Claims Data Key to Finding, Reducing Workers’ Comp Cost Drivers

Harnessing workers’ compensation claims data is the key to finding areas to decrease costs. A white paper released earlier this year by Advisen and sponsored by The Hartford, highlighted areas in workers’ comp claims that could benefit from cost containment. These include employee tenure, using prescription painkillers to treat chronic pain and obesity. The report noted that claims data revealed these additional risks can drive up workers’ comp costs significantly.

The report noted that medical costs account for more than 60 percent of total claim costs. According to the white paper, while claim frequency distinctions between older and younger workers have disappeared a new distinction has emerged — employee tenure.

The white paper cited a study by the National Council on Compensation Insurance (NCCI) that found that greater severity was the primary driver for older workers’ higher claims costs. This is likely due to medical issues other than the injury that arise with age. The report, “Mining Workers’ Compensation Data Nets Valuable Cost-Control Gems,” states that the employee tenure risk can be mitigated with appropriate safety training and engineering changes in the workplace.

Another area where cost reductions can be made is in the treatment of chronic pain with prescription painkillers. The NCCI reported that narcotics accounted for 25 percent of drug costs associated with a workers’ comp claim. Besides the risk of a deadly overdose there are side effects, of which there can be many.

In addition, the report noted that because most opioids cause drowsiness a stimulant is also typically prescribed.

The white paper suggests that the opioid problem can be addressed by carriers partnering with employers to use physicians that know the best practices for managing chronic pain. In addition, cognitive behavioral therapy may be helpful.

Nearly half of the states have also developed programs to stem opioid abuse.

Longer workers’ comp claims have also been linked to obesity. The study found that the duration of temporary total and permanent total indemnity benefits for obese claimants was five times longer than for non-obese claimants.