1 Comparison of the State of Texas Workers’ Compensation Programs Texas Department of Insurance...

1

Comparison of the State of Texas Workers’ Compensation

Programs

Texas Department of InsuranceWorkers’ Compensation Research and Evaluation

Group

August 2006

2

Purpose of This Analysis

• To compare the medical and indemnity costs associated with each of the state’s self-insured workers’ compensation programs

3

The State’s WC programs include:

• State Office of Risk Management (SORM)

• University of Texas System (UT)

• Texas A&M University System (A&M)

• Texas Department of Transportation (TXDOT)

4

Five areas of focus for this analysis:

1. Median workers’ compensation medical cost per claim– Professional medical service costs– Hospital costs– Pharmacy costs

2. Utilization of physical medicine and diagnostic testing services per claim

3. Medical billing and claim denial rates

4. Median Temporary Income Benefit (TIBs) cost and duration per claim

5. Median Impairment Income Benefits (IIBs) cost and duration per claim

5

Data Sources• Medical billing data (professional, hospital and pharmacy

bills) for 1999-2005 collected from each of the state WC programs

• Income benefit transaction data for 1999-2005 collected from each of the state WC programs

• Medical billing data (professional and hospital bills) for 1999-Feb, 2005 collected by the Texas Department of Insurance, Division of Workers’ Compensation

• Claim data for 1999-2005 collected by the Texas Department of Insurance, Division of Workers’ Compensation

6

Workers’ Compensation medical and income benefit cost comparisons

presented here:

• for all injuries; and

• for low back soft tissue injuries (i.e., low back strains/sprains).

7

Methods

• TDI first grouped all diagnoses into diagnostic “buckets” according to a methodology prescribed by the American College of Occupational and Environmental Medicine (ACOEM).

• A distribution of each of these diagnostic buckets was then run for SORM, UT, A&M, and TXDOT to identify the most frequent injury types.

• TDI then calculated the mean (average) and median (50th percentile) medical cost and TIBs and IIBs costs for all injuries and for low back soft tissue injuries (the most frequent type of injury for SORM, UT, A&M and TXDOT).

8

Methods, continued

• Medical costs were calculated for injury years 1999-2004 at twelve months post-injury to ensure that all claims included in the analysis have the same claim maturity.

• TIBs costs were calculated for injury years 1999-2003 with no cut-off applied since TIBs are statutorily capped at 104 weeks from the date disability began.

• In an effort to expand the usefulness of this analysis, professional and hospital medical costs for all state WC programs were compared with each other and with all other private and public workers’ compensation insurers (i.e., “other” category).

9

Caveats• Pharmacy costs for “other” workers’ compensation insurance

carriers during 1999-2005 are not currently available because pharmacy data was not collected by the Texas Workers’ Compensation Commission during this time.

• Medical and income benefit costs cannot be analyzed for specific injuries, other than low back soft tissue injuries, because of the relatively small numbers of WC claims for each of the state WC programs.

• State WC income benefit costs cannot be easily compared with all other private and public insurers because of statutory sick and annual leave provisions for state employees and because income benefit data for “other” insurance carriers is not currently collected at the transaction level.

10

Caveats, continued• Analyzing medical and income benefit data by diagnostic

groups helps to control for injury severity, but some injury severity differences can occur even within diagnostic groups.

• The mean and the median are presented for both the medical cost and income benefit cost comparisons, but the median provides a better platform for comparisons since a few high cost injuries can skew the mean.

• Medical cost findings for injury year 2004 and income benefit cost findings for injury year 2003 should be viewed with caution since the data is still incomplete.

11

Medical Costs per Claim

12

Distribution of Total Professional and Hospital Workers’ Compensation Medical Costs by Injury Type – Injury Year

2003 (12 Months Post Injury)Injury Type SORM UT A&M TXDOT OTHERS

LOW-BACK SOFT TISSUE 13% 12% N/A 14% 15%

SHOULDER SOFT TISSUE 8% 9% N/A 9% 9%

NECK SOFT TISSUE 7% 5% N/A 10% 6%

KNEE INTERNAL DERANGEMENT 6% 6% N/A 3% 5%

LOW-BACK NERVE COMPRESSION 6% 2% N/A 6% 7%

HAND-WRIST NERVE COMPRESSION 1% 1% N/A 1% 3%

HAND/WRIST SOFT TISSUE 3% 3% N/A 1% 3%

ANKLE-FOOT SOFT TISSUE 4% 4% N/A 1% 2%

MULTIPLE SOFT TISSUE 1% 1% N/A 0% 2%

HAND-WRIST SUPERFICIAL TRAUMA 3% 3% N/A 3% 4%

OTHER INJURIES 49% 55% N/A 54% 45%

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: “Other” represents all other private and public workers’ compensation insurance carriers.Note 2: Diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.

