These Are the 10 Most Pressing Challenges for Workers’ Comp, According to 500 Industry Stakeholders
Over the past six years, Risk & Insurance® has partnered with Healthesystems to survey workers’ compensation stakeholders from across the industry.
This year was no different. Employers and their insurers, executive leaders, government regulators, health care providers and claims adjusters are just some of the people who participated in the survey, which was conducted at the 2023 National Comp conference in Las Vegas from September 20 to 22 and online through the end of October.
What we found? Talent shortages — within the workers’ compensation industry and within health care organizations — are still looming large. Industry stakeholders are also concerned with managing comorbidities, increasingly complex claims and mental health conditions. Legal and regulatory concerns and litigation remain major issues for the industry as well.
Let’s dive in to the top 10 challenges the survey identified.
1) Health Care Provider Shortages
Survey respondents named health care provider shortages as the top major challenge for 2023, as 57.2% of respondents cited it among their top five concerns.
Shortages exist across health care professions and specialties. Bureau of Labor Statistics data has found that the U.S. could be short 200,000 nurses and 124,000 physicians by 2030. Orthopedic surgeons — a specialty commonly needed in workers’ comp — could see a shortage of 5,080 doctors by 2025, the Health Resources and Services Administration found.
Retirements, burnout and other issues are all contributing to these talent shortages. Sixty-three percent of doctors and nurses report moderate or extreme burnout at work, per a 2023 survey. When health care staff members exit the industry due to stressful work conditions, they might be leaving the industry permanently, exacerbating staffing challenges.
In workers’ compensation, physician and other health care shortages could result in it taking longer for patients to get the care they need, which can cause recovery and return-to-work delays. If a worker can’t see the doctor they need, they can’t heal.
2) Workplace Safety Challenges
Other workplace safety challenges came in second place in the list of the top 10 challenges. Remote work concerns, marijuana (possibly the potential for marijuana usage on the job), the risk of communicable diseases and the threat of workplace violence are all areas where workers’ comp professionals are concerned about employee safety. Just over half of respondents — 51.9% — named it a top five challenge.
Worries over these safety issues are largely a reflection of our changing working world.
In 2023, 12.7% of full-time employees were fully remote, while 28.2% worked part-time from home, part-time from the office, according to Forbes Advisor. It’s natural that workers’ comp professionals would be concerned about the ergonomic and other safety risks of working remotely.
Likewise, recreational marijuana usage is now legal in more states than ever before. Without reliable tools to test for cannabis impairment, workers’ comp teams will be concerned about injuries resulting from drug use on the job.
3) Mental Health Conditions and Coverage
A new entrant compared to last year’s list, mental health conditions and coverage ranked as the number three concern for industry stakeholders. Of respondents, 51.7% named addressing mental health issues and coverage a top five concern.
The issue also ranked fourth on the list of priorities stakeholders offered for their medical management programs. Over 31% said implementing a mental or behavioral health program is among their top priorities for the next three years. Research shows there is an explicit relationship between physical injury and mental health, so it stands to reason that this is becoming a bigger priority for workers’ comp.
While many in the industry care about addressing mental health concerns under a biopsychosocial or whole-person care model, others may be rightfully concerned about when these conditions are compensable.
Industry stakeholders will likely continue to support addressing mental health conditions that could delay recovery while drawing a careful line between what is and is not covered by workers’ compensation benefits.
4) Workforce Recruitment, Retention and Succession
Coming in fourth on the list of the top 10 most pressing industry challenges survey respondents identified is workforce recruitment, retention and succession; 49.9% of participants listed it among their top five concerns.
Workers’ compensation is reckoning with talent shortages and knowledge gaps created by a combination of early retirements and a lack of young people entering careers in insurance. Industry leaders are looking for ways to combat this problem, and 36.1% of respondents said that their organizations implemented employee retention and recruitment programs over the past two to three years.
These programs can take a variety of shapes. Some companies might be improving benefits, reducing workloads and enhancing salaries to increase adjuster retention. Others may implement training and internship programs to recruit younger workers to the industry.
5) Workers’ Comp Litigation
Concerns over litigation appear to have fallen slightly since last year’s survey, when more than 55% of respondents labeled it a major issue. This year, only 47.2% listed it among their top five challenges, causing the issue to fall from the number four slot into fifth position.
It’s clear litigation is still a pressing concern. But the industry has found ways to help reduce the strain. More than 60% of respondents said artificial intelligence and advanced analytics could help payers accumulate evidence of suspected fraudulent activity for further investigation and prosecution by state authorities.
Additionally, workers’ comp stakeholders are prioritizing efficiency and speed in coordinating communication in the claims process to help reduce litigation, which often stems from delays in disability payments or treatment authorization. Improving communication between injured workers, claims professionals, medical providers and employers can help reduce litigation and improve claim and medical outcomes.
6) Poor Worker Health and Comorbidities
The number six challenge is poor worker health and comorbidities. It’s easy to see why 45.9% of respondents ranked this as a major issue. In 2020, researchers found that more than half of U.S. adults had at least one chronic health condition such as obesity, hypertension, heart disease or diabetes, among others. Over 27% of adults had more than one of these conditions.
Comorbidities can complicate workers’ compensation claims. A worker with a comorbidity may take longer to recover, or they may need specialized care to help manage their injury. If they take medications to manage their comorbid condition, pharmacists will need to check to make sure they don’t interact with the drugs they need to take to treat the workers’ comp injury.
