"Out Front Ideas with Kimberly and Mark" is a complimentary webinar series and interactive forum that explores critical workers' compensation-related issues.
The first installment for 2018 covered workers' compensation issues to watch.
What follows are 10 of the issues we discussed when looking at workers' compensation trends that insurance and benefits professionals should follow in the coming year. Click here to listen to the entire webinar.
|No. 10: The healthcare industry continues to evolve.
The pace of change within healthcare is rapid, and the evolution is vast, encompassing everything from pharma to practice to technological disruptors.
Consolidation and mergers and acquisitions in the healthcare space will continue in 2018. As CVS looks to broaden with the acquisition of Aetna, do not be surprised if Amazon, Walmart and other large employers expand their reach into health as well.
Health systems have been merging for years. In some of the mergers, we are now beginning to see hospital and facility exits resulting in local disruption for patients, providers, insurers, and the benefit and risk programs of those impacted.
For many years, health plans have been in the business of delivering patient care. Probably the best example is Kaiser Permanente, operating as both a health plan and healthcare provider. Similar to UHG's announcement of their DaVita acquisition, we will likely see more payer/practice intermix in 2018. Drug companies are purchasing other drug companies and, given their R&D cycles, generic and biosimilar opportunities, we do not anticipate this to decrease.
Related: Workers' Comp 101
What's more, under Dr. Scott Gottlieb's oversight at the FDA, expect to see approval and safety pathways accelerated in 2018, which will enable speed to market for new generic drugs, digital health software, and medical devices.
A few additional hot healthcare-related topics will include:
- Scope of practice advancements for physician assistants and nurse practitioners given their underutilization.
- Competition for convenient, quicker, more-accessible options for care with growing emphasis on community care, home care, retail clinic care, and telemedicine.
- For most medical providers, revenues are flat while expenses continue to rise, prompting significant focus on efficiency. Offices and systems need to improve speed of delivery and agility at all levels.
- Value-based care models and value-based reimbursements. Examples in workers' compensation include physician/health system pay for outcomes and bundled payments arrangements. Health plans look at population health outcomes and continue to advance accountable care organization (ACO) models.
- Pharma continues to aggressively address the need to create value for outcomes related to drug pricing. The debate there continues. How much is a drug worth if it literally saves the life of a patient?
Four states in particular are expected to update workers' compensation laws this year. (Photo: iStock)
|No. 9: Legislative reform on the horizon
Thirty-four of the 50 state governors are currently Republicans. This, combined with the fact that insurance rates are down in most of the U.S., means we have not seen a significant push for workers' compensation reforms the last few years.
However, there are still some states where significant activity is expected in 2018.
- Florida will again attempt to fix the plaintiff attorney fee caps that were found unconstitutional by the state supreme court two years ago.
- Pennsylvania had the part of its workers' compensation statutes dealing with the evaluation of impairment found unconstitutional in 2017. Efforts are underway to correct this legislatively.
- Expect the workers' compensation reform battles between Illinois Governor Rauner and the Democrat-controlled legislature to continue. This is an election year for the Illinois governor.
- In California, it is Governor Brown's last year. Expect yet another push by the legislature to undermine prior workers' compensation reforms. Universal healthcare will likely be an issue in the 2018 governor's race and the outcome of this election could have a significant impact on workers' compensation in 2019.
We have seen a positive trend in states adopting treatment guidelines and drug formularies, which can help injured workers get proper, timely care and help to reduce unnecessary treatment. (Photo: iStock)
|No. 8: Treatment guidelines and drug formularies
In 2018, California, New York and Arkansas will all be implementing new treatment guidelines or drug formularies. Montana is also implementing a drug formulary but the timeline for this is not set yet.
Georgia, Pennsylvania, North Carolina and Louisiana all considered either treatment guidelines or drug formularies in 2017 and we expect them to revisit this again in 2018.
It's important to monitor the court decisions in your state as it is to monitor legislative activity. (Photo: iStock)
|No. 7: Judicial watch
Every year around the country, judges modify the practice of workers' compensation in their state based on their interpretation of the statutes. These interpretations can significantly expand or restrict workers' compensation benefits in the state.
Along those lines, challenging the constitutionality of workers' compensation statutes is a trend that is expected to continue in 2018. Last year, Pennsylvania joined the list of states to have a portion of their workers' compensation statutes found unconstitutional by the state supreme court. There is a case on appeal in Kansas right now challenging the constitutionality of a portion of their statute as well. It is worth noting that the basis for these constitutional challenges exists in many other states.
