Study Shows Benefits of Reforms to New York’s Workers’ Comp System

The workers’ compensation reforms enacted in New York in 2007 are beginning to achieve some of their objectives, particularly in bringing maximum disability benefit levels for injured workers closer to national norms and reducing the percentage of workers whose benefits were limited by the maximums, according to the latest study on the changes by the Workers Compensation Research Institute (WCRI).

The key reform measures increased maximum statutory benefits, limited the number of weeks of permanent partial disability (PPD) benefits, required development and implementation of medical treatment guidelines and called for adoption of a fee schedule for pharmaceuticals. The new WCRI study, Monitoring the Impact of the 2007 Reforms in New York, is the fifth in a series monitoring the impact of the New York reforms.

“This monitoring provides a foundation for evaluating the effect of the regulatory changes to determine whether the changes were successful in their goals and to identify if any unintended consequences were observed,” said Ramona Tanabe, WCRI’s deputy director and counsel. “While the data is now of sufficient maturity to begin to see the effects of regulatory changes, it will be several more years before the full impact of the reforms will be reflected.”

The study also reported that the implementation and subsequent change of the pharmacy fee schedule resulted in decreasing the average price per pill by ten to 20 percent.

The study pointed out that the maximum weekly benefit in New York rose 50 percent from $400 prior to July 1, 2007 to $600 on July 1, 2009. As a result, the study found that the average temporary total disability benefit increased 26 percent after the implementation of the third of three annual increases in the benefit rate. Effective July 1, 2010 and each July 1 thereafter, the maximum benefit is set at two-thirds of the New York state average weekly wage.

As planned, these increases in maximum weekly benefits have brought New York closer to national norms and reduced the percentage of workers whose benefits were limited by the maximums. For example, the percentage of injured workers whose benefits were limited by the maximum benefit fell from 48 percent prior to the first increase to 26 percent after the third increase. WCRI estimates that after the change tying the maximum benefit to the state average weekly wage, the percentage of workers affected by the maximum would fall further to approximately 16 percent, putting New York at the higher end when compared with other large states.

The study found that the percentage of PPD/lump-sum cases with PPD payments only (with no lump-sum payments) at an average of 12 months experience fell 13.5 points from 2007 to 2008, while there was a 12 point increase in cases with lump-sum settlements but no PPD payments.

WCRI observed that although the limitation on the weeks of PPD is expected to result in significant savings, it will likely be several years before they are reflected in the data.

Source: WCRI