By David Colón and Casan Scott

September 2024 ``

Introduction

Permanent partial disability injuries account for approximately 50% of all workers compensation costs, with impairment ratings playing a key role in most states. Consequently, changes in impairment ratings can have a significant impact on workers compensation costs. For instance, a 1% change in the average impairment rating could result in an approximate $2,5001 change in permanent partial disability costs, or about an 8% change in indemnity benefits for a permanent partial claim.

Given the frequent updates to the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides) and advancement in medical treatment, it is essential to understand how different claim characteristics can influence these ratings. This research focuses on analyzing impairment ratings, incorporating a diverse range of claim characteristics. The primary goal of this study is to provide insights into factors related to impairment ratings and analyze state differences using a regression model. This article also provides the ability to drill down on state-specific results and download the statistics used for each of the charts.

Key Insights

  • Across states included in the study,2 the average whole-body3 impairment rating is 6.5%, and the average time to maximum medical improvement (MMI) for claims identified as permanent partial is 363 days.
  • After accounting for key factors such as medical condition, surgery count, age, and time-to-MMI in a controlled model:
    • The average impairment rating varies by state, ranging from about 4% to approximately 11%
    • Claims involving surgery have, on average, impairment ratings that are 2 points higher than those without surgery (7.2% vs. 5%)
    • Claims with time-to-MMI under 90 days average a 4.4% impairment rating, while those taking over two years average 9.1%
    • Average impairment ratings for the most common medical conditions vary from about 3% for hand/wrist synovitis to approximately 10% for lumbar spine degeneration

Data Analysis and Summary Statistics

Cumulative Density of Whole Body Impairment Rating

Impairment ratings can range from 0% to 100% depending on various factors assessed during a medical provider’s evaluation. For the states included in this study, the average whole-body impairment rating is 6.5%. Exhibit 1 illustrates the overall distribution of these ratings by showing the percentage of claims (y-axis) with a whole-body impairment rating (x-axis) at or below a certain value.

From Exhibit 1, we get that 50% of claims have an impairment rating of 4% or less. The steep slope of the graph indicates that most claims have a whole-body impairment rating in the single digits. In fact, 95% of claims have an impairment rating of 20% or less. This distribution varies by state, and these differences can be visualized using the state-by-state dropdown in this exhibit. Across study states, the median impairment ranges between 2% and 9%.

Exhibit 1: Cumulative Density of Impairment

Study States