Insurers are all too familiar with the problem: Workers’ compensation medical costs are rising; as noted in the first installment of this series, they’ve more than tripled.
There are several underlying reasons for this, some of which can be attributed to the following megatrends.
Demographics. The U.S. workforce is getting older, and as it ages a larger proportion of workers suffer from long-term medical problems and pre-existing conditions that complicate an injured worker’s recovery and increase workers’ compensation medical costs. The workers’ comp system is paying the price for this trend.
Medical innovation and utilization. These innovations — often enabled by technology — are wonderful for society, but they’re very expensive. Innovation alone is not the only cause. What is crucial to the delivery of a quality outcome — and absolutely crucial to the bottom line — is making sure medical services are absolutely necessary and are not over-utilized. Medical necessity reviews can mitigate this issue, but there is no industry-wide system for conducting these reviews for all claims.
Fraud. Unfortunately, the workers’ comp system is a target for dishonest people, and the problem is getting worse. Even subtle anomalies in provider billing patterns can include traces of fraud and often go unrecognized.