About Workers' Compensation
Workers' Compensation (WC) provides coverage for medical expenses and wage replacement for employees disabled due to occupational injury or illness. WC expenses are typically associated with medical expenses, wage replacement payments, legal or investigative expenses, settlement costs or general expenses for claims administration. While workers' compensation is often thought of as similar to other disability coverage (i.e. short-term and long-term disability), it has several key differences:
- WC is not considered an employee benefit but rather a property and casualty risk coverage, regulated differently by every state.
- Wage replacement benefits can be supplemented by short-term and long-term disability benefits, but never the other way around. WC always pays first if the claim is work-related.
- All states have WC laws dictating benefit amounts, how benefits are determined, claim management practices, funding arrangements, and ability to opt out of state plans.
For EMPAQ® purposes, WC focuses on only two types of claims: medical-only and indemnity.
EMPAQ® Metrics
EMPAQ® metrics are ratios (i.e. numerators over denominators) that can be used to calculate the effectiveness of health and productivity management programs. They establish a consistent method for measuring cost, utilization and other performance issues.
EMPAQ® WC Metrics
Click here for a copy of the EMPAQ® Data Dictionary, which contains detailed definitions of all of the metrics, data elements and plan design questions.
There are 20 EMPAQ® metrics that describe the cost and lost-time expenses arising from workers' compensation.
These metrics include information on indemnity and RTW claims. Indemnity claims refer to work-related injuries or illnesses involving time lost from work. Costs for indemnity claims include both medical care and wage replacement. Within the category of indemnity claims, there are four different types of lost time claims: Temporary Total Disability (TTD), Temporary Partial Disability (TPD), Permanent Total Disability (PTD) and Permanent Partial Disability (PPD).
Return-to-work (RTW) refers to those claims where an employee returns to work in a modified capacity after being disabled due to a WC-covered illness or injury. The employee may work reduced hours or be unable to complete their assigned duties. EMPAQ® RTW metrics help measure the utilization and effectiveness of RTW programs.
Cost Per Full-Time Equivalent (FTE) Metrics
| Metric |
Ratio |
Explanation |
| Cost per FTE |
| Cost per FTE |
= |
Total Active Claim Costs
Total Number of FTEs
Covered for WC |
|
This metric calculates the cost of WC per covered employee for a defined period of time. |
| Indemnity Cost per FTE |
Indemnity Cost
per FTE |
= |
Total Indemnity Costs for
Indemnity Claims
Total Number of FTEs
Covered for WCC |
|
This metric calculates the indemnity costs for active WC indemnity claims per covered FTE. |
Indemnity-Related Medical Cost
per FTE |
| Indemnity-Related Medical Cost per FTE |
= |
Total Medical Costs for
Indemnity Claims
Total Number of FTEs
Covered for WC |
|
This metric calculates the medical costs for active WC indemnity claims per covered FTE. |
| Medical-Only Cost per FTE |
| Medical-Only Cost per FTE |
= |
Total Medical Costs for Medical-Only Claims
Total Number of FTEs
Covered for WC |
|
This metric calculates the medical costs for active WC medical-only claims per covered FTE. |
Claim Incidence Metrics
| Metric |
Ratio |
Explanation |
| Annual Claim Incidence per 100 FTEs |
| Annual Claim Incidence per 100 FTEs |
= |
Total Number of New Claims
Total Number of FTEs
Covered for WC |
× 100 |
|
This metric calculates the number of new claims per 100 FTEs incurred during a defined period of time. |
| Indemnity Claim Incidence per 100 FTEs |
| Indemnity Claim Incidence per 100 FTEs |
= |
Total Number of New
WC Indemnity Claims
Total Number of FTEs
