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WC Future Medical Claims: The Ticking Time Bomb
Self-insured employers & public entities remain unaware of the growing risk developing within their workers comp future medical claim inventory. By implementing proactive steps they can reduce their risk exposure and save money.
There are a number of reasons to be wary of a growing future medical inventory.
• The Obesity Epidemic
o In 1994, in no state had a percentage of obese adults as high as 20%.
o In 2010, all 50 states had adult obesity rates of 20% or more.
o In 12 states, the rate was 30% of adults deemed obese.
These are very startling statistics. It speaks to our changing techno-dependent culture. However, of interest to us is a statistic published by Duke Medicine & Communications. A 2007 Duke University Medical Center analysis found that obese workers filed twice the number of workers' compensation claims; had seven times higher medical costs from those claims and lost 13 times more days of work from work injury or work illness than did non-obese workers. Workers comp claims and indemnity costs are five to ten times higher for most obese workers. The effects of obesity, i.e. diabetes, can quickly turn a dormant future medical claim in a complex medical issue that can costs hundreds of thousands in additional medical costs.
• The Aging Future Medical Claim
o A greater portion of the workforce is close to or at the age range that requires Medicare involvement in workers’ compensation claim settlement discussions. This alone leads to greater levels of future medical settlement agreements.
o Due to the progressing age of claimants, future medical claims will begin to incur higher medical and pharmacy costs.
o Medical treatment will become increasingly complex and costly as elderly claimants’ multitude of ailments complicate treatment.
Aside from the challenging concerns noted above, an extensive open future medical claim inventory can negatively impact an organization, especially self-insured employers and public entities. Claim administrators that suffer consistent budgeting challenges such as cities and school districts will find that a growing future medical claims inventory is costing them not only reserve dollars, but resources such as time and productivity. Most notably, cities and other public entities may find that an increasing percentage of workers compensation benefits are being paid to individuals who are no longer employees!
A partial answer to this ticking time bomb is a proactive approach to future medical claims.
• Claims administrators can establish focused claims units that are responsible solely for handling and resolving future medical claims.
• By establishing specific goals and strategies for handling these claims and separating them from active indemnity cases, employers can see a better balance of future medical and active indemnity claims; fewer Medicare conditional payment liens
• Implementing a Best Practices protocol can help to reduce medical costs.
• Maintaining an aggressive claims settlement practice can help to eliminate the culture of entitlement and dependence that develops amongst employees.
• Establishing a practice of aggressively reducing the future claim inventory by buying out future medical claims.
These and many other proactive approaches can be instituted by any self-insured employer. New ideas may be a bit more challenging for budget strapped public entities, but not impossible to implement. An aggressive and proactive approach to future medical claims is synonymous with other proactive risk management efforts such as ergonomics service, return-to-work efforts, wellness programs and the like. However, bringing this issue to the forefront is vital for a successful claims and risk management program. Remaining open to a change in claims administration practice is vital.