If you are employed in the workers’ compensation claims industry, now is the time to take note. The National Council for Compensation Insurance’s yearly market analysis report released at the end of 2015 offers some interesting insight into what is to come.
As of right now, available data from the past few years indicate that workers’ compensation claim payouts are currently stable in most regions. However, there is an overwhelming feeling of caution among claims insiders that this could change very rapidly over the next few years.
Why? The industry is going through a marked renaissance. Technology advances in how claims adjusters handle files, the amount of manpower needed to navigate highly technical claims, and even the type of treatments that claimants are seeking is changing at a rapid pace. Many states are also implementing regulations to make the process more cost-effective. These many changes have insurance companies bracing themselves for what’s to come.
Here are a few other issues to consider when to understand where the industry is headed.
#1: Affordable Care Act Affects Workers’ Compensation Claim Payouts
When talking about the state of the workers’ compensation claims industry, it is important to remember that healthcare billing always has an effect on claim payouts. With many aspects of medical industry costs changing in a post-Affordable Care Act environment, the reflection is bound to be seen in workers’ compensation claims payout statistics within the next few years. However, not enough time has passed to be able to evaluate the data, so many insurers are left guessing when it comes to accurately evaluate risk and charging policy premiums.
Takeaway – Not enough data exists to see how the ACA affects workers’ comp claims, but it is expected to figure into reports and claims handling practices in the next few years.
#2: Claimants Are Seeking More Expensive Alternative Treatments and Providers
Another reason why the work comp industry is changing rapidly is that claimants are more open to trying new treatments for their injuries versus standard care than in the past. This includes taking advantage of compounding pharmacies, which often charge higher prices than large pharmaceutical firms for similar medications. Many patients no longer trust these conglomerates with their health and choose local options instead, with personalized treatment that often comes with a heftier price tag for insurers.
Takeaway – As patients seek out alternative care option, the cost of claim payouts increases.
#3: New State Regulations Are Actually Stabilizing Payouts in Some Areas
New state regulations over the last few years can actually be credited for stabilizing claim payouts in some areas. The majority of jurisdictions who have either standardized rates for medical care when a workers’ compensation claim is involved or put cap limits in place have seen a difference, but it may not be enough. More data over the next few years needs to be compared in order to create a full picture. In addition, many states are adding new rules and policies all the time, so it could take some time before firm policy is really in place nationwide.
Takeaway – States are now creating more policies that limit medical bills and cap payouts of work comp claims, which could help stabilize payouts.
#4: Technology Exposures
Workers’ compensation insurers today are faced with one of the biggest complications they’ve ever seen before—data breaches. With so much claimant personal information contained within computer files, data security is of paramount importance for firms that handle these types of files. Furthermore, companies that outsource certain aspects of claims handling—such as workers’ compensation transcription—have to be extra careful who they do business with. This increasing need for extra protection is one cost that is definitely changing the face of the industry.
(Hint: Allegis Transcription takes data security very seriously. Learn more here.)
Takeaway – The cost of data security is rapidly becoming a cost factor for many workers’ compensation insurers.
To conclude, the workers’ compensation claims industry is at a good place for the moment, but an evolving atmosphere could lead to big changes in the next few years.