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Distribution of Medical Costs by State Workers’ Compensation Program, Injury Years 1999-2001 and 2002-

2004 Combined, All Injuries (12 Months Post Injury)

SORM UT A&M TXDOT

1999-2001

2002-2004

1999-2001

2002-2004

1999-

2001

2002-2004

1999-2001

2002-2004

Hospital services 34% 32% 27% 17% 28% * 38% 26%

Pharmacy services 5% 5% 4% 12% 5% * 4% 8%

Professional services 62% 64% 69% 71% 67% * 58% 66%

Total costs paid for claims at 12 months post injury

$60 million

$56 million

$7 million $3 million

$3 million

* $5 million $3million

Approximate total # of claims with medical payments

20,000 19,000 4,500 2,300 2,400 2,000 1,900 1,300

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note: Injury year 2003-2004 pharmacy data for A&M are incomplete.

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Median Workers’ Compensation Total Professional and Hospital Medical Costs per Claim - All Injuries

Injury Years 1999-2004 (12 Months Post Injury)

$0

$100

$200

$300

$400

$500

$600

$700

Injury Year1999

Injury Year2000

Injury Year2001

Injury Year2002

Injury Year2003

Injury Year2004

SORM

UT

A&M

TXDOT

OTHER

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: “Other” represents all other private and public workers’ compensation insurance carriers.Note 2: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

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Mean (Average) and Median Workers’ Compensation Total Professional and Hospital Medical Costs per Claim - All Injuries


Injury Year 1999

Injury Year 2000

Injury Year 2001

Injury Year 2002

Injury Year 2003

Injury Year 2004*

Mean Median Mean Median Mean Median Mean Median Mean Median Mean Median

SORM $2,635 $404 $2,745 $469 $3,015 $524 $3,168 $595 $2,519 $627 $2,475 $655

UT $1,250 $232 $1,587 $235 $1,364 $258 $861 $242 $719 $276 $880 $268

TXAM $1,021 $201 $1,291 $210 $1,264 $244 $1,180 $227 $1,952 $389 $1,706 $458

TXDOT $2,214 $308 $3,131 $367 $1,975 $386 $2,349 $464 $1,663 $482 $2,548 $622

OTHER $2,353 $377 $2,494 $398 $2,876 $467 $3,093 $521 $3,022 $568 * *

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: “Other” represents all other private and public workers’ compensation insurance carriers.Note 2: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

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Median Workers’ Compensation Pharmacy Costs per Claim - All Injuries, Injury Years 1999-2004 (12 Months Post Injury)

$0

$20

$40

$60

$80

$100

$120

Injury Year 1999 Injury Year 2000 Injury Year 2001 Injury Year 2002 Injury Year 2003 Injury Year 2004

SORM

UT

TXAM

TXDOT

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: Pharmacy data is not currently available for “other” workers’ compensation insurance carriers.Note 2: Injury year 2003-2004 pharmacy data for A&M and injury year 2002-2004 pharmacy data for UT are incomplete.

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Mean (Average) and Median Workers’ Compensation Pharmacy Costs per Claim - All Injuries


Injury Year 1999

Injury Year 2000

Injury Year 2001

Injury Year 2002

Injury Year 2003

Injury Year 2004*


SORM $288 $94 $337 $110 $314 $110 $283 $107 $300 $104 $316 $107

UT $170 $80 $186 $70 $227 $87 $160 $79 $171 $79 $247 $81

TXAM $95 $52 $181 $65 $212 $58 $135 $74 ** ** ** **

TXDOT $201 $72 $295 $85 $212 $90 $275 $82 $330 $98 $391 $101

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: Pharmacy data is not currently available for “other” workers’ compensation insurance carriers.Note 2: Injury year 2003-2004 pharmacy data for A&M are incomplete.

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Median Workers’ Compensation Total Professional and Hospital Medical Costs per Claim – Low Back Soft Tissue Injuries, Injury Years 1999-2004 (12 Months Post Injury)

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Injury Year 1999 Injury Year 2000 Injury Year 2001 Injury Year 2002 Injury Year 2003 Injury Year 2004

SORM

UT

TXAM

TXDOT

OTHER

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: “Other” represents all other private and public workers’ compensation insurance carriers.Note 2: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.Note 3: TXDOT data for injury year 1999 and 2004 need additional validation.Note 4: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.

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Mean (Average) and Median Workers’ Compensation Total Professional and Hospital Medical Costs per Claim –

Low Back Soft Tissue Injuries, Injury Years 1999-2004 (12 Months Post Injury)

Injury Year 1999

Injury Year 2000

Injury Year 2001

Injury Year 2002

Injury Year 2003

Injury Year 2004*


SORM $3,148 $971 $3,883 $1,298 $3,837 $1,035 $3,925 $1,314 $3,528 $1,106 $3,120 $1,306

UT $1,693 $327 $2,031 $694 $1,966 $653 $971 $569 $796 $448 $1,139 $804

TXAM N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

TXDOT $5,480* $2,734* $2,889 $989 $2,118 $575 $2,996 $1,165 $2,626 $843 $4,004* $1,939*

OTHER $2,656 $654 $2,924 $656 $3,327 $729 $3,559 $813 $3,391 $864 * *

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: “Other” represents all other private and public workers’ compensation insurance carriers.Note 2: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.Note 3: TXDOT data for injury year 1999 and 2004 need additional validation.Note 4: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.

