Workers’ Compensation Trends

We haven’t discussed workers’ compensation for a while.  It has some significance to health care because over half of the costs are medical and for some providers this is an attractive business.  For health plans it can be an issue to try to integrate regular health benefits with workers’ comp ones.  A report from Rising Medical looks at trends in workers comp claims.   (Rising WC Report)   This is the 5th year for the report, which got input from 572 respondents from organizations involved in workers’ compensation, including employers, insurers and managed care vendors.  Workers’ compensation cost employers about $94 billion, with $61 billion paid out in claims in 2016.  About 50% of workers’ comp plans have claims managed by a third-party administrator; about 30% by a private insurer or a state fund and 20% self-administer.  The number one concern reported by firms is the rising medical costs in workers’ compensation.  That will likely continue, as workers’ comp organizations report anticipating a 6% or higher medical trend for 2017 and 2018.

Among other things, these increasing medical costs are resulting in fewer claims being closed, which means ongoing expense both for medical services and for administration costs.  Despite the fact that the number of claims is decreasing, the claims closure ratio is under 100% for over half of the responding workers’ comp plans; which means that more open claims were added than existing claims were closed.  This may reflect a trend toward more complex claims or it may reflect lack of skill at closing cases.  The three top competencies cited by organizations for success at managing workers’ comp claims were medical management, return-to-work efforts and investigations of whether a claim is real.  Few of the organizations, however, use analytics and outcomes measures to determine the effectiveness of their claims management processes.  Part of this problem is difficulty in attracting and retaining quality staff for workers’ comp organizations.  Use of technology, such as predictive modeling and linked data sharing across systems, has also lagged in workers’ compensation.  The survey suggests that is ample opportunity for innovation and improvement in claim management processes, which could reduce spending.