Complex claims have become the “common exceptions” in workers’ compensation — a paradox that defines one of the industry’s most pressing challenges. According to recent research from NCCI, while overall claim frequency declined by 5 percent in 2024, the claims that do occur are becoming significantly more expensive and time-consuming to resolve. Both medical and indemnity severity increased by 6 percent in the same period, and the average number of injury workdays lost has climbed by more than seven days over the past five years, reaching a total average of 80 days.

These trends point to a fundamental shift in the workers’ compensation landscape. Understanding what drives claims toward complexity, and what can be done to mitigate these factors, has become essential for payers, adjusters, and healthcare providers alike.

Complex claims in workers’ compensation are primarily defined by two factors: cost and duration that significantly exceed those of typical claims. Recent research from the Workers Compensation Research Institute (WCRI) illustrates the scope of this challenge. From a sample of 720,000 claims across 32 states, the top 5 percent of claims with seven or more days of disability accounted for 28 percent of total costs.

This top 5 percent represents approximately 36,000 claims with an average medical cost of $100,000, more than seven times higher than the average of the other 95 percent of claims. The disability duration period for these complex claims averaged 64 weeks, compared to just 18 weeks for standard claims. The average total cost for a complex claim now stands at $200,000.

What transforms a routine workers’ compensation claim into a complex, costly case? The answer is rarely singular. Complex claims emerge from an intricate web of medical, social, and systemic factors, often overlapping and compounding one another.

Treatment Timing and Type: The Critical Window

According to WCRI, surgery increases the likelihood of a complex claim by 335 percent. While surgery is involved in only 12.5 percent of claims, it accounts for 66 percent of medical costs in workers’ compensation.

Physical therapy presents a more nuanced picture. Utilization of physical medicine increases the chance of a claim becoming high-cost by nearly 250 percent —yet it’s worth noting that early intervention actually reduces both costs and claim duration.

Perhaps most striking is the impact of treatment timing on claim trajectory. According to WCRI, claims with one or more months of resource-intensive care occurring after 12 months are 35 times more likely to become high-cost claims, while claims that receive resource-intensive care within the first four months are 5.7 times more likely to become high cost.

Claims that received care from four or more health care providers during the first three months of treatment are 50 percent more likely to become high-cost claims than identical claims with three or fewer providers, according to WCRI. Conversely, claims that continued to receive physical medicine treatment from their initial provider were 33 percent less likely to become high-cost claims, underscoring the value of coordinated care.

WCRI research also shows that certain injuries carry inherently higher risks of complexity. Fractures between the ankle and hip increase the likelihood of a high-cost claim ninefold, while spinal fractures carry an 8.5-times increase. Severe burns, disc herniations, and neurological neck injuries each increase complexity risk by five to eight times.

Degenerative back conditions as a primary diagnosis incur the highest costs, with total claim costs reaching $150,455.

The presence of pre-existing or concurrent health conditions has emerged as one of the most significant drivers of claim complexity. Sixty-three percent of industry professionals surveyed by Healthesystems identified comorbidities as the top barrier to injured worker recovery, and 60 percent selected comorbidities as their most concerning source of claim complexity.

Fifty-eight percent of complex claims include at least one comorbidity, and the presence of one or more comorbidities increases the likelihood of complexity by 33 percent.

Mental health conditions add another layer of complexity, increasing claim costs by 2.5 times according to NCCI data. The relationship is bidirectional; workplace injuries can negatively impact mental health, and pre-existing mental health conditions can complicate recovery and treatment adherence.

Beyond traditional medical factors, Social Determinants of Health (SDoH) play an increasingly recognized role. These conditions, including housing stability, food security, transportation access, and education, are thought to comprise 80-90 percent of modifiable contributors to healthy outcomes, according to the National Academy of Medicine.

Medication Management Challenges

While opioid prescriptions have decreased dramatically in workers’ compensation, long-term opioid use is still associated with temporary disability duration more than triple that of claims without opioid prescriptions. Prescriptions for other drugs with abuse potential — such as gabapentinoids and benzodiazepines — have become more common, while utilization of high-cost specialty drugs is rising and driving up claim costs.

Polypharmacy adds further complication, particularly for injured workers with comorbidities or mental health conditions. Risks include therapeutic duplication, drug-drug interactions, and serious adverse events including serotonin syndrome, cardiac events, and severe respiratory depression.

Out-of-network care consistently emerges as a cost driver. According to the Texas Division of Workers’ Compensation, average costs for lost-time claims were $6,851 for in-network care versus $8,645 for out-of-network care. However, the functional impacts may be even more significant. Injured workers who received in-network care achieved a 93 percent return-to-work rate compared to 84 percent for those receiving out-of-network care, with functional scores four points higher.

Litigation has become a primary concern, with over 61 percent of industry professionals surveyed by Healthesystems citing it as their top challenge. WCRI’s 2024 study concluded that attorney involvement increases lost time days by 284 percent and inflates expense payments by 200 percent.

Demographic factors also influence complexity risk. Claims involving workers over 55 incur costs 6 percent higher than average, while workers with less than two years on the job experience 4 percent higher costs.

Strategic Approaches to Managing Complexity

While some complexity drivers remain beyond payers’ control, many risk factors can be effectively managed through strategic intervention:

• Machine learning and artificial intelligence can extract previously obscured data from medical records, providing clinical insights that inform automated escalation protocols and evidence-based treatment pathways.
• Operational tools that consolidate pharmacy and ancillary medical activity into integrated workflows support continuity of care at the claims management level.
• Maintaining high rates of network penetration and directing referrals to vendors that demonstrate the best combination of quality and cost is essential to achieving desirable outcomes.
• Clinical intervention, once risks are identified, can minimize or prevent complications.
• Clear, timely information helps injured workers navigate treatment options effectively.

Turning Understanding into Action

The rise of complex claims in workers’ compensation represents a significant challenge for the industry, but it is not an insurmountable one. The factors that drive complexity are increasingly well understood.

Some complexity drivers will remain beyond the industry’s control, but many can be effectively managed through proactive identification and strategic intervention. As complexity has increased, the tools available to address it have improved dramatically. The challenge now is implementation — translating understanding into action through comprehensive approaches that address multiple complexity drivers simultaneously. In doing so, the industry can work toward a future where complex claims, rather than becoming more common, become genuinely exceptional once again.

For a deeper look at complex claims and the factors driving them, access the full article by Healthesystems here. &