20

Median Workers’ Compensation Pharmacy Costs per Claim – Low Back Soft Tissue Injuries


$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Injury Year1999

Injury Year2000

Injury Year2001

Injury Year2002

Injury Year2003

Injury Year2004

SORM

UT

TXAM

TXDOT

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: Injury year 2002-2004 pharmacy data for UT is incomplete.Note 2: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.Note 3: TXDOT data for injury year 1999 and 2004 need additional validation.

21

Mean (Average) and Median Workers’ Compensation Pharmacy Costs per Claim – Low Back Soft Tissue Injuries


Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.

Note 1: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.Note 2: TXDOT data for injury year 1999 and 2004 need additional validation.

Injury Year 1999

Injury Year 2000

Injury Year 2001

Injury Year 2002

Injury Year 2003

Injury Year 2004*


SORM $437 $155 $539 $209 $428 $170 $514 $206 $511 $231 $476 $176

UT $289 $138 $262 $137 $248 $166 $183 $91 $345 $132 $274 $147

TXAM N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

TXDOT $898** $441** $372 $140 $317 $171 $319 $167 $520 $112 $773* $305*

22

Utilization of Physical Medicine and Diagnostic Testing Services per Claim

23

Physical Medicine Utilization Findings

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Percentage of Injured Workers Who Received Physical Medicine Services, Injury Years 1999-2004,

All Injuries (12 Months Post Injury)

Source: Texas Department of Insurance, Workers’ Compensation Research and Evaluation Group, 2006.Note 1: Physical medicine utilization data for Texas A&M is incomplete for injury years 2003 and 2004.Note 2: Utilization statistics reflect the utilization of these services in professional medical bills. Note 3: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

Injury Year

1999

Injury Year

2000

Injury Year

2001

Injury Year

2002

Injury Year

2003

Injury Year

2004*

SORM59% 60% 59% 58% 55% 61%

UT

46% 48% 50% 51% 50% 51%

A&M41% 46% 48% 46% * *

TXDOT

54% 58% 58% 60% 55% 62%

OTHER CARRIERS

55% 57% 59% 60% 60% *

25

Median Number of Physical Medicine Services per Worker, Injury Years 1999-2001 and 2002-2004 Combined, All Injuries,

One-Year Post Injury(results shown for 20 most frequent physical medicine services provided to injured state workers)

Source: Texas Department of Insurance, Workers’ Compensation Research and Evaluation Group, 2006.Note 1: Physical medicine utilization data for Texas A&M is incomplete for injury years 2003 and 2004.Note 2: Utilization statistics reflect the utilization of these services in professional medical bills. Note 3: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

Type of Physical Medicine Service

SORM UT A&M TXDOT OTHER

CARRIERS

1999-2001

2002-2004

1999-2001

2002-2004

1999-2001

2002-2004

1999-2001

2002-2004

1999-2001

2002-2003*

Therapeutic Exercises 16 16 12 8 3 * 13 12 8 9

Hot & Cold Packs 6 6 6 5 2 * 6 6 4 5

Electrical Stimulation – unattended

7 6 6 5 2 * 7 7 5 5

Myofascial Release 7 6 5 3 2 * 7 5 7 7

Therapeutic Exercises – one on one

5 5 4 3 3 * 4 4 3 3

Manipulation 13 9 4 5 4 * 12 10 12 12

Massage Therapy 7 6 5 5 2 * 6 6 6 6

Electrical Stimulation – manual

8 8 6 5 3 * 5 5 7 6

Joint Mobilization 5 5 3 3 2 * 4 4 4 4

Neuromuscular Education

6 7 5 4 1 * 9 6 6 7

26

Percentage of Injured Workers Who Received Physical Medicine Services, Injury Years 1999-2004, Low Back Soft Tissue Injuries (12 Months Post Injury)

Source: Texas Department of Insurance, Workers’ Compensation Research and Evaluation Group, 2006.Note 1: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.Note 2: Utilization statistics reflect the utilization of these services in professional medical bills. Note 3: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

Injury Year

1999

Injury Year

2000

Injury Year

2001

Injury Year

2002

Injury Year

2003

Injury Year

2004*

SORM81% 82% 79% 78% 74% 82%

UT

67% 69% 71% 72% 62% 76%

A&MN/A N/A N/A N/A N/A N/A

TXDOT

88% 82% 78% 78% 67% 80%

OTHER CARRIERS

75% 77% 78% 79% 80% *

27

Median Number of Physical Medicine Services per Worker, Injury Years 1999-2001 and 2002-2004 Combined,

