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Workers’ Comp in the Year 2030

At the WCRI Annual Issues & Research Conference, Dr. Richard Victor, former CEO of WCRI and currently a senior fellow with Sedgwick Institute, discussed his views of workers’ compensation in the future.

The workers’ compensation system was a compromise between labor and business designed to provide no-fault benefits in an environment that gave exclusive remedy protections to employers. Over the years, there have been ebbs and flows to the system in an effort to maintain balance. There is a constant struggle to balance benefits to workers with the costs of the system paid by employers.

In the past, when the workers’ compensation system got out of balance, it was due to actions from those within the system. That is something the system could correct with regulatory change. However, right now, there are things happening outside of the workers’ compensation system that could significantly affect it and cause a rethinking of the grand bargain.

Emerging labor shortages

Retiring baby boomers will cause labor shortages in healthcare and the insurance industry, which will delay claims and medical care. This will ultimately increase claims costs.

See also: The State of Workers’ Compensation  

In addition, a stronger economy is ultimately going to lead to a severe labor shortage. When you pair the aging workforce and people retiring with a growing job market, you end up with not enough qualified applicants to fill the positions. Employers have to relax their hiring standards. This leads to unqualified applicants being hired. These people will likely have higher accident rates.

Changes in the non-occupational health system

As workers see their out-of-pocket health insurance costs rise, it becomes more attractive to try to shift illness and injury episodes into the workers’ compensation system. Richard feels that this shifting will result in a 25% increase in workers’ compensation claims by 2030. With soft tissue injuries, it would be very easy for the worker to indicate the injury happened at work instead of at home. Disproving that would be very challenging for employers. Higher deductibles will greatly encourage workers to look for these cost-shifting possibilities.

Millions of workers losing health insurance

The number of uninsured workers is expected to decrease significantly as elements of the Affordable Care Act are repealed or weakened. These uninsured workers are also highly encouraged to shift their treatment into the workers’ compensation system. Richard estimates a 15% increase in workers’ compensation claims due to this.

Aging workforce

The injury rates for the older workers is higher than for younger workers. As the U.S. workforce ages, we will see higher injury rates across the employee population.

Federal immigration policies and practices

Limiting the flow of immigrants into the U.S. at a time there is a labor shortage will only compound the problem. The only way to grow our workforce to keep up with the demand is with immigrants. All of the growth in the labor force going forward is projected to come from immigrants.

Roughly 15% of all healthcare workers in the U.S. are foreign-born. If we discourage immigration into this country, Richard feels it could cause a labor shortage in the healthcare industry.

It does not even take a change in policy to see a change in immigration flow. After the Brexit vote there was a significant reduction in European nurses registering to work in the U.K. This is even though there had yet to be a policy change in the country.

See also: Healthcare Reform’s Effects on Workers’ Compensation

Conclusions

Taking all of the outside factors into consideration, Richard estimates a 55% increase in the number of workers’ compensation claims by the year 2030. When you add in medical inflation the costs of the workers’ compensation system could triple by 2030 with no change in indemnity benefit levels.

With this significant increase in costs, there will be questions about the continued viability of workers’ compensation. What is the solution? Are there viable options to traditional workers’ compensation? ERISA-style plans like the opt out in Texas have been widely criticized for providing inadequate protections for injured workers. Union carveout plans only apply to a very small sector of the workforce. Could we see workers’ compensation claims organizations become accountable to both employers and workers, with employees having the ability to choose which claims organization they want to use?

Potential Key to Tackling Opioid Issues

The use of urine drug testing (UDT) for injured workers raises challenges and questions for workers’ compensation stakeholders. Who should be tested? How many tests are too many? Too few? How often should the tests be performed? And, perhaps most importantly, what — if any — action should be taken in response to test results?

These questions have been brought to the forefront with the rise of opioid-related challenges — the same challenges that led a large workers’ compensation insurer to turn to experts for help.

The carrier saw a significant increase in opioid use among injured workers. Claims adjusters did not have the expertise on their own to aid in the problem.

