Category Archives: Claims Process

Trends in Workers’ Compensation Claims: Some Things to Think About for Medical Travel

It is rare that I post articles from the National Council on Compensation Insurance (NCCI) on this blog, and it has been some time since I discussed workers’ comp and medical travel in the same post, so I thought that this would be a good time to do so.

NCCI is the premier source for data collection in the workers’ compensation industry. Their focus is more involved with the factors that drive the cost of workers’ comp insurance, rather than specific issues in workers’ comp that one might find from reading the reports of the Workers’ Compensation Research Institute (WCRI).

As the article will note, there has been a decrease in frequency of claims, but an increase in severity. Claim frequency is defined by NCCI as the number of claims involving lost wage benefits paid, divided by earned premium. For those of you in the health care and medical travel worlds, just know that it means there are more claims reported to insurance carriers.

Claim severity, on the other hand, is defined as losses incurred, divided by the number of claims, for lost wage benefits paid. This will be of importance to the medical travel industry, as they have found a +16% increase in medical severity from 2011 to 2016.

I will let you read the rest of the article here.

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State of the Line Report — 2018 Edition

It’s May, and you know what that means. It means NCCI has held its Annual Issues Symposium, and the State of the Line Report, presented by Chief Actuary Kathy Antonello.

But this year I am going to do something a little different. I am going to compare the data presented this year with some of the data from last year and the year prior, so that the reader can see how much change there has been year over year from the 2017 and 2018 reports. Last year’s data and the year before was presented in my post, “Slight Increase in Average Medical Costs for Lost-Time Claims, Part 2.”

First up, this year’s WC Average Medical Lost-Time Claim Severity in Chart 1.

Chart 1.

As you can see, there has been another slight increase in the lost-time claim severity from the 2016 to 2017 preliminary data. In 2016, the average medical lost-time claim severity was $28,800 and the preliminary 2017 severity was $29,900, an increase of nearly $1,000.

The key takeaway here is that NCCI estimates that the AY 2017 average medical lost-time claim severity is 4% higher than the corresponding AY 2016 value.

Looking back at the data from last year’s report, we can compare the preliminary 2016 data with the actual 2016 data reported above. Chart 2 exhibits last year’s data.

Chart 2.

Source: NCCI’s Financial Call Data; p Preliminary based on data valued as of 12/31/2016.

In chart 2, the preliminary medical lost-time claim severity was $29,100 and represented a 5.0% change from 2015. In 2015, it was $27,700 and saw a -1.4% change from the prior year.

This is borne out in the next chart, Chart 3, where the 2015 average medical lost-time claim severity was estimated at $28,500, or a 1.0% change from 2014.

Chart 3.

 

Next, we look at the cumulative change in medical lost-time claim severity (1997-2017p), as highlighted in chart 4.

Chart 4.

In this chart, the cumulative change in medical lost-time claim severity is contrasted with the cumulative change in the Personal Health Care Chain-Weighted Price Index (1997-2017p). The PHC is a proxy for medical care price inflation that responds to changes in the blend of different medical services over time.

From the chart, the cumulative change in medical lost-time claim severity has strongly outpaced the change in the PHC index in that same period, indicating that while the PHC index is nearly flat, the medical lost-time claim severity is rising and will continue to do so.

According to NCCI, the medical lost-time claim costs have risen faster, +175% , than the PHC index of +61%, over the period from 1997-2017, with most of the gap occurring in the years before the recession.

However, looking at the data from last year’s report, as shown in chart 5, the cumulative change in medical lost-time claim severity was much higher, as estimated by NCCI, which was +227%.

Chart 5.

Sources: NCCI’s Financial Call Data; Centers for Medicare & Medicaid Services ; p Preliminary based on data valued as of 12/31/2016.

The next chart, chart 6, compares the relative growth rates between medical severity and price inflation.

Chart 6.

On the left-hand side, the medical lost-time claim severity grew approximately 4.5% per year faster than the medical care prices for the same period.

On the right-hand side however, the change in the medical lost-time claim severity and the medical care price tracked one another in the same ten-year period. Yet, there is a slight rise in the medical lost-time claim severity after 2015 continuing into 2017.