Low Back Soft Tissue Injuries, One-Year Post Injury(results shown for 10 most frequent physical medicine services provided to injured state workers)

Source: Texas Department of Insurance, Workers’ Compensation Research Group, 2004.Note 1: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.Note 2: Utilization statistics reflect the utilization of these services in professional medical bills. Note 3: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

Type of Physical Medicine Service


CARRIERS

1999-2001

2002-2004

1999-2001

2002-2004

1999-2001

2002-2004

1999-2001

2002-2004

1999-2001

2002-2003*

Therapeutic Exercises 13 13 9 8 N/A N/A 17 10 8 9

Hot & Cold Packs 6 6 5 5 N/A N/A 6 5 4 4

Electrical Stimulation – unattended

7 6 5 5 N/A N/A 8 5 5 5

Myofascial Release 6 5 6 1 N/A N/A 12 9 7 7

Therapeutic Exercises – one on one

6 5 6 3 N/A N/A 2 3 3 3

Manipulation 13 9 3 4 N/A N/A 8 12 12 12

Massage Therapy 7 7 4 6 N/A N/A 5 12 6 6

Electrical Stimulation – manual

8 9 8 10 N/A N/A 5 7 7 6

Joint Mobilization 3 5 3 2 N/A N/A 3 5 4 4

Neuromuscular Education

6 6 4 4 N/A N/A 10 14 6 6

28

Diagnostic Testing Utilization Findings

29

Percentage of Injured Workers Who Received Diagnostic Testing Services, Injury Years 1999-2004,

All Injuries (12 Months Post Injury)

Source: Texas Department of Insurance, Workers’ Compensation Research and Evaluation Group, 2006.Note 1: Diagnostic testing utilization data for Texas A&M is incomplete for injury years 2003 and 2004.Note 2: Utilization statistics reflect the utilization of these services in professional medical bills.Note 3: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

Injury Year

1999

Injury Year

2000

Injury Year

2001

Injury Year

2002

Injury Year

2003

Injury Year

2004*

SORM

52% 55% 48% 53% 51% 52%

UT47% 47% 48% 47% 44% 42%

A&M41% 48% 47% 44% * *

TXDOT

54% 57% 54% 51% 55% 61%

OTHER CARRIERS

58% 59% 59% 62% 63% *

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Median Number of Diagnostic Testing Services per Worker Who Received These Services, Injury Years 1999-2001 and 2002-2004

Combined, All Injuries (12 Months Post Injury)(results shown for most frequent types of diagnostic testing services provided to injured state workers)

Source: Texas Department of Insurance, Workers’ Compensation Research and Evaluation Group, 2006.Note 1: “Other Diagnostic Tests” include radiologic examinations, myelography, and diskography, among others.Note 2: Diagnostic testing utilization data for Texas A&M is incomplete for injury years 2003 and 2004.Note 3: Utilization statistics reflect the utilization of these services in professional medical bills. Note 4: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

Type of Diagnostic Test

SORM UT A&M TXDOT OTHER CARRIERS

1999-2001

2002-2004

1999-2001

2002-2004

1999-

2001

2002-2004

1999-2001

2002-2004

1999-2001

2002-2003*

Nerve Conduction Studies 8 10 6 6 6 * 8 9 8 9

MRIs

1 1 1 1 1 * 1 1 1 1

CT Scans

1 1 1 1 1 * 1 1 2 2

Other Diagnostic Tests 2 2 1 1 1 * 1 2 2 2

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Percentage of Injured Workers Who Received Diagnostic Testing Services, Injury Years 1999-2004, Low Back Soft Tissue Injuries (12 Months Post Injury)

Source: Texas Department of Insurance, Workers’ Compensation Research and Evaluation Group, 2006.Note 1: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.Note 2: Utilization statistics reflect the utilization of these services in professional medical bills. Note 3: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

Injury Year

1999

Injury Year

2000

Injury Year

2001

Injury Year

2002

Injury Year

2003

Injury Year

2004*

SORM62% 58% 59% 65% 61% 66%

UT

53% 49% 47% 49% 60% 47%

A&MN/A N/A N/A N/A N/A N/A

TXDOT

81% 70% 66% 70% 70% 73%

OTHER CARRIERS

60% 60% 61% 65% 65% *

32

Median Number of Diagnostic Testing Services per Worker Who Received These Services, Injury Years 1999-2001 and 2002-2004 Combined, Low Back Soft Tissue Injuries (12 Months Post Injury)

Source: Texas Department of Insurance, Workers’ Compensation Research and Evaluation Group, 2006.

