11 Workers' Compensation Issues Sure to Impact 2011
With the nation's legislative landscape dominated by health care reform and relatively stable workers' compensation rates in 2010, workers' compensation fell off the radar screen.
By Preston Diamond|January 17, 2011 at 11:07 AM
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With the nation’s legislative landscape dominated by health care reform and relatively stable workers’ compensation rates in 2010, workers’ compensation fell off the radar screen. However, a more careful review points to challenging times in the years ahead. Here are 11 issues that bear watching.
1. Declines in frequency of claims slowingAccording to insurers, the long-term trend of declining claims frequency (claims filed per employer payroll) is flattening. This is significant because declining trends that started in 1991 have helped counter rising medical costs driven by the severity of claims and increased utilization. It’s too early to determine the reasons or permanency of the shift, and it could be a temporary blip caused by employers cutting back on safety initiatives. On the other hand, a strengthening job market could mean hiring employees who are less experienced and more prone to injuries.
2. Injured employees are staying out of work longerThe National Council on Compensation Insurance (NCCI) notes that workers’ compensation payers are funding temporary total disability benefits longer. NCCI Director John Robertson attributes this to economic conditions, including fewer return-to-work opportunities.
The benefits of employee retention and reduced costs of a return-to-work program are valid regardless of economic conditions. However, the recession has made it difficult for some to place injured workers in transitional positions when the company is laying others off. In other cases, injured workers have returned to transitional jobs, only to be laid off for reasons unrelated to the injury.
Faced with few job prospects, the employees have little incentive to get well. In fact, there’s a disincentive to get well, and employees staying home leads to higher reserves that are expensive for the employer to support. Dr. Richard Pimentel, a national expert on disability management, notes that the savings of turning an indemnity claim into a medical-only claim can be significant; 20 percent of lost time from work injuries could be eliminated if the physician was given sufficient information about the transitional job possibilities.
It simply makes good economic sense to return injured employees to work as soon and as safely as possible.
3. Medical costs continue to riseAccording to NCCI, the medical costs of lost-time workers’ compensation claims continue to grow at a faster rate than the medical consumer price index and now represent 58 percent of claims. An important study, “Impact of Cost Intensive Physicians on Workers Compensation” by Edward Bernacki, MD and his team at Johns Hopkins, appeared in the Journal of Occupational and Environmental Medicine in January 2010.
Using five years’ closed claim data from the Louisiana Workers’ Compensation Corp., they studied claims that began with reserves less than $15,000, but migrated to reserves of +/-$50,000. Of those claims, 3.8 percent of physicians involved were responsible for 72 percent of the costs. The numbers clearly demonstrate that “cost intensive physicians” — those who had higher medical costs, longer medical treatment duration, longer claim durations — mean higher indemnity costs.
The Bernacki study also noted that injury types or diagnoses that don’t have clearly defined treatment pathways could easily lead to higher costs. Whereas a fractured tibia has a predictable treatment path, injuries of joints and back strains do not, leaving a wide berth of treatment options and opportunities for abuse.
While the adoption of evidenced-based guidelines has gained ground, many job-related health-related decisions are still made by health care professionals without appropriate training in occupational injuries. In 2010 The American College of Occupational and Environmental Medicine (ACOEM) published A Guide to High-Value Physician Services in Workers’ Compensation – How to find the best available care for your injured workers. The Guide offers suggestions for finding physicians who provide care for everyday, uncomplicated injuries, as well as physicians who provide specialized medical services addressing catastrophic injury or administrative tasks required by the workers’ compensation process.
4. Safety and wellness begin to integrateWhile it’s reasonable to postulate that healthy workers are less prone to injury and, once injured, recover more quickly than their out-of-shape co-workers, corporate silos have typically separated risk management departments from benefits management. New research, an aging workforce, court cases, tight budgets and anxiety over healthcare reform are causing employers to recognize the relationship between safety and wellness.
The recent Obesity 2010 NCCI Research Brief confirms that work-related injuries are far more costly and more likely to result in permanent disabilities if the injured worker is obese.
Court rulings have required weight reduction surgery prior to treatment of work-related injuries. Furthermore, studies have shown that older workers have fewer injuries than their younger counterparts, but when injured, they take longer to heal.
In addition to assessing how jobs can be modified to accommodate older workers, employers are looking at wellness programs as a way to keep employees healthy.
5. OSHA everywhereWith increased funding, additional staff and a vigorous agenda, OSHA significantly increased its enforcement activity and its fines in 2010. The National Safety Council (NSC) noted, “While the list of OSHA’s Top 10 most frequently cited violations remains mostly unchanged, the agency’s message of strong enforcement is clear.” For the first time since publishing the annual OSHA Top 10 feature, each of the 10 highest penalties issued in a fiscal year exceeded $1 million. This stepped up agenda is expected to continue in 2011.
6. Litigation swellsWhile workers’ compensation was founded in part to avoid litigation between employers and employees, litigation is very much part of the system. Moreover, the Equal Employment Opportunity Commission (EEOC) is on pace to set another record in 2010 because of the expansion of the legal environment, including ADA (Americans with Disabilities Act) amendments, GINA (Genetic Information Nondiscrimination Act) and the Ledbetter Fair Pay Act.
The Cambridge, Mass. Workers’ Compensation Research Institute published a valuable study in 2010, Avoiding Litigation: What Can Employers, Insurers, and State Workers’ Compensation Agencies Do? The study found that workers were more likely to seek attorneys when they felt threatened. Recommended actions included:
The evidence showed a N.Y. man engaged in a complex scheme to obtain commercial auto insurance in the names of fictitious business partnerships by submitting falsified documents and making false statements to multiple governmental agencies and insurance carriers.