4 Factors Influencing High-Cost Workers’ Compensation Claims

An injured worker’s injury type and social determinants of health, like economic stability, income, and living conditions, have been attributed to a significant impact on their recovery outcomes and the costs associated with the claim. A new study from the Workers’ Compensation Research Institute (WCRI) examines the effects of additional elements, like pre-existing conditions and injury complications, on contributions to claim costs.

“This study examined the top 5% of claims with medical payments within the first 36 months of injury, and while their representation of total workers’ compensation claims is small, they are responsible for a significant total of overall claims cost,” said Matt Sekula, Vice President – Workers’ Compensation Claims Strategy and Operations. “Many of the factors identified by WCRI that influence these claims can be proactively monitored, allowing stakeholders to advocate for better care management and thus a greater chance at an optimal outcome.”

When addressing the factors associated with an increased likelihood of high costs, stakeholders should closely monitor these four components.

1. Injury Complexity

Injuries may appear straightforward from the onset, but an individual’s pre-existing conditions can complicate severity, treatment, and recovery. Many injuries also have complexities from the start due to where the injury occurs in the body.

WCRI’s study found that the following can contribute to increased costs in claims (these figures are compared to costs associated with carpel tunnel syndrome):

• Fractures between the ankle and hip or pelvis, spinal fractures, and severe burns: 8-9 times more likely
• Herniated discs or disc disorders, neurological neck and back conditions, and spine pain, strains, or sprains: 4-5 times more likely
• Comorbidities: 33%
• Degenerative conditions: 46%

2. Resource-Intensive Care

The term “resource-intensive care claims” refers to situations when a claim’s medical payments exceed $10,000 for one or more months. As that care extends beyond 12 months post-injury, it is considered a late resource-intensive care claim. According to WCRI, late resource-intensive care “may indicate patterns of care that are inconsistent with treatment guidelines or expected practices.” It may also include complications occurring from the initial injury or treatment. WCRI found that these claims are 35 times more likely to have high costs than claims without resource-intensive care.

3. Lack of Care Coordination

Typically, when an injured worker is treated within the same healthcare organization, there is clearer communication and treating physicians can more easily collaborate on providing the best care plan. The likelihood of increased claim costs is often magnified when multiple healthcare systems are part of the treatment plan. Using the number of provider tax identifications (IDs) per claim, WCRI notes the following when considering the number of providers used:

• Four or more provider tax IDs listed during the first three months of treatment are linked to higher associated claim costs.
• When a claim has matching tax IDs for initial and subsequent physician visits, it is 33% less likely to have high costs than those with multiple providers listed.

4. Individual Characteristics

An injured worker’s age, gender, marital status, job tenure, and industry can moderately impact their recovery rate. Notably, an increasing number of workers aged 55 and up in the workforce contribute to higher injury severity rates. Compared to workers aged 35-44, this group has a 6% increased likelihood of a high-cost claim. Out of over 720,000 claims included in this study, the majority were attributed to males, consisting of 59% of the total claims.

Additionally, a worker’s associated industry, particularly those in construction, had a greater bearing on the likelihood of high claim costs. Construction workers were 45% more likely to have high costs than those working in manufacturing. Agriculture, forestry, and fishing employees held a 28% increased likelihood of increased costs.