Note 1: Results shown for most frequent types of diagnostic testing services provided to injured state workers.Note 2: “Other Diagnostic Tests” include radiologic examinations, myelography, and diskography, among others.Note 3: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.Note 4: Utilization statistics reflect the utilization of these services in professional medical bills. Note 5: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

Type of Diagnostic Test


CARRIERS

1999-2001

2002-2004

1999-2001

2002-2004

1999-

2001

2002-2004

1999-2001

2002-2004

1999-2001

2002-2003*

Nerve Conduction Studies 9 12 6 6 N/A N/A 10 12 9 10

MRIs

1 1 1 1 N/A N/A 1 1 1 1

CT Scans

1 1 1 1 N/A N/A 1 1 2 2

Other Diagnostic Tests 2 2 1 1 N/A N/A 1 2 3 2

33

Medical Billing and Claim Denial Rates

34

Percentage of Professional Medical Billing Lines Denied, Service Years 1999-2004, All Injuries

Service Year

1999

Service Year 2000

Service Year 2001

Service Year 2002

Service Year 2003

Service Year 2004*

SORM

17% 17% 21% 21% 23% 38%

UT

46% 44% 46% 56% 59% 53%

A&M

5% 5% 6% 8% 30% 23%

TXDOT

14% 14% 13% 37% 37% 35%

OTHER CARRIERS

16% 17% 17% 22% 25% 26%

Source: Texas Department of Insurance, Division of Workers’ Compensation Medical Billing Data and the Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: “Other” represents all other private and public workers’ compensation insurance carriers.Note 2: The 2004 figures should be interpreted with caution since these number are tentative and are current as of February 2005.Note 3: In general, medical billing denial rates increased for most insurance carriers after the passage of HB 2600 in 2001and the adoption of the Division’s medical fee guideline in August 2003.Note 4: 2004 and 2005 medical data for “other” workers’ compensation insurance carriers is incomplete.

35

Percentage of Reportable Workers’ Compensation Claims Initially Denied/Disputed for Compensability/Extent of Injury

Reasons, Service Years 1999-2004, All InjuriesInjury Year

1999

Injury Year

2000

Injury Year

2001

Injury Year

2002

Injury Year

2003

Injury Year

2004

SORM34% 33% 39% 39% 43% 44%

UT46% 48% 49% 51% 60% 59%

A&M66% 61% 60% 54% 62% 71%

TXDOT

24% 26% 27% 31% 30% 21%

OTHER CARRIERS

32% 34% 34% 36% 37% 42%

Source: Texas Department of Insurance, Division of Workers’ Compensation Claim Database and the Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006.Note 1: “Other” represents all other private and public workers’ compensation insurance carriers.Note 2: Reportable claims only include claims with at least one day of lost time that are required to be reported to TDI.Note 3: In general, claim denial rates increased for most insurance carriers after the passage of HB 2600 in 2001.

36

Findings Regarding Reportable Workers’ Compensation Claims Initially Denial/Dispute Rates

• The percentage of reportable claims that are denied/disputed because of compensability and/or extent of injury issues have increased for all insurance carriers, including the four state WC programs, since the passage of HB 2600 in 2001;

• However, the data collected by TDI on claim denials is currently inadequate, and therefore, it is difficult to precisely calculate claim denial rates for individual insurance carriers, although it is possible to observe general trends over time;

• Of the four state WC programs, TXDOT has the lowest initial claim denial/dispute rate, while UT and A&M have the highest rates.

• SORM’s initial denial/dispute rates were consistent with the denial/dispute rates of other workers’ compensation insurance carriers.

37

Temporary Income Benefit (TIBs) Costs and Duration per Claim

38

What are Temporary Income Benefits (TIBs)?

• Benefits paid weekly to injured workers to replace lost wages

• Paid once a worker has been off work for at least 1 week and paid until a worker:– Goes back to work;– Reaches maximum medical improvement; or– Has received a statutory maximum of 104 weeks of TIBs

• Workers are compensated at 70-75% of their pre-injury average weekly wage up to a statutory weekly maximum (currently $540/week)

• TIBs are not subject to federal income tax

39

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

1999 2000 2001 2002 2003

SORM

UT

A&M

TXDOT

Median TIBs Payments per ClaimAll Injuries-Injury Years 1999-2003

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006Note: TXDOT TIBs payments increased dramatically in 2002 and 2003 due to a handful of anomaly low back soft tissue claims during that time period.

Injury Year

40

Mean and Median TIBs Payments per Claim, All Injuries Injury Years 1999-2003

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006Note: TXDOT TIBs payments are higher in 2002 and 2003 due to a handful of anomaly low back soft tissue claims during that time period.

