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Comparison of the State of Texas Workers’ Compensation Programs

Comparison of the State of Texas Workers’ Compensation Programs. Texas Department of Insurance Workers’ Compensation Research and Evaluation Group August 2006. Purpose of This Analysis.

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Comparison of the State of Texas Workers’ Compensation Programs

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  1. Comparison of the State of Texas Workers’ Compensation Programs Texas Department of Insurance Workers’ 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: • Median workers’ compensation medical cost per claim • Professional medical service costs • Hospital costs • Pharmacy costs • Utilization of physical medicine and diagnostic testing services per claim • 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) 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.

  13. Distribution of Medical Costs by State Workers’ Compensation Program, Injury Years 1999-2001 and 2002-2004 Combined, All Injuries (12 Months Post Injury) Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006. Note: Injury year 2003-2004 pharmacy data for A&M are incomplete.

  14. Median Workers’ Compensation Total Professional and Hospital Medical Costs per Claim - All InjuriesInjury Years 1999-2004 (12 Months Post Injury) 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.

  15. Mean (Average) and Median Workers’ Compensation Total Professional and Hospital Medical Costs per Claim - All InjuriesInjury Years 1999-2004 (12 Months Post Injury) 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.

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

  17. Mean (Average) and Median Workers’ Compensation Pharmacy Costs per Claim - All InjuriesInjury Years 1999-2004 (12 Months Post Injury) 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.

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

  19. 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) 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 InjuriesInjury Years 1999-2004 (12 Months Post Injury) 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 InjuriesInjury Years 1999-2004 (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: TXDOT data for injury year 1999 and 2004 need additional validation.

  22. Utilization of Physical Medicine and Diagnostic Testing Services per Claim

  23. Physical Medicine Utilization Findings

  24. 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.

  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.

  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.

  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.

  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.

  30. 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.

  31. 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.

  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.

  33. Medical Billing and Claim Denial Rates

  34. Percentage of Professional Medical Billing Lines Denied, Service Years 1999-2004, All Injuries 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 Injuries 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. Median TIBs Payments per ClaimAll Injuries-Injury Years 1999-2003 Injury Year Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006 Note: TXDOT TIBs payments increased dramatically in 2002 and 2003 due to a handful of anomaly low back soft tissue claims during that time period.

  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, 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.

  41. Median TIBs Payments per ClaimLow Back Soft Tissue Injuries Injury Years 1999-2003 Injury Year Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006 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.

  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, 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. 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.

  43. Median TIBs Duration (weeks) per ClaimAll 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.

  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.

  45. Median TIBs Duration (weeks) per Claim , Low Back Soft Tissue Injuries, Injury Years 1999-2003 Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006. 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. .

  46. Mean and Median TIBs Duration (weeks) per Claim - Low Back Soft Tissue InjuriesInjury Years 1999-2003 Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006 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.

  47. Median Weekly TIBs Compensation rate per ClaimAll Injuries, Injury Years 1999-2003 Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006

  48. Mean and Median TIBs Compensation Rate per Claim - All Injuries, Injury Years 1999-2003 Source: Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, 2006

  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.

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