambridge, Massachusetts-based WCRI said in its study. The average indemnity benefit per claim in Illinois was $21,275 in 2013, while the median state benefit per claim was $18,269, WCRI said.

The decrease is being credited as the result of the reduction in medical fee schedule rates that took effect in 2011. However, some observers say that hasn’t been enough.

“We still remain a much more expensive state when it comes to indemnity benefits — both the type and the duration of those benefits — and with respect to the expenses that are involved in the medical and legal aspects of settling the claim,” Steve Schneider, Chicago-based vice president for state affairs for the Midwest region for the American Insurance Association, said Monday. “That demonstrates that Illinois’ workers compensation costs despite having decreased 6.4% in the last 6½ years overall remain very expensive when compared to other states.”

Illinois’ post-recession economy is named as a likely contributor to the trends in indemnity benefits per claim, the WCRI said.

“Illinois’ recession was more severe than the nation’s, and recovery in the state has been slower. The state has lagged behind the region and the country on income, output and job growth,” WCRI said in the study. In addition, the growth in the average weekly wage of injured workers in Illinois was faster at 4.9% than the median state at 2.1%, according to the study, leading to higher benefit costs. 

Experts say that the lack of forward movement in terms of passing a state budget is another cause for concern. 

“We have a situation now where our state hasn’t had a budget for the last two years,” Winnetka, Illinois-based Christopher Hurley, president of the Illinois Trial Lawyers Association, said Monday. “If there are jobs? leaving the state of Illinois, it’s because businesses don’t feel comfortable in this environment because there is so much uncertainty.”

On its efforts on workers comp reform since 2011, Illinois has seen no significant forward movement, and experts say that with passage of H.B. 2525 — a bill that would require insurers to submit rates to the Illinois Department of Insurance and wait up to 30 days before using them — there has been regression. 

“The movement in Illinois has been backward not forward,” Mr. Schneider said. “We think there could be forward movement made on three fronts: enact a closed drug formulary ... (have) the state adopt a Medicare-based fee schedule at a rate of 175 or perhaps 180% of the Medicare rates to ensure stability and predictable with respect to medical costs, and more transparency from the workers comp attorneys … and doctors,” said Mr. Schneider.