Injury Year 1999 Injury Year 2000 Injury Year 2001 Injury Year 2002 Injury Year 2003

Mean Median Mean Median Mean Median Mean Median Mean Median

SORM$6,709 $2,343 $8,266 $3,245 $9,087 $4,121 $8,708 $4,010 $8,518 $3,851

UT$5,773 $2,336 $7,645 $2,332 $6,860 $3,446 $6,168 $2,123 $7,096 $3,107

A&M$3,495 $1,301 $4,972 $2,156 $4,842 $1,357 $3,217 $1,321 $3,274 $1,342

TXDOT$6,939 $1,903 $6,528 $1,447 $5,883 $2,216 $7,998 $3,859 $9,827 $4,498

41

Median TIBs Payments per ClaimLow Back Soft Tissue Injuries Injury Years 1999-

2003

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006Note 1: TXDOT TIBs payments are higher in 2002 and 2003 due to a handful of anomaly low back soft tissue claims during that time period. Note 2: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

1999 2000 2001 2002 2003

SORM

UT

A&M

TXDOT

Injury Year

42

Mean and Median TIBs Payments per Claim, Low Back Soft Tissue Injuries, Injury Years 1999-2003

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006Note: TXDOT TIBs payments are higher in 2002 and 2003 due to a handful of anomaly low back soft tissue claims during that time period. Note2: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.

Injury Year 1999 Injury Year 2000 Injury Year 2001 Injury Year 2002 Injury Year 2003*


SORM$7,280 $2,424 $9,913 $4,139 $12,070 $6,809 $10,651 $5,314 $9,392 $4,215

UT$6,699 $2,347 $6,861 $2,861 $6,630 $3,701 $4,672 $1,793 $8,422 $3,273

A&M N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

TXDOT$7,715 $1,745 $7,761 $2,831 $3,711 $1,908 $14,276* $14,264* $16,648* $14,598*

43

Median TIBs Duration (weeks) per ClaimAll Injuries, Injury Years 1999-2003


Note: TXDOT TIBs payments are higher in 2002 and 2003 due to a handful of anomaly low back soft tissue claims during that time period.

0

2

4

6

8

10

12

14N

um

ber

of

Wee

ks

1999 2000 2001 2002 2003

Injury Year

SORM

UT

A&M

TXDOT

44

Mean and Median TIBs Duration (weeks) per Claim, All Injuries, Injury Years 1999-2003

Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006

Note: TXDOT TIBs payments are higher in 2002 and 2003 due to a handful of anomaly low back soft tissue claims during that time period.



SORM 21.8 9.0 25.0 11.0 26.6 14.0 23.8 12.0 23.8 12.0

UT 19.9 8.0 24.1 9.0 21.7 11.4 18.4 8.0 21.5 11.0

A&M 12.4 4.7 19.7 9.4 18.5 6.3 13.7 5.8 12.6 6.7

TXDOT 19.4 6.1 17.7 5.9 17.7 7.0 21.2* 9.4* 23.6* 13.4*

45

Median TIBs Duration (weeks) per Claim , Low Back Soft Tissue Injuries, Injury Years 1999-2003


Note 1: TXDOT TIBs payments are higher in 2002 and 2003 due to a handful of anomaly low back soft tissue claims during that time period.Note 2: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.

.

05

1015

2025

3035

4045

Nu

mb

er o

f W

eeks

1999 2000 2001 2002 2003

Injury Year

SORM

UT

A&M

TXDOT

46

Mean and Median TIBs Duration (weeks) per Claim - Low Back Soft Tissue Injuries

Injury Years 1999-2003


Note 1: TXDOT TIBs payments are higher in 2002 and 2003 due to a handful of anomaly low back soft tissue claims during that time period.

Note 2: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.



SORM 24.5 10.1 30.2 16.1 35.2 21.2 28.4 16.0 26.8 15.0

UT 22.1 10.0 23.8 13.4 21.7 13.3 16.0 7.0 25.1 12.1


TXDOT 19.7 6.2 21.9 8.3 10.4 7.0 35.6* 37.1* 43.7* 40.5*

47

Median Weekly TIBs Compensation rate per Claim

All Injuries, Injury Years 1999-2003

$0

$50

$100

$150

$200

$250

$300

$350

$400

1999 2000 2001 2002 2003

Injury Year

SORM

UT

A&M

TXDOT


48

Mean and Median TIBs Compensation Rate per Claim - All Injuries, Injury Years 1999-2003



SORM $322.4 $274.1 $299.2 $298.5 $314.3 $312.6 $362.5 $337.2 $320.7 $330.8

UT $294.1 $273.6 $305.3 $296.3 $314.8 $307.7 $309.3 $293.0 $321.3 $315.0

A&M $277.3 $243.3 $243.9 $228.4 $234.7 $234.5 $237.7 $233.1 $259.0 $253.5

TXDOT $350.5 $350.3 $286.4 $307.4 $308.6 $309.6 $371.3 $359.0 $394.7 $368.3


49

Sick and Annual Leave Usage by Injured State Workers

50

• In 2004, TDI requested sick and annual leave data from all of the state WC programs.

• However, after closer analysis of this data, it appears that each state WC program is collecting the data differently making it difficult to accurately compare sick and annual leave usage by injured state workers in each state WC program.

• In 2006, TDI checked with the four state programs. There have been no significant changes in the way that the four state programs collect this data.

