Considerations for the Future of Workers' Compensation

Workers’ compensation’s original premise, the “Grand Bargain”, has remained consistent since its inception in the early 20th century. There have been exceptions and variations to the definition of disease and injury coverage, types of benefits and to what extent they apply, and the value of the benefits. However, this original construct has continued throughout the generational, industrial, technological, societal, and cultural shifts/growth that has occurred over the last 100+ years.

The future of workers’ compensation will undoubtedly be influenced by the global health crisis of COVID-19. In his book, ‘Scenarios for the 2030s: Threats and Opportunities for Workers’ Compensation Systems, Dr. Rick Victor shares six points to consider as to the future of the workers’ compensation system: demographic changes in the workforce, healthcare reform, SSDI solvency, fiscal distress at the government level, globalization pressures intensify, and legislative and regulatory reform. Since early 2020, we have seen changes in each of these six points, but three particularly stand out as considerations for the future.

Workforce

Demographics in the workforce have been impacted significantly over the course of the last 2+ years. Some of these changes were already predicted by experts, for instance, the baby boomer generation exit from the workforce. Although many others were not, including the transition to greater remote workers; unemployment vacillation from high to extremely low within a period of 2 years; and a record number of job openings. These changes are impacting employee expectations, the skill set of the workforce, extreme job transitioning, and job tenure, which will tend to, in turn, impact workers’ compensation claims and their outcomes.

Healthcare

As one would expect during a pandemic, the healthcare industry was “front and center”. Patient access to healthcare information through technological advances simultaneously helped and hindered progress towards a trusting and beneficial healthcare environment. On one hand, patients can get instant access to electronic health records, test information and more via provider portals and access telehealth care which was accelerated in the pandemic. On the other hand, not all the information available online is trustworthy or reputable, which has led to a decrease in trust in the overall healthcare system based on the Robert Wood Johnson Public Health Survey in May of 2021.

As we consider the future of workers’ compensation, the benefits and challenges of telehealth must be addressed. Telehealth has been largely successful as a care option and is a useful method for care specific to workers’ compensation cases. With all signs pointing to virtual care being here to stay, expect telehealth workers’ compensation solutions to continue and become even more sophisticated and integrated.

The next frontier spurred on by new trust in technology is the use of medical device data in healthcare solutions, whether in everyday care or in workers’ compensation claims. Medical data from devices like phones and smartwatches will be useful in monitoring recovery in patients — particularly in workers’ compensation claims where improving return-to-work outcomes relies on careful tracking. The claims industry can take advantage of a richer health dataset by changing data modeling to focus on proactive care to prevent injuries from happening in the first place and improving gaps in safety and claims performance.

Currently, not every state supports the use of device data in healthcare cases and claims, but in the future, broader adoption is possible as data security systems get more sophisticated. Care and benefits providers need to become involved in this process to help regulators and advocate for wider adoption for this technology.

Legislation/regulations

Legislative and regulatory action for COVID-19 become a heightened focus in the workers’ compensation industry during the pandemic. Numerous states enacted, by legislation or executive order, compensability presumptions for COVID-19. These regulations varied as to employees covered with some states focusing on healthcare workers and first responders, while in other states the presumption applied to anyone working outside the home. This broadening of presumptions for COVID-19 in workers’ compensation systems raised a question as to “socialization of risks” — employers given ownership of something as ubiquitous as a global pandemic — counter to workers’ compensation’s focus on risks directly related to the employment.

Employers were also challenged with managing through a myriad of new legislation and regulations regarding sick/leave/disability. Many employers embraced the challenge and incorporated an employee-focused integrated care process to ensure employee support through workers’ compensation or sick/leave/disability. It became evident that a holistic focus on the employee can be done effectively while keeping transparency in reporting and management across departments. The pandemic pushed for improved analytics and data tracking to determine the status of benefits reporting, which overall fed into a greater focus on the total health and safety of employees within benefits and workers’ compensation programs. Compassionate care through an integrated approach that puts employees first could be part of the “new normal”.

The Occupational Safety and Health Administration (OSHA) provided guidance for compliance and rules for COVID-19 that at times appeared to be confusing. For instance, is COVID-19 recordable or not; what safety guidelines are currently in place; mask or no mask. Further, it remains unclear, generally, whether COVID-19 is a risk of employment for all industries.

How the industry responded to the past 2+ years will influence the future of workers’ compensation systems. Of course, there is no crystal ball. The goal of looking at the past and present circumstances to infer what's on the horizon is to plan now for future-ready and robust workers’ compensation programs. In each factor for change, there is room for employers to contribute, influence and take part in that future. The focus is to promote a safe and productive work environment for employees and to ensure a fair and equitable administrative process to address work-related injuries.

By Max Koonce

Courtesy of Sedgwick

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