We were very impressed with a webinar we viewed entitled “Out Front Ideas,” hosted by Kimberly George and Mark Walls. They discussed the latest workers’ compensation trends, concerns, and emerging issues from the perspectives of a wide array of industry stakeholders. Below are some of the highlights that we thought would be of interest to our clients, to employers, and those that are interested in workers’ compensation. If you would like to see the webinar in its entirety, the webinar is posted here. Note: the presentation works best in an Internet Explorer browser.
The Impact of the 2016 Election and Healthcare Reform
The November election will clearly have the most significant impact on workers’ compensation and healthcare reform. Trump clearly is an advocate for less federal regulation. If Clinton had won, it was believed federal legislation would be enacted to set minimum benefit levels across states. Andrew Puzder, Trump’s recommendation for Secretary of Labor, has openly expressed opposition of the worker protections enacted by the Obama administration. Therefore mandates and other sweeping reform in workers’ compensation is unlikely.
Both parties are very concerned about the solvency of Social Security. There are concerns about workers’ compensation claims being shifted to Social Security disability. Some states have caps on indemnity benefits so an injured worker with a lifetime payout claim would have to seek alternative benefits. Some states allow benefits to be offset by Social Security disability and others allow Social Security disability to offset workers’ compensation. It is expected that Congress will debate the potential cost shift of Social Security Disability as a part of their review of that program.
Gubernatorial elections were held in 12 states, shifting power more solidly in the Republican direction (4 seats shifted from the Democrat to Republican party). Those new governors will appoint insurance regulators and administrative law judges. It is expected that these changes will have a significant direct impact on the worker’s compensation industry.
With the new administration, new Department of Labor appointment and new agenda we anticipate an easing of federal regulation.
The ADA, LOA, and FMLA
Similar to OSHA, the focus of the ADA is likely to change under the Trump administration. Paid paternal care became the popular topic in 2016 and will continue into 2017. Many large employers started to offer paid parental leave. The GOP Congressional leadership has long opposed paid leave. Trump proposed six weeks paid for maternity leave during his campaign, half of what is provisioned by the FMLA.
The Americans with Disability Act and what constitutes a covered disability has evolved from a short list (ergonomics and transitional work for injured workers) to a complex, broad list; that includes line items like bringing service animals to work, removal of allergens such as glues, latex and perfumes; and noises requiring noise accommodation in the workplace setting. Future federal legislation to expand these laws is unlikely.
Rates and Premiums
Workers’ compensation market cycles are affected by changes in competition, more than changes in exposure. Analysis of history of claims costs over the last 20 years shows they have steadily increased. During the same period premiums independently have shown fluctuation. Because premiums had grown several years in a row and they seem to have approached a level of stability. However, recently higher premiums has led to increased competition which has driven premiums down but this is not expected to continue.
Workers’ Compensation and Long-tail Exposures
Another issue of workers’ compensation is long tail exposures — the premium exposures paid today that must cover losses to come in the future, and they are particularly difficult for employers and carriers to anticipate accurately. These claims may remain open over a worker’s lifetime, or the exposures can increase over time and there is fear the current premiums are not sufficient to cover those claims in the future. Both breakthroughs in medical science and advances in new drug treatments tend to both cost more and increase life expectancy, which contribute to increased future exposures.
Legislation Agendas at the State Level
Both Governor’s and the legislature have healthcare reform slated as central themes of their administrations. Key legislation is expected in Illinois, New York, Florida, and California and the outcome is likely to influence other states.
Medical Treatment Guidelines and Drug Formularies
Adoption and implementation of medical treatment and Return to Work Guidelines; as well as, drug formularies are moving forward, but it is challenging. States have implemented a variety of solutions, but there still is a lack of consensus among stakeholders, such as physicians, regulators, payers, and suppliers. Healthcare guidelines do not change because of state lines; however, workers’ compensation and its guidelines do.