51

Impairment Income Benefit (IIBs) Costs per Claim

52

What are Impairment Income Benefits (IIBs)?

• Benefits paid to compensate an injured worker for a permanent impairment received as a result of the injury – regardless of whether the worker is back to work or not

• Paid once a worker has reached maximum medical improvement and receives an impairment rating from a doctor using the AMA Guides to the Evaluation of Permanent Impairment, 4th edition

• Three weeks of IIBs are paid for each percentage point of impairment – for example, an impairment rating of 10% would = 30 weeks of IIBs

• Workers are compensated at 70% of their pre-injury average weekly wage up to a statutory weekly maximum (currently $378/week)

• IIBs are not subject to federal income tax

53

Median IIBs Payments per ClaimAll Injuries-Injury Years 1999-2003


$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

1999 2000 2001 2002 2003

Injury Year

SORM

UT

A&M

TXDOT

54

Mean and Median IIBs Payments per Claim, All Injuries Injury Years 1999-2003




SORM$7,999 $6,413 $7,310 $5,595 $6,817 $5,414 $6,459 $5,239 $6,254 $5,277

UT$7,020 $5,865 $6,753 $5,580 $7,032 $5,332 $6,685 $4,851 $6,053 $5,483

A&M$4,370 $2,897 $4,549 $3,036 $4,553 $3,091 $4,236 $3,723 $3,713 $3,349

TXDOT$8,049 $6,810 $8,100 $5,580 $6,632 $5,015 $6,666 $5,576 $6,608 $5,640

55

Median IIBs Payments per ClaimLow Back Soft Tissue Injuries



Note 1: TXDOT 2002 Low Back IIBs payment spike may be due to some troublesome claims with higher impairment ratings.

Note 2: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not

included in A&M’s response to TDI’s data call.

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

1999 2000 2001 2002 2003

Injury Year

SORM

UT

A&M

TXDOT

56

Mean and Median IIBs Payments per Claim, Low Back Soft Tissue Injuries, Injury Years

1999-2003


Note: A&M has been excluded from this comparison because the diagnostic codes needed to categorize injury types were not included in A&M’s response to TDI’s data call.



SORM$8,303 $6,588 $7,710 $6,439 $7,111 $5,595 $7,439 $5,625 $6,427 $5,617

UT$6,873 $5,926 $6,520 $5,595 $6,198 $5,313 $5,901 $5,390 $6,925 $5,640


TXDOT$9,953 $7,686 $7,830 $7,534 $6,513 $5,610 $8,516 $10,231 $6,563 $5,640

57

Median IIBs Duration per Claim (weeks)All Injuries, Injury Years 1999-2003


0

5

10

15

20

25

Nu

mb

er o

f W

eeks

1999 2000 2001 2002 2003

Injury Year

SORM

UT

A&M

TXDOT

58

Mean and Median IIBs Duration per Claim (weeks) - All Injuries, Injury Years 1999-2003




SORM 24.4 19.1 21.8 18.0 20.7 15.0 19.0 15.0 18.3 15.0

UT 23.4 21.0 22.4 15.5 21.8 15.0 21.2 15.0 17.8 15.0

A&M 15.9 11.9 17.1 14.6 16.9 12.3 14.9 13.4 12.5 10.4

TXDOT 24.6 20.9 23.4 15.0 19.0 15.0 18.8 15.0 17.7 15.0

59

Median IIBs Duration per Claim (weeks) -Low Back Soft Tissue Injuries


0

5

10

15

20

25

30

Nu

mb

er

of

We

ek

s

1999 2000 2001 2002 2003

Injury Year

SORM

UT

A&M

TXDOT


Note 1: TXDOT’s 2002 median IIBs duration is a result of a higher median impairment rating (10%) for workers injured during that year.


60

Mean and Median IIBs Duration per Claim (weeks) - Low Back Soft Tissue Injuries



Note 1: TXDOT’s 2002 median IIBs duration is a result of a higher median impairment rating (10%) for workers injured during that year.




SORM 25.7 21.0 24.1 21.0 21.4 15.0 21.8 15.0 19.3 15.0

UT 25.7 27.0 20.7 17.0 18.6 15.0 18.5 15.0 19.8 15.0


TXDOT 27.8 21.0 23.0 21.0 18.6 15.0 23.9* 29.1* 18.7 15.0

61

Median IIBs Compensation Rate per ClaimAll Injuries Injury Years 1999-2003


.