See also: Opioids Are the Opiates of the Masses

Over the past several years, the insurer has aligned with Optum (its pharmacy benefit manager) and Millennium Health (a health solutions company that specializes in medication monitoring) to create a program that identifies and works with injured workers who are potentially at risk for poor recoveries. The insurer has reported impressive results, with reductions on spending for opioid analgesics and decreases in the number of supply days of the medications. Using the clinical experts and toxicologists of Millennium to help interpret test results has helped the clinical pharmacists at Optum provide recommendations to the adjusters and providers.

Medical treatment guidelines increasingly include UDTs for injured workers who are prescribed opioids; however, the decision of how often to test is largely left to the medical provider’s discretion. Experts say UDT, used in conjunction with other tools, can provide objective information regarding current medication, as well as illicit substance use. The results can help identify injured workers who may be abusing, misusing or diverting prescribed opioids.

“The clinical utility of UDT has been well established and is promoted in several medical guidelines. However, in some segments, there is still an underutilization for various reasons,” said Maria Chianta, director for clinical affairs and managed markets at Millennium Health. “It could be a lack of awareness or a lack of time — it takes time to perform the tests and interpret them.”

(Chianta will lead a discussion at the National Workers’ Compensation and Disability Conference & Expo on Dec. 2 in New Orleans. The discussion will cover the use of UDT in workers’ compensation; explain what led the insurer to enlist the help of its pharmacy benefit manager and Millennium Health; and show the results the company has achieved.)

Non-adherence to guidelines

The latest research from the Workers’ Compensation Research Institute bears out the inconsistent use of UDTs in workers’ compensation. A study of 25 states showed that the percentage of injured workers with longer-term use of opioids receiving drug testing was lower than recommended by treatment guidelines. At the same time, however, the frequency of drug tests was unusually high among the top 5% of injured workers who received opioids on a longer-term basis and had drug testing.

A lack of understanding of what actions to take based on UDT results is perhaps one of the major barriers. “It takes time to walk through those results,” Chianta said. “If you get something unexpected, you have to try to get to the cause of that, which takes time. Some providers may not know the best ways to respond to the test results.”

Follow-up is among the key issues for the effective use of UDT. Depending on the results of the tests, the insurer, for example, may engage the services of a telephonic case manager or conduct a pain management program review.

See also: Urine Drug Testing Must Get Smarter

Another area of confusion over UDTs concerns the types of tests available. “Primarily, there is immunoassay technology and mass spectrometry,” Chianta said. “Immunoassay is a presumptive screening, and mass spectrometry is a definitive or confirmation test.”

Chianta will discuss the types of tests in more detail. Some people on the health plan side may be seeing drug tests coming in and paying for them — and that’s the end of the process. The speakers aim to give session attendees an appreciation of the value of becoming more involved with the outcomes of the tests and follow-up actions that are necessary.

Are Workers’ Comp Systems Broken?

As national conversations occur about the direction of workers’ compensation (WC) systems, I sometimes hear comments that “WC systems are broken.” Rarely are public programs either all black or all white. The material below summarizes relevant information from a variety of published Workers Compensation Research Institute (WCRI) studies about how most workers fare in WC systems. How workers fare is critical to assessing the performance of WC systems, and the effectiveness of these systems affects the competitiveness of American business.

See also: States of Confusion: Workers Comp Extraterritorial Issues

The data from WCRI illustrates that the majority of workers in the workers’ compensation system:

  • Return to work within a few weeks of the injury, typically to their pre-injury employers at the same jobs and pay as before the injury
  • Receive their first income benefit payment in 30 days or less from the time that the payer is notified of the claim
  • Report that they were satisfied with the overall medical care received, including the time it took to have the first non-emergency visit with a provider and access to the desired medical services

See also: Return to Work Decisions on a Worker’s Comp Claim

Here is more detail:

Return to work and recovery of earnings capacity

The overwhelming majority of injured workers return to work and do so to their pre-injury employer at the same or higher pay:

