500 Workers’ Compensation Stakeholders Identified the Top 10 Industry Challenges
In its fifth year, the Risk & Insurance® survey of workers’ compensation professionals, sponsored by Healthesystems, highlighted the top challenges industry professionals faced in 2022 and their priorities heading into 2023.
The survey data was garnered from attendees at National Comp in Las Vegas from Oct. 18 through Oct. 20, 2022.
This year, medical care challenges reigned supreme. Health care provider and service shortages, medical price inflation and increasingly complex claims were the top three obstacles the survey identified.
As the industry struggles with medical challenges, it’s grappling with a talent shortage of its own. Fortunately, new technologies are improving efficiency across the workers’ compensation system and enhancing injured worker experiences, though implementation is still slow.
Here’s a look at the top 10 challenges the survey identified.
1) Health Care Provider or Service Shortages
Health care provider and service shortages ranked as the number one challenge workers’ compensation stakeholders faced in 2022, with 58.28% of survey participants naming it as a top five concern for their organizations.
The drivers behind the health care provider shortage are myriad. In 2020, the Association of American Medical Colleges estimated that there would be a shortage of between 54,100 to 139,000 physicians by 2034 — and that was before the COVID-19 pandemic increased medical provider burnout, causing many physicians, nurses, and other allied health professionals to leave the industry.
“The fallout from the pandemic has affected all types of health care workers,” said Silvia Sacalis, VP of clinical services at Healthesystems. “Physicians certainly, but also nurses, pharmacists, technicians, and home health care workers are in short supply. Health care is one of the industries most severely impacted by the Great Resignation and it will take time to recover.”
Injured workers face additional hurdles to finding available care as a number of medical practices and related services refuse to accept workers’ compensation insurance payments due to low fee schedules.
The health care provider and service shortage has a number of consequences for workers’ compensation: “These challenges make it difficult for adjusters to provide timely access to health care services for injured workers, resulting in more problematic claims outcomes, slower healing, longer disability, and likely, higher litigation rates,” said Kimberly Wiswell, CMSP-fellow senior product manager, workers’ compensation, Gradient AI, a participant in this year’s survey.
Although the heath care provider and service shortage was named the number one challenge, access to timely and quality care was only one of several barriers to care cited by survey participants, which included injured workers who are unfamiliar with the workers’ comp system, comorbidities, limited transitional or light duty assignments, communication challenges and social determinants of health.
2) Medical Price Inflation
The second issue pressing on workers’ compensation stakeholders’ minds was medical price inflation. Just over 57% of respondents listed it among their top concerns.
Overall, medical costs per claim rose two percent in 2021 and NCCI projects costs in the personal health care index will increase 3.7% in 2022.
Though these numbers are lower than consumer inflation, which has risen dramatically over the past few years, many in workers’ comp are wary. Health care inflation typically lags behind other price inflation and medical care costs are increasingly accounting for greater shares of total claims spending. Workers’ compensation payers are already seeing price inflation for some medical services and products.
“Labor shortages are having a disproportionate impact on health care and we still see supply chain disruptions for pharmaceuticals and medical devices,” said Kristine Kennedy, SVP of product and innovation for Healthesystems.
“The best way to mitigate the dual challenges of shortages and price inflation is through vigilant selection and management of all medical provider and service networks.”
3) Increasingly Complex Claims
More than 56% of respondents placed increasingly complex claims as a top five concern for their organizations, making it the third biggest challenge.
Increasingly complex claims have been a concern for a number of years now. This year, mental health issues were the primary concern for respondents worried over claims complexity, with 61.73% naming it as problematic. Closely following mental health issues was comorbidities, which 61.05% saw as a concerning claim complexity.
4) Workers’ Comp Litigation
Nuclear verdicts — those that award plaintiffs more than $10 million — have been on the rise and it has a number of workers’ compensation professionals on edge. Over 55% of respondents placed litigation concerns toward the top of their lists of industry challenges.
One reason litigation may be top-of-mind: the insurance industry talent shortage. Experienced adjusters are able to prevent claims from turning litigious. Less experienced adjusters may not have the breadth of knowledge needed to detect at-risk claims and intervene.
The silver lining? The industry has tested strategies for preventing litigation. The injured worker advocacy movement is believed to reduce workers’ comp litigation.
“There’s a large effort really pushing worker advocacy,” said a veteran executive with a national medical management firm who attended National Comp and took the survey. “And I think that’ll help lower litigation.”
Others seem to agree with him. Sixty-five percent of survey participants said that personalizing an injured workers’ experience was the most valuable data application and 48% reported success with initiatives aimed at improving employee’s experiences with workers’ compensation.
5) New Workplace Safety Challenges
Workers’ comp is always adapting to new workplace safety issues and 2022 was no different.
The survey found that 53.46% of workers’ comp stakeholders believe new workplace safety challenges to be a primary concern for their organization.
The phrase “new workplace safety challenges” covers a variety of trending issues in workers’ compensation, from workplace marijuana use to telecommuting, safety considerations and fears over communicable disease. Workplace violence was another issue respondents listed as a recent safety challenge.
6) Comorbidities and Poor Worker Health
Combating comorbidities remains a major challenge for workers’ comp professionals. Over 52% listed it as a primary concern and 71% said it was a major medical program priority, up from 46% in prior surveys.