The key takeaways as NCCI reported were that much of the gap between the cumulative changes in medical lost-time claim severity and the PHC index since 1997 arose from the years prior to 2007. And that both the severity and care prices have grown at approximately the same rate, as indicated above.

Lastly, the next chart, chart 7, indicates the average annual change from 2012 to 2016 for all NCCI states. Note: all states in grey are either monopolistic states or are intrastate-rated states that do not report data to NCCI.

Chart 7.

The state with the highest average annual change was Nevada, and the states with the lowest average annual change, were Maine, Massachusetts, North Carolina, Oregon, and Rhode Island.

The key takeaways here are that the average annual change in medical lost-time claim severity was +2.3% from the four years between 2012 and 2016. The increase in Nevada, NCCI stated, was due to a very large claim that occurred in 2016. The decrease in North Carolina was due to a combination of large claim activity in 2012 and a change in the medical fee schedule in 2013 and 2015.

But it is apparent that most states experienced a change at, or below 10% from 2012 to 2016. And if we are to believe that claim frequency is decreasing, then we must ask ourselves, why is the medical lost-time claim severity rising, as seen in chart 1, one hundred dollars short of $30,000.

One answer we have already examined is the cumulative change in medical lost-time claim severity from 1997 to 2017, although preliminary as of this week’s report.

However, what is not shown is what lies behind those numbers, i.e., what is happening in each claim to cause the severity to rise, or not rise. There is no indication, as there never is, as to what amount of the rise is due to the cost of surgery or to other claim factors such as hospital bills, ancillary services such as medical equipment, anesthesia services, any testing performed, etc. In short, we don’t know if what is causing health care costs generally to rise also is affecting the medical lost-time claim severity.

As I have stated before in this blog, workers’ compensation must look to other alternatives to help bring down the medical lost-time claim severity. This cannot be achieved by looking between all three coasts. It must include looking at less expensive, but equally advanced medical care elsewhere. Otherwise, the gap will only get wider over time.

 

 

 

 

New Study Concludes States with Employer Choice Have Higher Claim Costs

While scanning LinkedIn yesterday afternoon, I noticed someone had posted a link to an article in the Journal of Occupational and Environmental Medicine (JOEM) early last month.

The abstract stated that the financial impact of choice of physician within workers’ compensation had not be well studied, and that the purpose of the article was to assess the difference in cost between employer and employee directed choice of physician.

As many of you will recall, this subject was one of the first topics I covered when I began my blog over five years ago.

The following articles are linked here for your review:

Employee vs Employer Choice of Physician: How best to Incorporate Medical Tourism into Workers’ Compensation

Employee vs. Employer Choice of Physician Revisited: Additional Commentary on How Best to Incorporate Medical Tourism into Workers’ Compensation

Employer Choice States See Lower Claim Costs

Follow-up to Employee/Employer Choice: Three Years Later

The authors, Tao, Leung, Kalia, Lavin, Yuspeh, Bernacki (2017) analyzed 35,640 indemnity lost time claims from a 13-year period at a nationwide company, using multivariate logistic regression to determine association of medical direction with high-cost of claims.

Tao et al. found that states that have employer-directed choice of physician have lower risk of having high cost claims, greater than or equal to, $50,000, but had higher attorney involvement compared to employee direction. Their results showed that the net effect of attorneys offset the benefits of employer choice.

This study may be in line with the WCRI study I cited in the article above, “Employer Choice States See Lower Claim Costs”, but because of higher attorney involvement, the benefits are negated.

They concluded that states that permit employer selection of treating physician have higher cost due to greater participation by attorneys in the claims process.

Average Medical Costs in Work Comp Leveling Off

Once again it is time to look at the average medical costs for lost-time claims in workers’ comp. as reported last week in the NCCI State of the Line Report at the 2016 Annual Issues Symposium.

Those of you who have read my White Paper, or have followed this blog for sometime, know that this is an annual meeting of industry people in Florida to look at what is happening in workers’ comp.

