Today’s Workers’ Compensation market is generally favorable, butseveral emerging medical and demographic challenges possess thepotential to upset the current balance. By better understanding thepossible impact of these new variables on the market, buyers andbrokers will be able to continue to protect employees—and theirbottom line.

Medical challenges

Four emerging medical challenges may threaten the workerscompensation market:

• The potential impact of the federal Affordable CareAct. This mandate may well increase workers’ compensationcosts by increasing demand for medical services from a fixed numberof providers. Simple economics dictates that if more Americans canbuy medical services, the cost of those services will rise.

Beyond higher prices, greater demand will also lead to longertreatment and recovery times as claimants wait to get appointments,potentially impacting indemnity costs.

• The growing use of – and cost for – physicaltherapy. Fee schedules for physical therapy have increasedover the past two years in nine states that have the greatest useof this service in workers’ compensation claims. Californiaincreased its fee schedule for all physical therapy billing codesby 5% to 6% in March of this year, while New Jersey increased itsschedule by 3.6% last fall.

Managing the utilization and cost of physical therapy isbecoming a key issue, so much so that clients, prospects andbrokers are asking TPAs more questions about their strategies inthis area.