WCRI study

Reform measures working in NC

Medical and indemnity payments per claim with more than seven days of lost time remained stable in North Carolina between 2011 and 2015, in contrast to annual increases of 6% or more between 2004 and 2009, according to a recently released study by the Cambridge, MA-based Workers Compensation Research Institute.

The study is available for purchase at https://www.wcrinet.org/reports/monitoring-the-north-carolina-system-compscopebenchmarks-17th-edition. Founded in 1983, WCRI is an independent, not-for-profit research organization.

WCRI looked at claims occurring between 2011 and 2015, during which period North Carolina enacted measures aimed at decreasing indemnity claims and hospital payments per claim. Prior to the recent reforms, indemnity benefits per claim in North Carolina were among the highest of 18 large states routinely monitored by WCRI, and hospital payments per claim were also higher.

"Taken together, the income benefit provisions in HB 709 (passed in 2011) and the hospital fee schedule reductions targeted the key cost drivers in North Carolina - slower return to work (hence longer duration of temporary disability), larger lump-sum settlements, and higher payments for hospital outpatient care," the group reports.

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North Carolina phased in decreases in reimbursement for hospitals and ambulatory surgery centers in April 2015, and the impact of those cuts is reflected in the recent study, which includes up to 12 months of experience under the reduced fee schedules.

Other contributing factors to the decline seen in hospital payments per claim include decreases in utilization of some medical services, stable payments per hospital inpatient episode, and less frequent inpatient care, WCRI says. It attributes the decline in indemnity payments primarily to decreases in duration of temporary disability.

HB 709 made several important changes that both increased and decreased income benefits applicable to injuries occurring on or after June 24, 2011. These include:

  • Capping temporary total disability benefits at 500 weeks in most instances (previously there was no cap)
  • Increasing duration of temporary partial disability benefits from 300 weeks to 500 weeks
  • Clearly defining suitable employment for cases both before and after maximum medical improvement is established
  • Improving injured workers' access to vocational rehabilitation services
  • Increasing benefits in death cases.

In recent developments, North Carolina's changes to fee schedules for hospitals and ambulatory surgery centers have been contested by the surgery centers and the matter is tied up in litigation. The surgery centers have sued the Industrial Commission arguing the General Assembly mandated new fee schedules only for hospitals and physicians and, because the surgical centers are legally distinct from hospitals, the Commission did not have statutory authority to impose new fee schedules on them.

The Commission has warned that should the surgery centers succeed in their demand for increased rates it would raise workers' compensation premiums in the state by $21 - $28 million.