We kick off 2019 by discussing 20 issues the workers compensation community should be monitoring. Our list includes both employee benefits and workers compensation issues, as these two areas inevitably overlap. Later in the year, several of these topics will be developed into individual Out Front Ideas with Kimberly and Mark webinars.1
Just because an issue is not on our list does not mean it's not important. Our goal is to highlight issues that we feel need more attention. Thus, while opioids are an important issue, we do not discuss them here because they are already receiving tremendous national attention.
Health Care 2020
After 2 years into this administration, the Affordable Care Act remains the law, although lawmakers and the administration have reshaped parts of it through legislative, regulatory, budgetary, and legal actions. Health care was a leading campaign conversation during the midterm elections in 2018 and, expect it to top the list in the 2020 presidential election.
As of January 4, all but 14 states have adopted Medicaid expansion. This is something we expect to continue into 2019.
Addressing the cost of prescription drugs will be a priority in 2019. While we are a long way from bipartisan consensus on how to address the pricing challenges, big pharma is bracing for smaller, but significant, regulatory changes.
Finally, physician-led Accountable Care Organizations (ACOs) have continued to do well and are likely to increase in 2019. ACOs reward providers for desirable patient outcomes.
The 2018 elections may have a big impact on the workers compensation landscape in 2019. There were eight states where the party of the governor changed in the November 2018 elections. Many do not fully appreciate the impact this can have on workers compensation; however, these governors appoint the workers compensation regulators and administrative law judges. These positions have a very significant influence on the practice of workers compensation in their respective states.
In 2018, there were over 100 national bills introduced to expand presumptions for first responders. Many of these bills pertained to post-traumatic stress disorder. We expect a similar trend this year. One newer area of emphasis that we expect to see is a push to continue death benefits for surviving spouses of first responders after remarriage.
In terms of specific states, we are closely monitoring the following for potential workers compensation legislative activity in 2019.
California. Bills to erode costs savings provisions in the workers compensation statutes pass the California legislature every year. The question is: will incoming Governor Gavin Newsom veto those bills as the past two governors did? Governor Newsom is also very focused on creating universal health care for California residents, which could have a significant impact on workers compensation.
Illinois. The Democratic Illinois legislature and Republican Governor Bruce Rauner battled for his entire term over workers compensation. What will happen when Democratic Governor J.B. Pritzker takes office?
Alabama. In May 2017, a circuit judge ruled that Alabama's workers compensation statutes were unconstitutional because of the caps on weekly benefit and attorney fees. Since then, a bipartisan task force has been working to develop reforms to their workers compensation statutes that would address the areas that the judge felt were unconstitutional while, at the same time, preventing significant cost increases for employers. It remains to be seen whether legislative action on the task force recommendations will happen in 2019.
Federal. With the solvency of Social Security being a significant concern for the federal government, we have been waiting for Social Security to start looking into potential shifting from state workers compensation programs to the federal program. This appears to be happening now. There are currently 15 states that have a "reverse offset" allowing workers compensation benefits to be reduced if the person is receiving both Social Security Disability (SSDI) and workers compensation. In all other states, SSDI gets the offset. Legislation could quite possibly take away this reverse offset.
Psychology of Pain
Treating pain is much more complicated than prescription medication and physical therapy. Pain has biological, psychological, and emotional factors—often referred to as the biopsychosocial approach to pain or the biopsychosocial model. When patients focus on pain, pain worsens. Anxiety, fear, and a sense of loss of control contribute to pain. Research shows treating anxiety and psychological support reduces pain and the use of pain medication. And, while we know that the psyche has a tremendous role in pain, few patients receive treatment for the emotional and psychological aspects impacting pain.
Worldwide, the need for more effective pain treatment has led the pain treatment community to promote comprehensive treatment of pain and multidisciplinary pain care. Unfortunately, access to skilled providers and comprehensive pain care is a challenge in many parts of America. In addition, receiving payer approval for care is equally challenging.
Understanding a patient's response to pain earlier in the claim offers an opportunity to proactively create a meaningful holistic treatment plan. If the initial pain assessment reveals the patient has a high level of subjective pain complaints with limited objective findings, there is a likelihood the patient will end up in a chronic pain state in the future.
The following are a few suggestions to consider regarding the psychology of pain and workers compensation.
Workers Compensation and Pain Suggestions
Create a pain philosophy as part of your claims program. Engage the entire cross-functional claims team in the development of the program, including claims, clinical, legal, employer, occupational, and orthopedic providers. The pain philosophy and associated documents become part of the client service instructions.
Implement pain assessment tool(s). Initial and ongoing assessments are available.
Outline care pathways for holistic pain treatment.
Patient-centered care is a key to success. Communicate clearly and often with the injured worker. Transparency and empathy are important.
Identify a pain psychologist or clinical pain expert to consult, as needed, on pain cases and help guide the more complex cases.
Create a feedback loop or grand rounds approach to bring stakeholders together on a regular basis and assess the pain philosophy, outcomes, and opportunities for improvement.
