Increased automation, use of robotics, and other advancements are helping improve work-site safety and decrease overall workers compensation claims. Even with these improvements, U.S. businesses still spend nearly $59 billion in direct workers compensation costs relating to serious, nonfatal workplace injuries each year, according to the 2020 Liberty Mutual Workplace Safety Index.
Several trends continue to impact claims frequency and severity. As the workers compensation landscape continues to evolve, here are five potential exposures that warrant risk managers’ attention.
Rising incidence of mega claims
Workers compensation mega claims, defined as claims for which $10 million or more has been paid or is expected to be paid, reached a new peak in 2016 – with more occurring than in any of the last 15 years according to the National Council on Compensation Insurance (NCCI). While relatively infrequent, these types of claims generate a heavy volume of loss dollars. Many are the result of motor vehicle accidents or falls, with more than half of the costs associated with hospital inpatient and home healthcare services.
Severity of motor vehicle accidents
Vehicle accident claims cost 80% to 100% more than the average workers compensation claim because they tend to involve severe injuries, according to NCCI data. They also tend to represent a higher share of the most severe claims, accounting for 28% of claims above $500,000.
Distracted driving likely plays a role in the increase– in large part fueled by the rise of smartphone use. Indeed, in its most recent research, the National Highway Traffic Safety Administration (NHTSA) estimates that more than 5% of drivers today are using either handheld or hands-free cell phones while driving during daytime hours.
Having a fleet safety program that includes pre-screening of prospective drivers, establishing a distracted driving policy, and monitoring driver behavior through technology like telematics can help protect workers and mitigate the risk of accidents.
Hiring of inexperienced talent
The U.S. economy is in an upswing in 2019, with the unemployment rates below 4%, according to the Bureau of Labor Statistics (BLS). While businesses reap the benefits of economic growth, they also face a significant challenge: finding available skilled workers. As a result, many companies may hire less experienced staff who are not as familiar with role-specific tasks, risks, and safety practices.
And this lack of understanding can lead to injuries. In fact, according to research by the Institute for Work and Health, employees in their first month on the job are exposed to more than three times the risk for a lost-time injury than workers who have been at their jobs for more than a year. As part-time and contract work become the norm, businesses must be ready to provide the appropriate training, supervision, and equipment so employees remain safe on the job.
Evolving efforts to manage pain
Prescription drug costs comprise a significant part of overall workers compensation medical costs, accounting for 13% to 14% according to NCCI.
And while prescription drug costs per active claim are declining, likely because of lower utilization, the use of opioids and other drugs to treat pain remains a challenge. For example, although physicians are changing their treatment practices to align with the updated opioid prescription guidelines put forth by the Centers for Disease Control and Prevention, opioids account for 25% of the dollars spent for prescriptions in workers compensation.
Physicians are considering alternative treatments, such as medical marijuana, but these also require close monitoring. For instance, while more than 30 states and the District of Columbia have legalized marijuana in some form, there are no state or national medical guidelines for use in workers compensation. Businesses also face other challenges, including how to enforce drug-free workplace polices and maintain safe work environments for employees and visitors alike. There are ways companies can partner with their insurers to manage emerging treatments effectively.
Growing interest in telehealth
Digital health technologies to treat, monitor, and assess workers compensation injuries continue to attract industry attention for a range of services, including initial injury treatment, specialty consultations, follow-up care, and rehabilitation.
The use of electronic communication to provide clinical services to patients through virtual, face-to-face interactions, without an in-person visit, has the potential to save both time and money and provide quicker, more efficient access to care. Proponents of this trend believe that tech may also help injured workers recover and return to work sooner, leading to lower claims costs.
However, as the possibilities expand, so do the challenges. Issues that are still evolving include:
- State laws, which vary in the types of telehealth services covered;
- Provider requirements, reimbursements, and medical licensure;
- Patient and data privacy;
- Monitoring the quality of outcomes; and
- Systems connectivity and technology costs.
For now, most observers acknowledge that for certain diagnosis and circumstances, telehealth may become a viable option to supplement overall care in workers compensation cases.
Staying protected through change
Technological, social, and other trends will continue to change how workers compensation claims are managed. By working closely with their insurance carriers and brokers, businesses can stay ahead of the curve and better control their overall costs. Learn more about the role of technology in workers compensation in Five Emerging Technologies that Are Improving the Workers Comp Claim Experience.
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