Last year, comorbidities also ranked sixth in the list of respondents’ top 10 concerns. This year, over 65% said it was the biggest barrier to injured worker recovery. Additionally, 35.5% said managing chronic conditions or comorbidities is a priority for their medical management program over the next two to three years. Surprisingly, this was down from the 71% who said it was a major medical program priority last year.
7) Complex Claims
Complex claims ranked number seven in workers’ comp professionals’ top 10 challenges, as 45.0% of respondents listed it as a major concern.
A variety of factors can lead to a complex claim. Comorbid conditions could complicate treatment, a worker might struggle with mental illness or other biopsychosocial factors, or they may have suffered a catastrophic injury that requires intensive treatments.
Whatever the case, industry professionals know what they need to more effectively manage these issues. Mental health conditions and comorbidities were the top two most concerning contributors to complex claims, according to 65% and 63% of survey participants, respectively.
Thirty-one percent said that implementing mental/behavioral health programs is a medical program management priority, and 30% said that identifying and managing social determinants of health is a priority. Additionally, 22.6% said they want to create clinical outreach and intervention programs. All of these initiatives can help detect complex claims, allowing adjusters to intervene before they spiral.
8) Medical and Pharmaceutical Price Inflation
The high inflation rates on a variety of goods and services has been a major challenge for the general population over the past few years, and there has been some concern among workers’ comp stakeholders about how increasing costs could affect medical spend. Medical price inflation was the number two industry challenge last year, when 58% of participants cited it as a major challenge, but it appears that those concerns have lessened. This year, a smaller 44% slice of respondents listed medical and pharmaceutical price inflation as one of the 10 most pressing industry challenges.
Though health care inflation trailed behind that of other goods on the Consumer Price Index in 2021 and 2022, it’s starting to catch up. Medical service prices had about a 3% inflation rate this summer. Comparatively, other goods and services saw price increases of about 3.7%.
Workers’ compensation payers generally seek to balance cost-containment strategies with a desire to provide quality comprehensive care. Of survey respondents, 56.7% named cost containment as a top three goal for their pharmaceutical programs, and more than 41% of adjusters said inflated prices were an obstacle to getting injured workers the medical care they need.
Workers’ comp health care service areas that have been particularly hard-hit by inflation are home health and transportation services, largely due to a shortage of workers for these labor-intensive services.
9) Increasing Regulation and Expanding Coverage Requirements
The ninth most pressing challenge for workers’ compensation stakeholders is increased regulation and expanding coverage requirements; 30.9% of respondents cited it as a major concern.
The legal and regulatory landscape in the industry is always shifting. Last year, NCCI tracked 844 state and federal bills that would affect workers’ compensation and 243 proposed workers’ compensation-related regulations. Of those, 95 proposed regulations and 98 bills were enacted before the end of July 2022.
Many claims professionals work in a multi-jurisdictional claim center, which requires them to keep up with different sets of rules, forms and utilization review standards, adding complexity to the claim handler’s day-to-day work.
In addition, there is a growing trend toward presumptive coverage for first responders for a variety of health conditions, from PTSD to cancer.
According to Sandy Shtab, VP, industry and state affairs, Healthesystems, “a single claims professional may receive two claims for two different employees with identical diagnoses and injury exposure, yet depending on their occupation, one claim might be compensable while the other claim is not.”
Keeping up with state regulations is essential and can be a challenge for claims adjusters. More than 19% of adjusters said legislative and regulatory requirements are an obstacle when facilitating medical treatment for injured workers.
10) Operational and Technical Efficiency
The final challenge industry stakeholders ranked in the top 10 is operational and technical efficiency, which 29% of survey participants deemed a challenge for the industry.
This appears to be an area of focus for many organizations, as evidenced by the 61% who reported that their organizations have benefited from newly implemented claims processing and operational efficiency initiatives. With talent shortages top of mind, it makes sense that industry stakeholders want to make sure their organizations are operating efficiently and have the technical expertise they need to swiftly manage claims.
New technologies will likely play a role in continuing to achieve these goals. Industry stakeholders expect that advanced analytic, machine learning and artificial intelligence tools will help workers’ compensation professionals summarize medical reports and records, create a more individualized experience for injured workers, and automate referrals and authorizations, all of which could increase efficiency.
Talent shortages on both the medical provider side and the claims management side are a major concern for workers’ compensation pros this year. Two of the top 10 challenges stakeholders identified related to talent shortages, and others — like operational efficiency and a need to manage increasingly complex claims — can be connected back to the issue of not having enough experienced medical providers or claims professionals.
Outside of the top 10 concerns, survey respondents identified rapid technological change and climate change’s impact on work conditions and occupational health as major concerns. Just over 21% of respondents named climate change’s effects on the industry as a top concern, and 19.0% expressed apprehension about rapid technological change. Digital tools are already playing a key role in addressing talent shortages, and industry leaders are considering how new and advancing technologies might further improve efficiencies and provide a better experience for claims staff and injured workers.
Though some respondents were concerned about technological change, many think technology is a boon for the industry. Over 68% of respondents said that tools that automate claims processes will continue to be important for their medical management programs over the next three to five years.
Other tools — like telemedicine, wearable technologies, and digital medicine or smart devices — also garnered interest from respondents. &
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.