Politics of Permanent Impairment
When the American Medical Section (AMA) Sixth Edition Impairment Guidelines were issued, experts hailed them as a very significant improvement in the evaluation of physical impairment. But they have also led to litigation around the country as plaintiff attorneys challenge the constitutionality of the guidelines because they can produce lower impairment ratings.
This leads to the question states need to be asking: what is the purpose of the impairment guidelines in their state? If the purpose is to provide a measurement of objective physical impairment, then the AMA Sixth Edition is the best tool for this. But, if the purpose of the impairment rating is to provide a permanent partial disability award that considers more than just objective impairment, then the AMA Guidelines alone are not the proper tool. The AMA Guidelines measure physical impairment, not the loss of access to the labor market, potential loss of earning capacity, or other subjective elements that have nothing to do with recovery from the physical injury.
Social Determinants of Health
In patient care, addressing social determinants of health is as important as the quality of the care that a patient receives. Social determinants of health are the conditions in which people are born, live, work, play, worship, and age that factor into overall health. Social determinants of health include socioeconomic status, education and literacy, access to healthy foods and health services, and social and physical environments. Increasingly, payers and healthcare providers are interested in more holistic care with the goal of improving health outcomes.
Economy's Impact on Workers Compensation
We are at record-low levels of unemployment and wages are climbing. Higher employment and wages mean a higher payroll. Higher payroll leads to higher workers compensation premiums.
However, higher employment rates also mean that we have more workers in the workforce who are not adequately trained and may not be in good physical condition. Because of this, some insurers are starting to notice a slight uptick in accident frequency rates. It will be interesting to see the data presented at the 2019 NCCI Annual Issues Symposium to see if we are, indeed, starting to see an increase in frequency rates.
As of January 1, 2019, 20 states increased their minimum wage. Higher wages could lead to more payroll and associated premiums. In addition, in states with a wage loss benefit, a higher minimum wage means decreased wage loss awards.
Employee Health Models
Benefits continue to be a talent attraction and retention tool for employers. Chief human resources officers understand that the health of an employee is directly related to productivity. The health and well-being of the employee population lead to productivity and, in turn, directly correlates to the top and bottom-line performance of the organization. Employee health models are evolving with employer-purchased care. This is happening because health insurers are not negotiating and managing costs in a way that employers can manage models directly.
Direct primary care (DPC) is a small but fast-growing movement of doctors who do not accept insurance and, instead, charge a monthly membership fee. Employers engaging DPC believe in the primary care health model from a treatment perspective and care coordination. Doctors have the incentive to prioritize prevention and provide high-quality, coordinated care. It is a cost-effective, value-based care model that avoids the fee-for-service traditional pricing model.
The National Business Group on Health estimates that over 50 percent of employers report having some form of value-based care in their health insurance program. Although we are hearing more about value-based care in workers compensation, be mindful of the difference between bundled pricing and value-based programs. "Value-based" care should have a quality care component and cost factor. "Bundled pricing" is a cost savings model.
Telemedicine is commonplace in employee health benefits today. Over 95 percent of large employers offer telemedicine solutions. While adoption varies, consumers who use telemedicine typically report a high level of confidence and satisfaction in their care.
Mega Claims and Rates
Industry data reports that the number of claims over $5 million incurred is increasing, and the size of individual claims is also increasing. It was not that long ago that a $5 million claim was a rarity and catastrophic injury claims tended to top off around $10 million–$15 million.
However, a combination of factors is leading to an increase in these numbers, including accident survivability, an increase in auto accident frequency, and advancement in medical treatment. Insurers are now seeing individual claims as high as $40 million, and these long-tail costs have a significant impact on premium rates.
In terms of forecasting workers compensation premium rates for 2019, overall the outlook is that rates will remain fairly flat with some states seeing slight rate decreases. However, both A.M. Best and Fitch have cautioned that increasing medical and litigation costs are eroding workers compensation insurer combined ratios and that 2019 will likely be closer to a break-even combined ratio than the last 3 years. If the data, ultimately, shows that accident frequency is increasing, that would be another factor that would impact the marketplace.
Leave of Absence
State and local laws, the talent war, and employee expectations are leading more employers to implement leave of absence programs. Employers offering paid leave report that the benefit helps with employee retention and reduces costs related to turnover and employee training. Another contributing factor to leave policies is the federal Tax Cuts and Jobs Act of 2017, which contains a tax credit for employers that provide qualifying types of paid leave to full- and part-time employees.
As more leave programs exist, the coordination of leave administration with job accommodations and workers compensation continues to be an issue to watch.
As we enter 2019, legal marijuana is more available than ever before. In October 2018, recreational marijuana became legal in Canada. After the November elections, there are now 10 states and the District of Columbia with legal recreational marijuana. In 2019, state legislatures in Connecticut, Illinois, Minnesota, New Hampshire, New Jersey, New Mexico, New York, and Rhode Island are all expected to consider legalizing recreational marijuana.
What does all of this mean for employers? Some percentage of your workforce is possibly impaired at work. The challenge for both employers and law enforcement right now is that the science of marijuana has not caught up to the social reality of legal marijuana. There are no widely accepted standards or standardized tests to determine if someone is impaired from marijuana.
