TY - JOUR
T1 - Determinants of escalating costs in low risk workers' compensation claims
AU - Bernacki, Edward J.
AU - Yuspeh, Larry
AU - Tao, Xuguang
PY - 2007/7
Y1 - 2007/7
N2 - OBJECTIVE: To identify and quantify attributes that lead to unanticipated cost escalation in workers' compensation claims. METHODS: We constructed four claim categories: low initial reserve/low cost, migrated catastrophic (low initial reserve/high cost), high initial reserve/low cost, and catastrophic (high initial reserve/high cost). To assess the attributes associated with the increased cost of migrated catastrophic claims, we analyzed 36,329 Louisiana workers' compensation claims in the four categories over a 5-year period. RESULTS: In the 729 claims initially thought to be low-cost claims (migrated catastrophic), the most significant predictors for cost escalation were attorney involvement and claim duration, followed by low back disorder, married/single/divorced status, male gender, small company size, high premium, reporting delays, and older age. These injuries accounted for 2% of all claims but 32.3% of the costs. Accelerated escalation of costs occurred late in the claim cycle (2 years). CONCLUSION: Certain attributes, particularly attorney involvement and claim duration, are associated with unanticipated cost escalation in a small number of claims that drastically affect overall losses. The results of this study suggest that these cases may be identified and addressed before rapid escalation occurs.
AB - OBJECTIVE: To identify and quantify attributes that lead to unanticipated cost escalation in workers' compensation claims. METHODS: We constructed four claim categories: low initial reserve/low cost, migrated catastrophic (low initial reserve/high cost), high initial reserve/low cost, and catastrophic (high initial reserve/high cost). To assess the attributes associated with the increased cost of migrated catastrophic claims, we analyzed 36,329 Louisiana workers' compensation claims in the four categories over a 5-year period. RESULTS: In the 729 claims initially thought to be low-cost claims (migrated catastrophic), the most significant predictors for cost escalation were attorney involvement and claim duration, followed by low back disorder, married/single/divorced status, male gender, small company size, high premium, reporting delays, and older age. These injuries accounted for 2% of all claims but 32.3% of the costs. Accelerated escalation of costs occurred late in the claim cycle (2 years). CONCLUSION: Certain attributes, particularly attorney involvement and claim duration, are associated with unanticipated cost escalation in a small number of claims that drastically affect overall losses. The results of this study suggest that these cases may be identified and addressed before rapid escalation occurs.
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U2 - 10.1097/JOM.0b013e318095a471
DO - 10.1097/JOM.0b013e318095a471
M3 - Article
C2 - 17622852
AN - SCOPUS:34447340949
SN - 1076-2752
VL - 49
SP - 780
EP - 790
JO - Journal of occupational and environmental medicine
JF - Journal of occupational and environmental medicine
IS - 7
ER -