  • 75% to 85% of workers had less than one week of lost time[1]
  • 80% to 90% of workers had four weeks of lost time or less[2]
  • 85% to 95% of workers had six weeks or less of lost time[3]
  • Only 5% to 10% said they earned a lot less when they first returned to work (for those who returned to work)[4]
  • 87% to 95% said they returned to their pre-injury employer[5]
  • Half of those changing employers reported that the change was not due to the injury[6]

Timely payment

Most workers receive their first indemnity payment without dispute or substantial delay:[7]

  • 40% to 50% in 14 days or less from the time payer was notified of injury
  • 60% to 75% in 30 days or less

Satisfaction and access to medical care

By an overwhelming majority, most workers were satisfied with medical care received (workers with more than seven days of lost time):

  • 75% to 85% reported somewhat or very satisfied[8]
  • 85% to 90% reported no problems or small problems getting desired care[9]
  • 80% to 90% reported being somewhat or very satisfied with the time it took to have the first nonemergency care[10]

While the systems may serve most workers reasonably well, the data also shows that there are injured workers with certain attributes that make them less likely to receive these good outcomes. Discussions that focus on system changes that improve outcomes for these injured workers have high-impact potential. A subsequent post will highlight the evidence on who these workers are.

A Biopsychosocial Approach to Recovery

Watching people try to recover from injury can be baffling. Some recover function quickly; others do not. Why is there so much variability with severity and duration of disability, given similar injuries or illnesses? Why do some individuals get stuck in delayed recovery?

Our medical system has tended to focus on the physical: If there is back pain, there must be something going on in the disc, vertebrae or nerve roots. That approach isn’t bad. Medicine has made a lot of progress with that tactic. But sometimes a physical cause isn’t apparent.

If we examine what else may be happening in people’s lives, what they’re thinking and what they’re feeling, we start to uncover circumstances and behaviors that may be delaying their recovery.

The Hartford is focusing on a different and promising approach that looks beyond the physical aspects (such as symptoms, physical findings, test results) and looks at the whole person as a biopsychosocial being who may have non-physical barriers that are delaying recovery. The Hartford has developed a program that offers help to assist people in getting unstuck.

Internal data analytics indicate the presence of psychosocial risk factors can account for a two- to four-fold increase in disability duration of work-related injuries.

Background

The biomedical model has served as the traditional foundation of our understanding of the body and has formed the bedrock of modern Western medicine. In essence, this model reduces illness and injury to their most basic units; the body is seen as a machine that operates on the basis of physical and chemical processes. In other words, find out what’s wrong with the body and fix it.

The biopsychosocial model seeks to amplify the biomedical model by addressing an individual holistically as a physical, psychological and social being.

The 1970s saw pioneering work in the treatment of chronic pain by using psychological — or behavioral – principles. For instance, W.E. Fordyce at the University of Washington found that helping patients with pain behave normally (that is, getting them to stop displaying pain behaviors) led to improvements in function.

In the 1980s, cognitive behavioral therapy (CBT) began to be used in treating chronic pain patients. CBT tries to change patterns of thinking or behavior that are behind a person’s difficulties all to change how they feel.

In the past 20 years, some have shown the usefulness of interventions based on specific psychosocial risk factors for pain and disability. Much of this work has been carried out in Canada, Europe, Australia and New Zealand.

See also: Better Outcomes for Chronic Pain

The medical and research literature points to social and behavioral factors — like fear, expectation of recovery, catastrophic thinking and perceived injustice — as powerful forces that can delay recovery after an injury or illness. As one example, a 2015 WCRI study showed that fear of getting fired could affect a worker’s return to work after an injury.

The Hartford Approach

Armed with an understanding of these drivers of disability, The Hartford is using its advanced data analytics and developing innovative solutions to help workers at risk regain the function they had before an injury or illness.

A patented text mining technique allows us to look for psychosocial, comorbid and other risk factors to identify, early on, individuals who demonstrate a likelihood to have a prolonged disability. By combining this early identification tool with a growing toolkit of interventions, we are finding new ways to help individuals restore their lives after an injury or illness.