It is not a conspiracy meeting of insiders looking to harm injured workers, as one deranged individual has suggested. [Emphasis added]

But rather, it is one way in which insurance personnel can understand where the workers’ compensation insurance market is headed. And the word this year, from Joe Paduda’s reporting last week is “Transitioning”.

Workers’ comp is transitioning and what it is transitioning into has been discussed previously by both Joe and Peter Rousmaniere, and that I have described in earlier posts.

One aspect of this transitioning has to do with automation and the development of artificial intelligence that will make many current jobs obsolete [remember that Twilight Zone episode with Burgess Meredith and Fritz Weaver where the State declared them both ‘obsolote’?]

Another part of this transitioning relates to the so-called ‘gig economy’ of companies like Uber and Lyft, Airbnb, etc., as well as the move of some jobs to part-time from full-time status, whatever the reason given.

But let’s move on to the issue at hand, which is, what is the average medical cost for lost-time claims this year. As you will see in the first chart, the average medical cost for lost-time claim dropped 1% from 2014, where there had been an increase from 2013 of 3%.

Chart 1.

Avg Med Cost 2016

Unlike past charts, this year’s chart shows that there are two years of preliminary data, 2014 and 2014. Compare that to last year’s chart, found here, as well as the two previous years, 2014 and 2015.

In 2014, the average medical cost per lost-time claim was $28,800; in 2015, the average medical cost dropped a mere $300 to $28,500, not very significant, but perhaps signalling a leveling off. You will notice in my previous articles and in my White Paper that I included a trendline that always showed the cost increasing, but it is apparent by looking at this year’s chart that there seems to be a flattening occurring.

According to Kathy Antonello’s report, the two key takeaways are:

  •  Medical severity change has moderated in recent years
  • The 2015 average medical cost is 1% lower than the 2014 value

Another factor to consider is how much of the total claim cost does medical payments per claim represent. As shown in the second chart, medical costs have remained at 58% of total claim cost, with indemnity (lost wages) representing the rest.

Chart 2.

Ind Med Split

As you can see, medical costs have risen significantly since 1981. Another way to view the change in average medical cost and its apparent leveling off can be seen in the third chart.

Chart 3.

WC Ave Med Cost

Chart 3 indicates that the cumulative change in excess of medical care inflation from 1995 to 2015 has joined the cumulative change in average medical cost from 1995 to 2015p in leveling off.

What this means, according to Ms. Antonello, is that workers’ comp medical costs per claim have risen at a much faster pace than indemnity over the past thirty years, medical inflation has outpaced wage growth, medical lost-time severity has increased 214% since 1995, and the corresponding increase in medical lost-time severity over and above the increase in medical price inflation is 55%.

What this also indicates is that workers’ comp is changing, and many predict that in a few years, workers’ comp as we have known it will disappear. Then perhaps treating injuries to certain body parts as knees, backs, shoulders, etc., common to both workers’ comp and general health care won’t be separated into different silos, but rather paid for as one medical expense under an employer’s health plan or even a single payer plan.

Either way, medical travel, given the predicted shortages of physicians and nurses, may present itself as a viable alternative, and not be subjected to antiquated laws and statutes that restrict an injured worker from getting medical care wherever they want to. And if predictions about artificial intelligence and automation are correct, then it won’t really matter, since very few individuals will be hurt on the job in the future.

There is an old Chinese curse: “May you live in interesting times.”


I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

I am also looking for a partner who shares my vision of global health care for injured workers.

I am also willing to work with any health care provider, medical tourism facilitator or facility to help you take advantage of a market segment treating workers injured on the job. Workers’ compensation is going through dramatic changes, and may one day be folded into general health care. Injured workers needing surgery for compensable injuries will need to seek alternatives that provide quality medical care at lower cost to their employers. Caribbean and Latin America region preferred.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Will accept invitations to speak or attend conferences.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com.

Transforming Workers’ Blog is now viewed all over the world in 250 countries and political entities. I have published nearly 300 articles, many of them re-published in newsletters and other blogs.

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Fee Schedules May Increase Number of Work Comp Claims

The Workers’ Compensation Research Institute (WCRI) published a new study that examined whether fee schedules increase the number of workers’ compensation claims.

