As an artificial intelligence (AI) company setting a new standard in forecasting medical treatment and costs for claims, it’s our business to be informed about trends in medical exposure in the workers compensation insurance sector. Naturally, we are focused on the data presented on this topic.
In an analysis of state differences and trends across 18 states, it was found that more surgeries related to workers compensation accidents/ injuries, are occurring on an outpatient basis, consistent with trends found in group health. While the frequency of surgeries decreased across many states, there is a wide variability in facility fees costs. Outpatient facility fees represent a median 17% of the total cost of medical care provided. A shift in payments from hospital outpatient facilities to outpatient ambulatory care centers (ASC) occurred from 2016, consistent with initiatives promoted by the ACA. As more workers compensation payers develop ASC networks, more treatment may be expected to shift to ASC facilities, causing facility fee costs to decline, having a positive impact on medical costs.
According to WCRI, the average lump sum workers comp settlement is $50, 000. Typically, medical costs are 41% of the total claim cost, 44% for indemnity (income replacement) benefits and the remaining 15% for benefit delivery defined as litigation and medical management fees such as bill review, UR, and nurse case management services. In most states, medical cost containment fees were 15-20% of the total medical payments, or 9% of the total claim costs. Among the 18 study states, Medical cost containment expenses have increased 5% per year per claim since 2005, comparatively, a greater increase than the medical consumer price index for inflation of medical care.
This finding may corroborate with the increase in claim severity documented in the 2018 NCCI State of Line Report which shows an increase in average workers compensation lost time claim severity year over year, a 175% increase over a 10-year period between 2007-2017. If this trend continues, the average cost per claim will only continue to rise, suggesting that much more needs to be done to both decrease the severity of injuries in the workplace and develop more efficient methods of managing claims to reduce overall claim costs without compromising the quality of care delivery and outcomes.
Herein lies the opportunity for digital transformation in claims processing and partnerships with InsurTech companies to bring new solutions to old problems and transparency to the claims vertical.
As innovation becomes core to the financial strength of insurers, AM Best is requesting comments on draft criteria for scoring and evaluating a company’s level of innovation. AM Best recognizes that innovation ensures the future viability of insurance during this era of digital transformation.
Care Bridge International’s technology platform uses artificial intelligence (AI) to forecast medical reserves in minutes with actionable triggers that manage risk timely. Such innovation drastically improves operational efficiencies that support claim and risk management linked with promoting a company’s long-term financial growth and financial stability.
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