The Future of Workers’ Comp: Innovations and Hurdles Explored at 20th ExecuSummit

Hartford, CT (WorkersCompensation.com) -- The 20th Annual Workers Compensation Insurance ExecuSummit convened on January 23, 2024, in Hartford, Connecticut, drawing a gathering of experts and thought leaders in workers' compensation. This summit featured a diverse panel of industry professionals, including Paul F. Meleedy, Attorney at Law; Dennis Tierney, Senior Vice President at Marsh Global Claims Practice; Dr. Marcos A. Iglesias from Travelers; Carey Armistead of Sompo International North America; and Nicole Lovett, RN, of Windham Group. These experts came together to shed light on the latest trends, innovations, and challenges shaping the landscape of workers' compensation. The summit offered an opportunity for professionals to exchange ideas, explore new perspectives, and gain insights into the evolving dynamics of workers’ compensation.

PTSD and Mental Health in Workers’ Compensation

The summit explored a vital discussion on PTSD and mental health, topics that have gained significant traction in the realm of workers' compensation claims. The panel of experts delved into how the eligibility requirements for PTSD claims vary across states, a complexity that has become more distinct in the aftermath of the pandemic. They emphasized the critical role of effective treatment methods for PTSD, such as trauma-focused psychotherapy and pharmacotherapy, in aiding the recovery process. Legislatures are increasingly focusing on PTSD and evolving to provide support for first responders, which highlights a growing recognition of work-related mental health issues within the legislative framework. This session also explored the challenges in objectively measuring and proving mental health conditions as work-related, a key hurdle in obtaining workers' compensation benefits. The panelists emphasized the importance of understanding and navigating these complexities to effectively address mental health in the workplace and ensure appropriate support for affected workers.

Medical Cannabis and Workers’ Compensation

A substantial segment of this panel focused on the intricate and evolving legal and regulatory landscape surrounding medical cannabis in the context of workers' compensation. The panel of experts explored the multifaceted issue of cannabis as a reimbursable medical treatment, delving into the varied approaches and legal interpretations across different states. They discussed the significant challenges in applying intoxication defenses in workers' compensation claims, especially considering the complex nature of cannabis's effects and detection in the body. The panelists emphasized the stark differences in state-level legislation and case law, which have created a patchwork of policies and practices regarding the use of medical cannabis for work-related injuries. They stressed the importance of a nuanced and informed approach to this issue, particularly as an increasing number of jurisdictions move toward legalizing cannabis for medical purposes. This discussion highlighted the growing need for clarity and consistency in addressing the role of medical cannabis in workers' compensation, reflecting the shifting societal and legal perspectives on cannabis use.

Catastrophic Claim Rise and Its Implications

The significant rise in catastrophic claims has attracted increasing attention from industry professionals. The panelists observed that, intriguingly, while the overall frequency of claims has decreased, the severity of the claims that do occur has escalated, leading to more substantial indemnity claims. This uptick in severity has impacted the direct cost of claims and raised concerns about potential increases in reinsurance rates, a significant factor for the insurance industry's financial planning. The rise in catastrophic claims is attributed to several key factors: advancements in medical care and technology have significantly improved survival rates and prolonged life expectancies for severely injured workers, leading to longer-term and more expensive care requirements. Legislative changes have expanded the scope of benefits in many jurisdictions, increasing the potential cost of claims. This group also highlighted that the cost drivers of these catastrophic claims, such as extended ICU hospitalizations and advanced medical procedures, are often not adequately covered by existing fee schedules, further exacerbating the financial impact on the workers' compensation system.

The Impact of Artificial Intelligence

The workers' compensation industry is regularly experiencing the impact of artificial intelligence (AI). The panel demystified AI, separating popular myths from reality, and concentrated on its actual, practical applications in the sector. They highlighted that AI enables computers to understand and interpret human language through natural language processing and helps predict future outcomes based on data through predictive analytics. The experts emphasized AI's ability to streamline administrative processes, making handling claims faster and more efficient. For instance, Optical Character Recognition, another AI application, helps quickly convert documents into data that can be easily managed and analyzed. The panel also discussed AI's role in 'data scrubbing,' a process crucial for maintaining data accuracy and consistency, vital for informed decision-making in claims management.