One such tool is a proprietary, telephonic coaching intervention. Having identified claimants who show an elevated risk for prolonged disability, we invite them to participate in a program that matches them with a specially trained coach who helps them overcome psychosocial barriers. By equipping individuals with skills and techniques to change the way they think, feel and act, we help them develop confidence to take control of their recovery. This confidence allows them to increase function in all areas of life, including return to work.

The voluntary program, called iRECOVER(SM) uses phone calls with the coach, along with a workbook and homework assignments. It can last several weeks.

Although still in its early days, iRECOVER shows promising results: earlier return to function and return to work.

Participant feedback has been very positive. For instance, we have received emails and letters from injured workers that say:

  • “There’s light at the end of the tunnel.”
  • “I feel confident going back to work. A good part of this is due to my participation in iRECOVER.”
  • “I think what you do is probably as important as medical treatment.”
  • “iRECOVER helped me be courageous and strong.”

See also: Data Science: Methods Matter (Part 1)

Conclusion

By considering the whole patient, applying potent data analytics and developing innovative solutions, we are getting to the root of delayed recovery for many individuals. The results will benefit all concerned, especially the injured worker, who just wants life to get back to normal.

Power of ‘Claims Advocacy’

“Claims advocacy” is fast getting the attention of workers’ comp claims leaders as a powerful approach to better claims outcomes. The on-demand economy has created cultural and multi-generational expectations around service, speed and simplicity, and some claims leaders have already figured out how to deliver.

The workers’ compensation industry is in the throes of internal debate about mission and purpose.  Employee-centric claims models have become a large part of this debate. Some claims leaders say that payer organizations should move away from a compliance-oriented and, at times, adversarial style to an “advocacy” style of claims management.

Research, too, indicates that claims advocacy is top of mind for industry executives. The responses of 700 participants in Rising Medical Solutions’ Workers’ Compensation Benchmarking Study confirm that many claims leaders know the building blocks of advocacy and recognize its potential value. 

We recently interviewed claims leaders to better understand the practical meaning of the concept, as it applies to all claims operations, from self-administered employers to insurers handling claims for thousands of policyholders.

What Is Claims Advocacy?

We asked Noreen Olson, workers’ compensation manager with Starbucks, for a definition of advocacy.  (Starbucks employs 180,000 “partners” worldwide and has close to 12,000 outlets in the U.S.) Olson proposed this:

“In workers’ comp, advocacy is a process grounded by the values of dignity, respect and transparency that coordinates activities to assist the injured worker effectively and promote expectancy and engagement in recovery, efficiently restores (and often improves upon) health and well-being, and resolves the experience in mutual satisfaction.”

Others we spoke with endorsed this or a similar definition. They all have in mind not a checklist, nor a charm offensive, but a culture.  A claims culture that makes access to benefits simple and builds trust – and one that must be supported by executive buy-in, organizational values, technology and operating systems to be successful.

Access to benefits from the worker’s perspective includes ease of filing a claim, ease in obtaining prescribed medications, access to medical specialists and help in navigating the healthcare maze. Along the course of injury recovery, there are many opportunities that affect access and trust as perceived by the worker. The highly respected Workers’ Compensation Research Institute reports in its Predictors of Worker Outcomes Series that “trust” is a key driver of claims outcomes.

See also: How Should Workers’ Compensation Evolve?

Why Now?

Tom Stark, technical director of workers’ compensation at Nationwide Insurance, told us that advocacy has been around for a long time. He’s practiced advocacy since the 1980s Several forces converge to promote advocacy in claims today. Claims leaders are emphasizing, or perhaps “reemphasizing,” the importance of interpersonal relations. As claims handling has shifted from onsite home visits to lower contact models, the importance of emotional intelligence, soft skills and customer service skills is greater than ever to dispel uncertainty and engender trust.