Covered for WC |
× 100 |
|
This metric calculates the number of new WC indemnity claims per 100 FTEs incurred during a defined period of time. |
| Medical-Only Claim Incidence per 100 FTEs |
| Medical-Only Claim Incidence per 100 FTEs |
= |
Total Number of New WC Medical-Only Claims
Total Number of FTEs Covered for WC |
× 100 |
|
This metric calculates the number of new WC medical-only claims incurred during a defined period of time. |
| New Indemnity Claim Percentage |
| New Indemnity Claim Percentage |
= |
Number of New Indemnity Claims
Total Number of New WC Claims |
× 100 |
|
This metric calculates the number of new indemnity claims incurred during a defined period of time. |
Cost Per Active Claim Metrics
| Metric |
Ratio |
Explanation |
| Cost per Active Claim |
| Cost per Active Claim |
= |
Total Active Claim Costs
Number of Active WC Claims |
|
This metric calculates the per claim cost of WC coverage for a defined period of time. |
| Indemnity Costs for Indemnity Claims |
| Indemnity Costs for Indemnity Claims |
= |
Total Indemnity Costs for Indemnity Claims
Number of Active WC
Indemnity Claims |
|
This metric calculates the indemnity costs per active WC indemnity claim. |
| Medical Costs for Indemnity Claims |
| Medical Costs for Indemnity Claims |
= |
Total Medical Costs for
Indemnity Claims
Number of Active WC
Indemnity Claims |
|
This metric calculates the indemnity costs per active WC indemnity claim. |
| Medical Costs for Medical-Only Claims |
| Medical Costs for Medical-Only Claims |
= |
Total Medical Costs for Medical-Only Claims
Number of Active WC Medical-Only Claims |
|
This metric calculates the medical costs per active WC medical-only claim. |
Cost Per Closed Claim Metrics
| Metric |
Ratio |
Explanation |
| Cost Per Closed Claim |
| Cost per Closed Claim |
= |
Total Benefits Paid for Closed
WC Claims
Number of Closed WC Claims |
|
This metric calculates the total per claim cost of WC coverage for a defined period of time. |
| Indemnity Cost per Closed Claim |
| Indemnity Cost per Closed Claim |
= |
Total Indemnity Costs for Closed Indemnity Claims
Number of Closed WC Indemnity Claims |
|
This metric calculates the indemnity costs per closed WC indemnity claim. |
| Indemnity-Related Medical Cost per Closed Claim |
| Indemnity-Related Medical Cost per Closed Claim |
= |
Total Medical Costs for Closed Indemnity Claims
Number of Closed WC Indemnity Claims |
|
This metric calculates the indemnity costs per closed WC indemnity claim. |
| Medical-Only Cost per Closed Claim |
| Medical-Only Cost per Closed Claim |
= |
Total Medical Costs for Closed Medical-Only Claims
Number of Closed WC Medical-Only Claims |
|
This metric calculates the medical costs per closed WC medical-only claim. |
Lost Time Metrics
| Metric |
Ratio |
Explanation |
| Lost TTD Workdays per 100 FTEs |
| Lost TTD Workdays per 100 FTEs |
= |
Lost Workdays for TTD Claims
Total Number of FTEs
Covered for WC |
× 100 |
|
This metric measures the effect of lost productivity from WC indemnity claims. |
| Lost TTD Workdays per Closed TTD Claim |
| Lost TTD Workdays per Closed TTD Claim |
= |
Lost Workdays from Date of Injury for Closed TTD Claims
Total Number of Closed TTD Claims |
× 100 |
|
This metric measures a company’s average number of lost workdays associated with closed TTD claims. |
Return-to-Work (RTW) Metrics
| Metric |
Ratio |
Explanation |
| RTW Claim Percentage |
| RTW Claim Percentage |
= |
Total Number of Claims with RTW Transitional Duty
Number of Total Active Claims |
|
This metric calculates the percent of all WC claims with RTW transitional duty for a defined period of time. |
| RTW Transitional Workdays Percentage |
| RTW Transitional Workdays Percentage |
= |
Total Number of Workdays with RTW Transitional Duty
Number of Total Lost Workdays |
|
This metric calculates the percentage of workdays that are lost due to transitional RTW for a defined period of time. |
|