Medical Inflation Trends, Pharmacy Costs, and Economic Impact

A detailed examination and explanation of medical inflation trends and their influence on workers' compensation revealed some insightful findings. While there was significant consumer inflation in areas like energy, food, and housing during 2021-2022, medical inflation did not significantly impact the workers' compensation sector. Some experts partly attributed the lack of impact to the effectiveness of workers' compensation fee schedules, establishing guidelines for medical service and treatment charges. These fee schedules have helped keep medical costs under control, even during periods of high inflation in the general economy. The experts also discussed pharmacy costs, noting increased utilization and cost per claim. For instance, costs for topical medications, now a significant focus area in workers' compensation, have risen notably. They account for 7.2% of utilization but 18.5% of costs. Regarding opioids, a long-standing concern in workers' compensation, there was a slight decrease in both prescriptions and costs, indicating a gradual shift away from opioid use. However, the challenge remains, particularly in long-term or legacy claims where injured workers have been using opioids for an extended period.

Workplace Violence and Exclusive Remedy

Workplace violence is increasingly affecting workers' compensation. The panelists delved into the alarming statistics that highlight the severity of the problem: homicide is the third leading cause of death on the job as of 2022, and an estimated 1,400 people are murdered at work annually in the United States. Additionally, about 20,000 US workers experience physical trauma in the workplace each year, with these incidents costing employers an estimated $121 billion annually, according to the Department of Justice. The experts also explored recent legislative efforts to address this growing concern. For example, in September 2023, California Governor Gavin Newsom signed a Senate Bill (SB.) No. 553, requiring virtually every employer in the state to adopt a comprehensive workplace violence prevention plan by July 1, 2024. Additionally, the State of Illinois, effective from January 1, 2024, allows survivors to sue employers for negligence in handling gender-related violence, legislation unanimously passed in the Senate and signed into law by Governor J.B. Pritzker. Of note, the panel presented a discussion of the implications of notable judicial cases challenging the exclusive remedy provision of workers' compensation, such as the Zwerner vs. Newport News Public Schools case, where a teacher shot by a student could press forward with a lawsuit, challenging the notion that workers' compensation should be the only remedy.

Workforce Trend Challenges in Workers' Compensation

Managing workers' compensation claims poses challenges due to current workforce trends. One of the issues highlighted was the 'insurance retirement cliff,' a looming problem where a significant portion of the insurance workforce is nearing retirement. Industry experts anticipate this demographic shift will gather momentum in the coming decade, which may require more seasoned professionals. The industry continues to see increasing competition for talent in the market. As the demand for skilled workers in the insurance sector grows, companies need help in hiring for replacement roles, leading to a smaller talent pipeline. The relentless growth of technology in the insurance industry drives the rapid evolution of required skill sets, exacerbating the talent crisis. The panel noted that this technological advancement is changing the nature of work in the sector, creating a knowledge gap that challenges the quality and capability of staff handling workers' compensation claims. The panel concluded that addressing these workforce trends is critical to maintaining efficiency and effectiveness in managing workers' compensation claims and keeping customer service as a focus.

Conclusion

This panel captured a broad spectrum of current issues and emerging worker compensation trends. This discussion of agility and adaptability in the face of evolving challenges, such as the increasing focus on mental health, the shifting legal landscapes around issues like medical marijuana, and the rising incidence of workplace violence. The experts highlighted the impact of technological advancements, particularly artificial intelligence, on streamlining claim processes and improving efficiency in the industry. The discussions also highlighted the significant workforce challenges, from the impending retirement cliff to the competition for skilled talent, reshaping the workers' compensation management landscape. The panel provided insights, shared knowledge, and prepared for the future, emphasizing continuous adaptation and strategic thinking in navigating workers' compensation's complex and ever-changing world.

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