Rising Medical Costs Caused Increased Florida Workers Comp Rates

A report on Florida’s workers compensation program says costs rose over a five-year period after reforms in 2003 drove those costs down by 20 percent.

A study by the Workers Compensation Research Institute titled “CompScope Benchmarks for Florida, 12th edition” says the market showed signs of growth from 2005 to 2009 following reforms in 2003.

The research association says the “average indemnity cost per claim—payments for lost wages, loss of earning capacity, or permanent impairment or disability—rose three percent per year after decreases of more than 20 percent due to reforms related to permanent disability benefits.”

WCRI says part of the moderate growth in indemnity costs per claim came from wage growth; and another part was driven by increases in lump-sum frequency and growth in the average lump-sum payment per claim.

Adding to the increase, medical costs per claim in Florida continued to increase rapidly for most cases in 2009. For all paid claims and medical-only claims, the average medical cost per claim grew 7 percent and 10 percent, respectively, in 2009.

Medical costs per claim in Florida grew 5-to-6 percent per year starting in 2005, following one-year of stabilization due to the fee schedule reforms. A main driver of the growth in medical costs per claim in 2005 was the price increase for chiropractors and physical and occupational therapists, resulting from a fee schedule increase.

From 2006 to 2008, growth in the average payment per service for hospital outpatient services was a driver of the growth in medical costs per claim.

The study also notes the frequency of defense attorney involvement rose steadily from 2005 to 2009, at one to two percentage points per year. This was likely related to the steady growth in the frequency of claims with lump-sum settlements after 2005, says WCRI. The average defense attorney payment per claim in Florida grew 12 percent in 2009.