Injured worker outcomes after compensation system overhaul: an interrupted time series study

ABSTRACT Objective In 2015, South Australia replaced its workers’ compensation system with the aim of improving return to work rates. We tested whether time off work among injured workers changed under the new system, as well as indicators of potential mechanisms. Methods We conducted a controlled interrupted time series using workers’ compensation claims data. The primary outcome was mean weeks of compensated disability duration. Secondary outcomes tested explanatory mechanisms: 1) claim volumes to determine whether the new system changed the makeup of claimants, and 2) mean employer report and insurer decision times to evaluate whether there had been changes in claim processing. Outcomes were aggregated into monthly units. South Australia was compared to six other Australian workers’ compensation systems. To test for moderation by condition type, disease claims were compared to injury claims and mental health claims to physical health claims. Results Disability duration and insurer decision time steadily declined before the RTW Act came into effect, but flatlined afterwards. Claim volumes did not change significantly. Employer report time initially increased but gradually decreased until it was lower than the counterfactual. There were non-significant increases in disability durations among injury claims compared to disease claims, and mental health claims compared to physical claims. Conclusions The increase in disability duration after the RTW Act took effect may be attributable to the disruption of implementing a new compensation system or the elimination of provisional liability entitlements that incentivised early decision making and provided early intervention. KEY MESSAGES What is already known on this topic Workers’ compensation systems are a major determinant of injured worker recovery. However, the specific mechanisms of how the compensation system influences outcomes are often opaque, which impedes the design of effective systems. What this study adds This interrupted time series study evaluates the effect of a new workers’ compensation system in South Australia, which was designed specifically to improve return to work rates. Time off work increased relative to the counterfactual, which paralleled trends in the time for insurers to decide on liability. How this study might affect research, practice, or policy The findings highlight the importance of understanding how compensation systems influence injured workers outcomes and considering the entire claims process when designing new systems.