Determinants of escalating costs in low risk workers' compensation claims.
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).


CONCLUSIONS
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.
Bernacki
Edward J
EJ
Division of Occupational and Environmental Medicine, Johns Hopkins University, School of Medicine, Baltimore, Maryland 21287-1629, USA. bernacki@jhmi.edu
Yuspeh
Larry
L
Tao
Xuguang
X
D000062:Accidents, Occupational; D000328:Adult; D003365:Costs and Cost Analysis; D005260:Female; D006801:Humans; D007345:Insurance Claim Review; D008145:Louisiana; D008297:Male; D008875:Middle Aged; D018570:Risk Assessment; D014942:Workers' Compensation / Q000191:economics*