Annals of Workers Comp: The Bay State’s Not-So-Secret Sauce
Everyone knows that workers compensation in MA is different: the rates are among the lowest in the nation and the benefits are relatively high (though they need to be a bit higher). Back in 1990 the state was ranked 3rd highest for cost in the country; today, MA is ranked 44th. How is this possible? What exactly is in the state's "special sauce"?
When we want to understand comp data in depth, we turn to the Workers Comp Research Institute, a remarkable Cambridge MA institution that studies comp across the country. WCRI's reports are systematic, thorough and impartial. Unlike the ubiquitous quarterly reports routinely issued by corporations, WCRI takes a long, objective view.
Which brings us to their latest report, CompScope Benchmarks for Massachusetts, 17th edition (available for purchase here). By using a standard set of criteria, and by comparing data across 18 states, principal researcher Evelina Radeva has uncovered some of the key ingredients that have gone into the making of the MA workers comp miracle.
Here are some highlights:
- Among claims involving at least seven lost days, the average total cost of $33,298 per claim is the lowest among the 18 states in the study.
- The costs of litigation are lower than in most states, due in large part to an efficient and timely dispute resolution process.
- Injured workers receive initial indemnity checks faster in MA than in any other state (another important factor in reduced litigation!).
- At the same time, the state's lengthy pay-without-prejudice period enables carriers to terminate benefits within six months without having to go before a judge.
- The maximum comp benefit is the highest among the 18 states, although injured workers receive only 60 percent of their average weekly wage. (The legislature should definitely consider restoring indemnity benefits to 66 2/3 of the average weekly wage.)
- Despite the state's world class - and expensive - medical infrastructure, the per claim medical payments are the lowest among the 18 states; this is due primarily to a very low fee schedule and utilization review. (One could certainly argue that the MA comp miracle comes at the expense of doctors.)
There are many more compelling nuggets in the WCRI report, which does not present itself as advocating one way or the other for the MA model. The state's unique combination of high satisfaction among injured workers and low costs for employers is unique in America. Other states would do well to study the very special ingredients in this very special sauce.
Senior Workers Compensation Consultant