California is one of the two states in the U.S that has the highest workersâ€™ compensation rates though the state had launched a huge workersâ€™ compensation reform law in 2012, instituting independent medical review (IMR) to ensure that evidence-based medical treatment guidelines are closely followed and to prevent inappropriate medical treatment. New Jersey is the other state that has the nationâ€™s most expensive workersâ€™ compensation rates. An IMR involves a medical evaluation in connection with the claims determinations for workersâ€™ compensation insurance payers, disability insurance payers or health insurance companies. Mostly, this evaluation is requested by an insurance company that disagrees with the course of treatment of the claimant or his/her disability rating made by the claimantâ€™s treating doctor. The insurance company may ask the claimant to undergo an independent medical examination by a doctor they choose for the purpose. Medical record analysis becomes very significant and indispensable in this regard, and for this independent medical examiners utilize medical review service. The reports IME physicians provide are legally important and may be used as evidence during the hearing to prove the extent of the claimantâ€™s permanent disability and how much he/she should receive in benefits. The outcome of an independent medical exam can have a considerable impact on the workersâ€™ compensation case.
It would be interesting to look at the workersâ€™ compensation ratesâ€™ statistics in the United States. According to a report released this week by the Oregon Department of Consumer and Business Services, workersâ€™ compensation rates in Oregon are among the lowest in the United States. The rates have been falling steadily over the past 3 years. North Dakota has the lowest rates in the nation. As mentioned at the outset, California and New Jersey have the highest rates.
- Rates ranged from a low of 89 cents in North Dakota to a high of $3.24 in California. The report highlights that Californiaâ€™s rates were 188% above the national median. (Each stateâ€™s rates were compared to the national median rate of $1.84 per $100 of payroll.)
- Next to California, New Jersey has the highest rates in the nation, where the $2.92 per $100 in payroll was 158% above the nationâ€™s median. In 2014, the rates averaged $2.82.
- New York ($2.83), Connecticut ($2.74), Alaska ($2.74) and Oklahoma ($2.23) follow New Jersey in the rankings for the highest workersâ€™ comp rates.
- After North Dakota (89 cents), Indiana ($1.05), Arkansas ($1.06), West Virginia ($1.22) and Virginia ($1.24) have the lowest rates in the nation.
Let us look at California, North Dakota and Oregon statistics.
- California has higher advisory loss costs rates in the different classes compared to other states, according to the study. Other drivers of high workersâ€™ comp rates include claim frequency, claim administration rates and high medical costs. However, the Oregon study shows that California is showing a downward trend because two years ago, the stateâ€™s rates were at $3.48. According to Christine Baker, director of the stateâ€™s Department of Industrial Relations, the Oregon report does not show the actual costs in Californiaâ€™s workersâ€™ compensation system because that study is based on the industrial mix in that state. She said that in California they are focused on ensuring the best, evidence-based medical treatment to workers injured at the workplace.
- At the opposite end is North Dakota with its 89 cents rate that places it at 48% of the national median. The studyâ€™s lead author pointed out that North Dakota is one of only 4 states with a monopolistic workersâ€™ comp structure, though that doesnâ€™t warrant a low or high premium rate.
- With its $1.28 rate, Oregon is 31% below the nationâ€™s median. It had the 7th least expensive rates in 2016, a definite improvement from its ranking as the 9th least expensive state in 2014. In 2012, it was the 13th least expensive. It is estimated that Oregonâ€™s workersâ€™ comp rates would experience a further drop (6.6%) in 2017. The study authors believe that these low rates are proof of the success of reforms made to Oregonâ€™s workersâ€™ comp system as well as its improvements as regards health and workplace safety.
The workersâ€™ compensation program will improve with effective reforms, experts and industry observers say. The reforms passed with Senate Bill 863 in California in 2012 which included requirements such as – a reduction in ambulatory surgery fees from 120% to 80% of Medicare hospital outpatient rates, mandated adoption of a resource-based relative value scale for professional fees, and an independent medical review and independent bill review processes – are said to be effective according to reports from credible sources such as the Department of Industrial Relations and its Division of Workersâ€™ Compensation. Reforms such as these are expected to ensure significant cost-saving benefits for employers while also ensuring that injured workers receive the compensation they deserve.