Statutes Found Unconstitutional
In five states, components of workers’ compensation regulation were found unconstitutional. When this happens, the law reverts to how it was before it was passed. This uncertainty and inability to anticipate the future expenses is particularly challenging and has a negative impact on carriers and self-insured employers.
Workplace Mental Health and Well-Being
Mental conditions can sometimes be covered by workers’ compensation if you can prove the mental or psychiatric problem was primarily caused by your work – and even those court cases are hard to win. Some of the top reasons for short-term disability absences across industries is; you guessed it, mental health. Despite a growing trend by employers acknowledging that a lack of mental health crosses the boundaries of the workplace and left untreated has a direct impact on productivity and their bottom-line. Regardless, many states don’t allow payment of workers’ compensation unless there is proof the cause of the problem was primarily caused by the place of work. More work needs to be done to include mental injury into workers’ compensation in the future.
The New Reality of an Increasingly-Impaired Workforce
26 states allow recreational marijuana use in some form. For employers, this means it is likely a percentage of their workers are impaired. Since current drug tests only test for a presence of the drug, which is now legal, rather than impairment (and currently, there are not standards or tests for these), they are not particularly useful. And yet this poses problems for employers who want workplaces that are drug-free.
Alternatives to Opioids for Chronic Pain
In 2017 there will be greater emphasis on providing more alternatives for chronic pain care and reduce reliance on prescription opioids. Employers have discovered that when it comes to the treatment of acute, and chronic pain, an integrated pain management approach, that includes both traditional and alternative modalities, can alleviate or reduce the need for opioid use. Pain management care should be individualized to maximize outcomes both for the patient and financially long-term. Still payments for pain medication are processed quickly by insurers, and they are slow to pay for alternative treatments. The hope is that 2017 should see an increase in alternative treatments that are supported.
Allow me to interject some brief and relevant information on how DORN can help. DORN provides an effective alternative to traditional medicine and opioid use, reducing chronic pain in the workplace. We provide highly trained and skilled specialists to work at a place of business and fix painful muscular conditions. Through training of body mechanics, stretching and injury prevention techniques future injuries are often prevented. DORN provides highly skilled professional specialists, data analytics, and quick, safe, inexpensive, OSHA non-recordable treatment, all on-site at the workplace. By reducing employee pain, additional associated benefits include reduced workers’ comp claims, improved sleep, reduced anxiety and stress, and better well-being. When pain is addressed utilizing the effective DORN treatment modalities, the need to use medication can often be reduced or even eliminated.
Cancer can occur in the workplace based on exposure to toxic chemicals. Unfortunately, most state regulations are not robust enough. Statutes only protect against certain kinds of diseases, and yet in many states, the statute of limitations for reporting a claim is less than it takes for the disease to become apparent. This creates vulnerability in coverage. As scientists discover more proof of the connection of exposure to toxic chemicals and the sources of disease in the workplace, workers’ compensation will need to be updated to fill this hole in coverage.
Advocacy-Based Claim Models & Transparency with Workers
There has been an adjustment from process-based claims systems to a more advocacy-based claims model with the goal of improving the health of the injured worker. This process changes the focus to improve the workers understanding of the process, where stakeholders are charged with helping the injured workers understand the process and ensures optimum decisions throughout the process. Teaming with the injured worker; creating trust, and ensuring transparency is leading to mutually better outcomes and the expectation is that this model will evolve in 2017.
Evolving Claims Models — Machine Learning, Artificial Intelligence, and Automation
In 2017, we believe technology will evolve from predictive analytics currently used in claims management to machine learning and artificial intelligence. How many claims can just as easily be handled by a machine? Are exposures reduced when a person gets involved or can this be handled through the computers and automation? Technology should drive significant efficiencies in 2017.
These top trends, concerns, and emerging issues are going to have a significant impact on Worker’ Compensation in 2017. It will be fascinating to watch and understand the many changes unfold.