$0

$50

$100

$150

$200

$250

$300

$350

$400

IIB C

om

pen

sati

on

Rat

e

1999 2000 2001 2002 2003

Injury Year

SORM

UT

A&M

TXDOT

62

Mean and Median Weekly IIBs Compensation Rate per Claim - All Injuries, Injury Years 1999-

2003


Injury Year 1999

Injury Year 2000

Injury Year 2001

Injury Year 2002

Injury Year 2003


SORM $321 $343 $334 $371 $339 $373 $353 $375 $352 $376

UT $306 $323 $324 $362 $327 $356 $330 $370 $338 $373

A&M $274 $284 $260 $266 $283 $296 $284 $283 $296 $328

TXDOT $336 $366 $343 $371 $342 $373 $356 $374 $369 $376

63

Summary– With a few exceptions, the types and distribution of work-related injuries

serviced by all four state WC programs are extremely similar, although SORM is by far the largest of the four programs, paying for medical care on approximately 6,000 claims per year.

– For a similar mix of injuries, SORM appears to have higher workers’ compensation medical costs (both professional/hospital and pharmacy costs) per claim than UT, A&M and TXDOT and in most cases all other private and public insurers. This finding is consistent with the comparison results TDI published in 2004.

– For low back soft tissue injuries, specifically, which represent the most frequent single type of injury in the workers’ compensation system, SORM had the highest medical cost and pharmacy cost per claim for injury years 2000-2003, while TXDOT had the highest medical and pharmacy cost per claim in injury years 1999 and 2004 due to a handful of anomaly claims in those years.

– TDI was unable to include A&M in any analysis of low back soft tissue claims due to missing diagnostic codes in their medical billing data.

64

Summary– SORM’s and TXDOT’s higher medical costs per claim may be a result

of a higher percentage of workers receiving medical treatment and more medical treatments paid per claim:

• Compared to A&M and UT, a higher percentage of SORM’s and TXDOT’s claimants are receiving physical medicine and diagnostic testing services.

• SORM also appears to have higher utilization of physical medicine services per claim than the other state WC programs, while SORM and TXDOT appear to have higher utilization of diagnostic testing services per claim than UT and A&M.

– Although SORM’s medical costs are higher than the other state WC programs, their denial rates for professional medical services billed are consistent with the denial rates for other private and public insurance carriers, while UT had significantly higher denial rates than the other state WC programs and other insurance carriers.

– All insurance carriers, including the state WC programs, increased their denial rates for professional medical services after the passage of HB 2600 in 2001 due to increasing average medical costs per claim.

65

Summary– Another possible factor that influences claim costs is a program’s WC

claim denial rate.

– The percentage of reportable WC claims (i.e., claims with at least one day of lost time) that are denied/disputed because of compensability and/or extent of injury issues have increased for all insurance carriers, including the four state WC programs, since the passage of HB 2600 in 2001.

– In terms of general trends, it appears that with the exception of TXDOT and SORM, UT and A&M generally deny/dispute a higher percentage of reportable claims than other workers’ compensation insurance carriers.

– Of the four state WC programs, TXDOT has the lowest initial claim denial/dispute rate, while UT and A&M have the highest rates.

– However the data collected by TDI and its predecessor agency TWCC is currently inadequate and therefore it is difficult to precisely calculate these denial rates for individual carriers, although it is possible to observe general trends over time.

66

Summary– For the same types of injuries, SORM also appears to have higher

Temporary Income Benefit (TIBs, the income benefit that is paid to replace a worker’s lost wages) costs per claim and longer TIBs durations than UT, A&M and TXDOT.

– For low back soft tissue injuries, specifically, SORM has higher Temporary Income Benefit (TIBs) costs per claim and TIBs duration per claim for injury years 1999-2001, while TXDOT had the highest TIBs cost and duration per claim in injury years 2002 and 2003 due to a handful of anomaly claims in those years.

– SORM’s and TXDOT’s higher TIBs costs per claim appear to be a result of:

• Longer durations of TIBs payments (in weeks); and

• Slightly higher wages for employees (measured by their claimants’ weekly compensation rates as well as confirmed by reviewing Texas Workforce Commission UI wage data for these claimants).

– These TIBs findings, based on actual income benefit payment data provided directly to TDI by the 4 state WC programs, differs from the comparison that was conducted by TDI in 2004 using data these same programs reported to TWCC, which requires additional scrutiny by TDI.

67

Summary– Given the differences in the current sick and annual leave data

collection processes for each of the state WC programs, it is not possible to accurately compare the usage of sick and annual leave by injured state workers in lieu of TIBs.

– Additionally, because of the statutory provisions allowing the use of sick and annual leave for injured state employees in lieu of TIBs, it isn’t possible to accurately compare TIBs costs and durations for the state WC programs with other WC insurance carriers.

– When Impairment Income Benefits (IIBs, the income benefit that is paid to compensate an injured worker for a permanent physical impairment) are examined, there are few differences in the median IIBs payments and IIBs durations per claim for the 4 state WC programs, with the exception of A&M who has significantly lower IIBs payments, durations, and weekly compensation rates per claim compared to the other state WC programs.

– Similarities in injury distribution and IIBs durations for the 4 state WC programs indicate that medical and income benefit cost differences among these programs are not likely the result of differences in injury severity.

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