Workers' Compensation System Report summary

By David Berry
Research and Statistics

The 2004 Minnesota Workers’ Compensation System Report will be released in

early March. It will be available at the Department of Labor and Industry
Web site at www.doli.state.mn.us/research.html.1

The report, part of an annual series, presents data from 1997

through 2004 about several aspects of Minnesota’s workers’
compensation system: claims, benefits and costs; medical
cost trends; vocational rehabilitation; and disputes and dispute
resolution. The purpose of the report is to describe statistically
the current status and direction of workers’ compensation in
Minnesota and to offer explanations where possible for recent
developments.

These are the report’s major findings.

• The claim rate fell continually from 1997 to 2004.

• Indemnity and medical benefits2 per claim are up sharply (adjusting for wage growth).

• Relative to payroll, medical benefits have risen since 1997, while indemnity benefits have fallen
slightly, reflecting the net effect of the falling claim rate and increasing benefits per claim.

• The increase in indemnity benefits is due partly to increasing benefit duration and partly to
increases in the frequency and amounts of stipulated benefits.

• According to data from a large insurer:

– the largest contributing factors to the recent increases in medical costs were outpatient
hospital facility services, drugs and radiology.
– for radiology, the primary factor was a shift toward more expensive services.
– among the categories analyzed, all of the significant increases in cost per unit of service
were in areas not covered by the medical fee schedule, particularly anesthesia (all
provider types), radiology and physical medicine provided by hospitals, and overnight
hospital rooms.

• The vocational rehabilitation participation rate rose steadily from 1997 to 2004.

• The dispute rate has increased continually since 1999.

• Total workers’ compensation system cost continued increasing relative to payroll from its
low point in 2000, but the rate of increase slowed between 2003 and 2004.
1
The report will also be available by calling (651) 284-5025. For alternative formats, call 1-800-342-5354 or TTY (651) 297-4198.
2
Indemnity benefits are monetary benefits paid to the injured worker.

5 • COMPACT • February 2006