Finally, last year, a judge in Alabama declared the state's entire workers' compensation statutes unconstitutional. This was appealed, and the case settled on appeal, so that decision ultimately was rendered moot. However, the issues raised in that court case regarding benefit adequacy are something we could see again anywhere.
Evolving issues related to workplace violence and harassment are something to watch in 2018. (Photo: iStock)
|No. 6: Raising workplace violence awareness
Whether they are engaging consultants to assist with planning or conducting revised employee training, risk managers and Human Resources are working together to ensure they have a solid program in place. There is an uptick in patient attacks on healthcare workers. This is happening all too often, ranging from emergency room to mental health facilities and nursing home care settings.
Given that 2017 marks an unprecedented awareness of sexual harassment in the workplace, we are adding workplace harassment as an issue to watch. Employers small and large are looking at their sexual harassment policies, training, and complaint investigation processes.
Workers' compensation is a state-based system, and the variation between the states is something that has been attracting consistent attention. (Photo: iStock)
|No. 5: State-based system variations
Two people performing the same job for the same company in different states can receive significantly different workers' compensation benefits. The very definition of an employee varies by state. From the administrative side, a lack of consistency with regard to state forms, data templates and even the definition of disability is very challenging to payers.
The U.S. Department of Labor started looking into these issues in late 2016, but those efforts stopped after the election of President Trump. However, those issues are still very real and need to be addressed. Now is probably the best time to establish standards between state workers' compensation systems — now when the federal government is not pushing for it. If no action is taken, it is likely that the federal government will push for this in the future.
When it comes to pain management, one size does not fit all. (Photo: iStock)
|No. 4: Fresh approaches to pain management
Everyone is keenly aware of the opioid crisis and the importance of tapering narcotics, narcotics avoidance, formularies, and deaths related to opioids. 2018 provides the opportunity to advance our understanding of these issues and willingness to change treatment protocols for patients in pre-pain, acute pain, and chronic pain states.
Related: The opioid epidemic in workers' comp
Personalization of care and working in partnership with the patient, their family or support system, and providers to collectively create a treatment pathway for the patient is important to ensure success.
Multiple major hurricanes and widespread wildfires throttled the U.S. during 2017. Such events can have a major impact on local healthcare systems. (Photo: AP Images)
|No. 3: Getting ready for the next natural disaster
Last year (2017) saw unprecedented natural disasters in the United States.
Natural disasters can have a big impact on workers' compensation and healthcare systems, including the risks faced by first responders, the disruption to your workforce, challenges to the benefit delivery system, and supply chain disruption.
Every company has cyber risks. (Photo: Shutterstock)
|No 2: Facing down cyber threats
Cyber preparedness and recovery is now a daily priority for the CIO.
Cyber risk reaches beyond hacking and selling personal identifiable information on the deep dark web. It can be a life and death concern.
Health systems locally and worldwide were hit with ransomware in 2017 shutting down hospital and practice computer systems while demanding money in exchange for digital keys to unlock the systems. Patient data hacks have resulted in medical device malfunctions and treatment delays. A recent cyber attack on Merck impacted its ability to produce medicines. Workers' compensation payers, service providers, and stakeholders are equally at risk. Past history shows companies without a solid cyber insurance program put their business at risk. Companies and customers will place even greater emphasis on cyber risks in 2018.
Related: Protecting against cyber risks
Multiple brokers have indicated that the workers' compensation rate outlook for 2018 is relatively flat. (Photo: iStock)
|No. 1: Anticipating rate adjustments
For the last few years, workers' compensation rates around the country have been flat to down in most states. This is in spite of the fact that NCCI data shows that, over the last 20 years, the average medical and indemnity costs per lost time claim have increased at rates greater than inflation.
In 2017, two of the top 10 writers of workers' compensation posted multi-million dollar reserve increases to cover their developing losses. This attracted the attention of rating agencies such as A.M. Best who, in a September report, raised concern about the threat of inflation on workers' compensation tail costs and the impact this could have on industry reserves.
Multiple brokers have indicated that the workers' compensation rate outlook for 2018 is relatively flat. But with workers' compensation being such a long-tail business, premiums collected today must cover losses 30 years into the future. As losses continue to climb, it is inevitable that insurance rates will need to increase in the future to offset those losses.
Mark Walls is vice president of Communications & Strategic Analysis at Safety National. He can be reached by sending email to [email protected].
Kimberly George is the senior vice president of Corporate Development, M&A and Healthcare at Sedgwick Claims Management Services, Inc. She can be reached by sending email to [email protected].
See also:
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