Perhaps the biggest driver of customer service and transactional speed is the American retail sector. Its massive engagement in these areas has shaped everyone’s expectations – of all generations. Millennials, born in the 1980s and 1990s, in particular have grown up with this customer-focused approach and therefore bring to the claims environment high expectations for both delivering and receiving quality service. Slow, bureaucratic responses can shock injured workers. Darrell Brown, chief claims officer at Sedgwick, says, “We are now an on-demand economy. That is the way it is.”

Why Is Claims Advocacy Attractive?

Brown says that engaging the injured worker is key. Fast and helpful response to injury pays off in worker satisfaction and lower claims costs. “People file claims, but they don’t know what is going to happen. If you lose injured workers at the beginning of the claim, to anxiety and fear, they go to litigation.” Brown also says that when claims professionals engage more constructively with injured workers, their own experience is better. This leads to better morale and talent retention.

For employers, claims advocacy provides a special opportunity to directly align work injury response with their corporate brand, core values, employee communications and benefit delivery.

Walking the Walk

Albertsons Safeway, with more than a quarter million “associates” in 34 states, has crafted its claims approach to reinforce engagement and confidence for the injured workers. Director of Managed Care and Disability Denise Algire, who is also the principal researcher for the Workers’ Compensation Benchmarking Study, says that staff talks with injured employees on the day of injury. “We focus on education and reducing uncertainty,” she says.  They avoid potentially intimidating or antagonistic terms like “adjusting,” “examining” and “investigating.” They also start with the positive expectation that every employee wants to return to work. “Workers’ compensation has become adversarial because we manage the system based on the deceptive few versus the deserving many,” she says. “Our claims approach is based on the majority, not the minority.”

Brown talked to us about tangible actions. “If you can make a compensability determination in two days, even though the law gives you 14 days, imagine how much uncertainty and anxiety is removed,” he says. “The same applies to indemnity payments. The industry is often guided by regulatory requirements. If you can take action and make payments sooner, why make it later? You’ve got to walk the walk.” Starbucks, for example, direct deposits indemnity checks into employees’ accounts to increase speed.

Advocacy does not hinder organizations from being compliance-minded. Rather, it becomes one aspect of a holistic, customer-driven framework that aims higher than the bar often set by regulatory standards.

See Also: How to Win at Work Comp Claims

Barriers to Overcome

Stark sees lagging technology as getting in the way of engaging the injured worker. To him, claims tasks grew exponentially while support staff in claims offices were cut. Claims technology has often not kept up. He says, “Look at the work-arounds – count the number of sticky-notes on the adjuster’s screen. If technology is not there to support effective claims management, even in its most transactional form, you are really stressing the model. How are you going to be an advocate?”

Olson brought up two challenges that Starbucks has solved but still confront most employers. She believes that it is important to make it as easy as possible for a partner to report an injury. At Starbucks, they not only have web, mobile and call center options, they also allow partners to self-report their injuries versus going through their manager or HR.

Olson additionally stresses the importance of easily moving the partner to other benefit programs if the injury is not compensable and to avoid language like “your claim is denied.” She says that placing the award of benefits in the “right benefit bucket” needs to be done seamlessly so that the partner does not feel on the hook. In addition to the state mandated language in these instances, Starbucks includes its own letter that communicates that, while the claim isn’t eligible for workers’ comp, the partner may be eligible for other benefits to help with their injury/illness.

One barrier that Algire notes – simply “rebranding” claims adjusters as advocates is not enough. “A true cultural shift will require organizations to move beyond performance metrics that are based primarily in cost containment to those based on clinical quality, functional outcomes and patient satisfaction,” she says. This shift is critical to “walking the walk” and reinforcing the advocacy approach with claims staff.

Conclusion

The on-demand economy has created cultural and multi-generational expectations around service, speed and simplicity – giving workers’ compensation a blueprint for claims advocacy. Embracing consumer-driven models around injury recovery is emerging as a competitive advantage, both from a claims outcomes and a talent recruitment/retention perspective.

The 2016 Workers’ Compensation Benchmarking Study will be surveying claims leaders on advocacy, among other pressing topics, to better understand its current application and perceived viability.  A copy of the 2016 Study report may be ordered here.