In previous reports, the WCRI found that in many states, workers’ compensation pays higher prices than group health.

Another study they issued, found that in some states, workers’ compensation prices were two to four times higher than group health prices.

Moreover, in most states, WCRI found, the workers’ compensation systems rely heavily on the treating physician to determine whether a specific patient’s injury is work-related or not.

Dr. Olesya Fomenko, the author of the report and an economist at WCRI, said that, “Policymakers have always focused on the impact fee schedules have on access to care as well as utilization of services. This study shines a light on an issue that policymakers and other system stakeholders might not be thinking of, which is that physicians may call an injury work-related in order to receive a higher reimbursement for care he or she provides to the patient.”

Two of the findings from the study are as follows:

  • If the cause of injury is not straightforward (e.g., soft tissue conditions), case-shifting is more common in the states with higher workers’ compensation reimbursement rates. In particular, the study estimated that a 20 percent growth in workers’ compensation payments for physician services provided during an office visit increases the number of soft tissue injuries being called work-related by 6 percent.
  • There was no evidence of case-shifting from group health to workers’ compensation for patients with conditions for which causation is more certain (e.g., fractures, lacerations, and contusions).

What does this mean?

It means that physicians seeking higher reimbursements are classifying some injuries as work-related, and that there is no evidence of case-shifting from group health where the cause is more determinable.

What it also means is that no matter what the industry tries to do to lower medical costs, there is always a way for physicians and other stakeholders to do the opposite for their own benefit.

And given that, you have to wonder why the industry is deaf, dumb and blind to alternatives that apply basic economic laws to saving money. If you can get a good or service at the same or better quality, and at lower cost, no matter where that is, you go there.

It works that way when buying cars in one state, when the buyer lives in another state, and it should work that way with medical care, particularly regarding surgery.

The industry should not listen to certain individuals who dismiss this idea, and call the locations where better or equal care can be obtained at lower cost, “Turkishmaninacanstans“.

It demeans the hard work and dedication of medical professionals and business people who have spent years and money on building a business to provide health care that is affordable and of the highest quality.

It insults the education and training of doctors, nurses, and medical technicians in those countries who otherwise might not be working in such a highly respect profession as medicine.

It only proves that the author of that canard is a coward, a racist, and dead wrong.

 

Independent Medical Review Upheld as Constitutional

As I mentioned this morning to a good friend, I normally shy away from writing about California work comp issues, but the following article by Stephanie Goldberg, is indicative of how the legal system has been corrupted to the extent that benefits are denied to injured workers when it is proved they are necessary to deal with their injuries, especially those that leave the worker unable to be gainfully employed.

In other words, the courts have helped the employers screw the workers once again, and this is not coming from ProPublica/NPR.

Here is the article from Business Insurance:

http://www.businessinsurance.com/article/20151029/NEWS08/151029727/constitutionality-of-workers-comp-medical-review-process-upheld-by?tags=|68|309|70|74|92|329|304

We can and should do better, and not just for blue collar workers, but for white collar workers as well. which is what Ms. Stevens is. And I know two other white collar women in CA who have also gotten the shaft from the system. I wrote about them in three separate articles, “The Stench of Fraud: Why Workers’ Comp Can No Longer Be a Closed System“, “The Stench of Fraud, Continued“, and “What Price Profit?“.

From what I have heard about the IMR process, not all of the reviewers are equipped or knowledgeable to review cases, and they only look at medical records (which by one account had been changed), so the process is unfair, no matter what the court said.

Workers’ comp is being undermined from within and without. It is only a matter of time until it it is completely gutted and done away with. That is the fault of stupid and greedy people, but it is also our fault for choosing leaders who allow this to happen because instead of looking out for the people, they look out for the interests of the wealthy and powerful.

Change for Change’s Sake: What Real Change in Workers’ Comp Looks Like

Note: This is my 200th post, so I think you will find it to be one of the best articles I have written so far.

Every industry has its share of conferences, conventions and meetings around the country. The insurance and risk management industries, which includes the workers’ comp industry, is no exception.

In the early stage of my career, I worked for a small, retail insurance broker on New York’s Long Island, and the men in my company would attend the Risk and Insurance Management Society (RIMS) Conference every year.