Talent Training and Development
As an industry, we are experiencing an unprecedented amount of turnover due to the aging workforce. With turnover comes the need to train and prepare the next generation of claims handlers. It is important that we carefully examine existing training programs to ensure that they are adequately preparing people with the necessary skill sets to handle claims. Not only are statutes and rules important to learn, but soft skills are more important than ever. Rules and regulations are trained consistently, and system training is extensive; however, soft skills training is lacking and, often, absent.
Workplace violence is a problem that continues to get worse. We are not talking about mass shootings, which are rare. Instead, our focus is the day-to-day threat of violence faced by many workers. Physical assaults on the job are a growing problem in many industries—especially health care, K–12 schools, and retailers. Most are not aware of how bad the problem is becoming because it is not widely reported. Some workers feel it is part of the job, so they don't report the incidents. In addition, businesses and schools don't want customers and the community to think they are unsafe, so they don't talk about the problem.
We cannot begin to fix the problem of workplace violence until we acknowledge the extent to which it is happening and talk about the societal causes of the behavior. This is a very complex problem for employers.
In recent years, the discussion about diversity and inclusion has become mainstream. Conferences on the topic flood our inboxes, and many of our organizations have hired diversity officers. While the discussions are important and meaningful, we also must spend time digging into ways that we can train our staff to be more inclusive. One such way is to tackle the topic of them.
Unconscious biases are learned stereotypes that are automatic, unintentional, and deeply engrained in each of us. Since many of these prejudices exist beyond the conscious level and are a result of being brought up in a culture that harbors biases, we must first acknowledge that they, in fact, exist. Simply learning about our hidden biases is not enough. We must train colleagues to identify and build skills to overcome these biases.
The determination of whether a worker is an employee or an independent contractor is a challenge that has been around since the start of workers compensation. This issue is getting more attention now because of the gig economy. States and the US Department of Labor are very focused on this issue.
This is a very complicated problem for employers. The rules regarding what constitutes an independent contractor not only vary by state, but "independent contractor" can also be defined differently under a state's workers compensation than under their wage-and-hour rules. In addition, Internal Revenue Service definitions of an independent contractor are often different than the state regulations.
The Sharing Economy
When we speak of the sharing economy, organizations like Uber, Lyft,and Airbnb come to mind. However, the biggest potential impact of the sharing economy in workers compensation comes in the form of data.
Larger companies used to have a tremendous competitive advantage because they had access to so much more data, which enabled them to make more informed decisions. However, many InsurTech companies are data aggregators, gathering information from multiple sources and compiling it into something useful that can be analyzed and acted upon. The wide availability of data is a benefit to startup and smaller companies because it can help to level the information playing field. More data enables better analytics and better decision-making.
Globalization of Risk Management
We live in a global economy, and, as a result, risk management is becoming more globalized. Employers with operations in multiple countries are well aware of the challenges associated with globalization, including complying with a growing number of laws and regulations. However, even businesses that do not have physical operations in other countries can be subject to international laws and regulations if they have an online presence or work with vendors in other countries.
The Consumer Experience
Organizations placing a high priority on consumer experience and engagement are changing the way they create and design products, address customer service issues, and measure experience and engagement across stakeholders. These organizations often discuss design thinking as a strategy for innovation. "Design thinking" involves internal and external stakeholders, satisfaction and engagement levels, and efficacy and quality.
How often do you find injured workers at a conference sharing their experience with the system and claims process? Do injured workers have a voice at the table regarding processes and communications in which they are involved? Would turnover and employee satisfaction improve for claims organizations if the claims adjuster had a central role in workflow and product design?
As we consider the future of work, talent attraction, and retention, evolving from process to an empathetic engaging industry, we believe an emphasis on the consumer experience is paramount to success.
The old adage of "what gets measured gets done" is also true in the workers compensation industry. But the question becomes "are we measuring the right things?"
Future of Work
The future of work is an important conversation for all of us to consider in 2019. When you think of the future of work, what comes to mind? Machine learning, automation, technology, digital? How are our work cultures changing? Employees today want to feel connected—connected to each other, connected to their community, and connected to passions. Employees also want to perform purposeful work and to feel valued.
As workplaces evolve, our industry will also need to evolve in order to attract and maintain the workforce of the future.
Without question, we are experiencing more frequent and more catastrophic natural disasters than ever before. Last year, we saw a record hurricane hit the Florida panhandle and wildfires in California destroy entire towns. Disaster planning and response are an essential part of a risk manager's job. However, the significant and devastating nature of natural disasters requires an evaluation of current risk management programs. Risk managers need to build in different possibilities for contingency plans and also need to factor in what would happen if there was a significant and lengthy disruption in their supply chain. We need to be thinking of the unthinkable and preparing for it before it happens.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.
1 To listen to the complete Out Front Ideas with Kimberly and Mark "20 Issues to Watch in 2019" webinar, which was broadcast on January 8, 2019, please visit our archive.