Comorbidities were the second biggest barrier to recovery, with 52% of respondents naming it a hurdle, and the second most worrying type of claims complexity.
At the heart of tackling comorbidities is a simple mission: get workers back to health and back on the job as quickly as possible.
“We see more workers who have chronic conditions, such as hypertension and diabetes” said Healthesystems’ Dr. Sacalis. “And, unfortunately, mental health concerns are now more prevalent across the board, including in workers’ comp.”
“This is why it’s so important to identify injured workers who are at risk and intervene as early as possible. A full recovery requires treating the whole patient.”
7) Insurance Industry Labor Shortage
The commercial insurance industry was preparing for a talent shortage of 400,000 workers even before the Great Resignation began making headlines across the country. Now, 56% of insurance companies said they had plans to increase staff last year, per an Insurance Information Institute report.
There continues to be a lot of turnover in the industry — so much so that 49.27% of survey participants believe the insurance industry talent shortage to be a top concern.
Claims professionals are feeling the effects of the talent shortage most acutely. Sixty percent said there are too many claims to manage, up from 40% who said the same in last year’s survey.
“Reducing the burden on front-line claims staff is so important,” said Kennedy. “Automating appropriate tasks and providing reliable clinical decision support allows claims professionals to put their time and attention where it is needed most.”
A number of negative outcomes can occur when claims professionals are overwhelmed due to a lack of resources. Injured workers may take longer to recover and may be more likely to pursue litigation, making it important to develop a strategy for improving efficiency and supporting claims staff.
8) Increasing Regulation and Expanding Coverage Requirements
Number eight on the list of challenges was increasing regulation and expanding coverage requirements. More than 47% of participants named this a top challenge.
Workers’ compensation regulations are always shifting. But in recent years as states tried to manage the COVID-19 pandemic a number of new laws came into play, possibly pushing regulation into the list of top concerns this year.
“Expanding presumption laws continue to broaden the responsibility scope for the workers’ compensation industry,” said Andrea L. Shopher, director of excess workers’ compensation for Safety National.
Insureds with multi-state programs may find shifting regulations difficult to keep up with, especially since each locality t may have differing requirements.
9) Outdated Technology and Insufficient Technological Support
Workers’ compensation has long struggled to keep pace with group health when it comes to adopting innovative technology solutions.
“Some employees and stakeholders are resistant to adopting new technologies. This can lead to a lack of support for new initiatives and uptake of new technologies,” Gradient AI’s Wiswell said.
In the past, old ways of doing things seemed to get the job done. Now, insurance personnel and provider shortages, increasingly complex claims and ever-changing regulations are highlighting the need for automation and other new tools. Over 41% of survey respondents named outdated and insufficient tech as one of their top five challenges.
Wiswell identified four types of new technologies that can help improve efficiency and claims outcomes: virtual and remote technologies, analytics and artificial intelligence services, predictive modeling and automation.
These tools can help adjusters manage claims remotely, identify potential claims obstacles, model outcomes and automate repetitive tasks to help reduce the strain of the industry talent shortage.
“These technologies are helping organizations to automate repetitive tasks such as data entry and document management, freeing up adjusters to focus on more complex tasks,” Wiswell said.
10) Cybersecurity Risks
Increased use of technology can bring increased cyber exposures; workers’ comp isn’t immune to the scores of cyber risk challenges companies have faced in recent years.
Cybersecurity risks rounded out the list of top challenges workers’ compensation stakeholders faced this year, with 29.14% naming it as a pressing threat.
These fears may be driven by the increased uptake of telemedicine and the growing number of adjusters and claims professionals who are working from home, where digital and online setups may not be as secure.
As the industry continues to invest in new technologies, fears over cyber risks amongst industry professionals will be an area to watch.
Medical issues are weighing on workers’ comp professionals’ minds this year. The top three challenges selected by attendees surveyed at National Comp all related to the medical system.
Claims process improvement and the insurance industry talent shortage were two other issues that ranked highly for survey participants. Respondents were keen to remark on the talent shortage’s connection to other major industry challenges, including litigation rates and tackling claims complexities.
In the face of many of these issues, workers’ compensation stakeholders are turning to digital tools to manage talent shortages and increase satisfaction for injured workers and their employers alike.
More than 33% of respondents said that technological integration between providers and partners has been the most beneficial program they’ve implemented over the past two to three years. Another 28.17% named analytics and artificial intelligence usage as their top improvement.
“Workers’ comp organizations understand that technology is essential to simplifying injured worker care,” said Kennedy. “Automation, analytics, mobile apps, and telehealth, to name just a few, will all play a role in further streamlining the processes between payers, providers, and patients.
Stakeholders are invested in using these tools to drive improvements in injured worker experience and to provide quality care that helps employees get back to work in a timely manner. &
Readers who would like to receive a copy of the full survey report when published in February, can request a complimentary digital copy from Healthesystems.
About the Survey
In all, 503 stakeholders took part in the survey, representing every facet of the workers’ comp industry including executives, senior claims leaders, front-line claims professionals and adjusters, brokers and agents, medical providers, clinical case managers, attorneys, medical program managers and procurement professionals.
Insurance carrier response increased from 15% to 21% between this year’s and last year’s survey. Participation from health care providers, claims leaders and clinical case managers also increased while responses from employers and risk managers held steady.