I am sure they went there to learn about things other brokers were doing, make connections with insurance company executives, and workers’ comp service providers. But typically, these conferences allowed the participants to hang out with their buddies at the bar, and play a round or two of golf.

So I was mildly amused when I read an article posted today in The Workers’ Compensation Daily from Safety National Insurance Company, titled “It’s Time to Change Workers’ Compensation”.

The article discussed a recent meeting of the Harbor Health Systems 2015 MPN (Medical Provider Networks) Medical Directors, in which an executive from Sedgwick gave the keynote address. His address discussed the need for change in the approach to workers’ comp claims handling.

Harbor Health Systems is based in California, and through the writings of my fellow blogger, David De Paolo, and the personal experiences of two women I previously wrote about, “Ms. X” and “Ms. A”, the California workers’ comp system could use more than a keynote address to change the problems and abuses injured workers are receiving in that state.

FYI, Harbor Health Systems is a subsidiary of One Call Care Management, a company that for the past two years or so has been gobbling up smaller companies, especially in the pharmacy benefit management arena, as well as other smaller workers’ compensation service providers, and as Joe Paduda reported earlier this week, One Call Care Management has acquired an imaging company called MedFocus.

According to Joe, this acquisition consolidates One Call’s stranglehold on the market, so if this is the kind of change Mr. North of Sedgwick was referring to, then it is more of the same.

The article goes on to say that the role of a medical director is to be there to help injured workers to recover from their injuries and resume their lives. I believe “Ms. X” and “Ms. A” would beg to differ.

The article also goes on to say that for years, the workers’ comp medical networks have focused on two things: discount and proximity. They would send injured workers to the physician closest to the employer’s location who would agree to accept a discount on the treatment provided.

Over time, they realized this approach was flawed, and that they should identify the medical providers who produce the best outcomes and incentivize them to treat injured workers by compensating them fairly.

They are learning that when they find these superior physicians, they need to get out of their way and let them practice medicine. The rest of the article details how the industry needs to evolve in how they devote resources to claims, how to better explain the workers’ comp system and protections it provides, and to avail themselves of the opportunities the ACA provides to evolve the way medical care is delivered.

According to Mr. North, when it comes to change, there are three main categories of people:

  • Innovators – people who are truly creating change
  • Learners – people who take what innovators created and work to evolve it
  • Ignorers – people who are uncomfortable with change and have a tendency to ignore it as long as possible

He said that workers’ comp cannot evolve if they are unwilling to take risks and become innovators; otherwise change will not happen.

I agree with his analysis, and my posts have attested to that fact time and time again. Therefore using his categories, it is clear that I would be considered an innovator, since I have been advocating implementing medical travel into workers’ comp.

Workers’ comp needs to take risks, and medical travel affords them of one of those risks.

Yet, those who have derided my idea, or who have not paid any attention to what I am saying, are ignorers, and there may even be people who would see to it that medical travel never becomes part of workers’ comp.

So I would like to add a fourth category to this list. Call them defenders of the status quo, or preventers, or even saboteurs, if it ever got that far.

So what is this change Mr. North is talking about? Is it real change, or just change for the sake of change? And what does real change look like?

Real change is not keeping injured workers and the system locked in a padded cell, wrapped in a straitjacket.

Real change is not buying up smaller companies and cornering the market, so that the very idea of competition is tossed on the dustbin of history.

Real change is not doing the same things over and over again and expecting different results.

Real change is not being afraid to look outside of one’s comfort zone, and outside of one’s national borders at a time when your industry is facing challenges from the expansion of out-out legislation that threatens to destroy workers’ comp, rising medical costs, physician shortages, questions of the constitutionality of exclusive remedy, negative media reports, changes in technology and diversification, and other “seismic shifts”.

Real change is becoming a learner, and I am looking for learners to work with. Real change is being fearless and recognizing that Americans are not the only ones who are able to provide quality medical care.

Real change is going with the flow of change in the world today and joining the globalized world; otherwise you stagnate and die. Time is running out. Real change is possible, but you must go after it.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.