COVID-19’s Impact on the California Workers’ Compensation System: WCIRB Updates Its March 2022 Study

By Hon. Susan V. Hamilton, Former Assistant Secretary and Deputy Commissioner, California Workers’ Compensation Appeals Board

The California Workers’ Compensation Insurance Rating Bureau (WCIRB) has followed up with significant updates to its March 2022 study on medical treatments and costs of COVID-19 claims.

Background

In March 2022 the WCIRB released its study entitled, “Medical Treatments and Costs of COVID-19 Claims and an Early Look at ‘Long COVID’ in the California Workers’ Compensation System.” (https://www.wcirb.com/sites/default/files/documents/wcirb-longcovid-impactreport-ar-2.pdf) The objective of that study was to provide better understanding of the medical costs and treatment patterns of COVID-19 in California’s workers’ compensation system, as well as the potential cost impacts and prevalence of “long COVID.” The study examined a sample of approximately 6,000 COVID-19 claims in its database with a date of injury between March 2020 and March 2021 that incurred medical payments. Most of the claims (90%) were for mild COVID-19 infections that did not require hospitalization. However, 4% of the claims required hospitalization without an ICU stay, another 4% required hospitalization with an ICU stay, and 2% were death claims. The study made the following key findings:

First, when compared to non-COVID-19 workers’ compensation claims, COVID-19 compensation claims were more likely to involve hospitalization and fatality and were more concentrated among workers aged 50 and older.

Second, for claims with medical payments made during the first six months of injury, average payments on COVID-19 claims were almost twice as high as those for non-COVID-19 claims, which was largely driven by a higher share of COVID-19 claims involving hospitalization and fatality.

Third, at six months from the initial date of treatment, however, COVID-19 claims generally had lower average medical payments than non-COVID-19 claims.

Fourth, COVID-19 death claims had higher average medical costs than their non-COVID-19 counterparts, due in large part to higher inpatient costs and longer hospital stays prior to the fatality.

Fifth, within six months of the first medical treatment, COVID-19 claims closed faster than their non-COVID 19 counterparts of the same severity apart from death claims. Closed COVID-19 claims that involved hospitalization or death had higher average claims costs than closed non-COVID-19 claims that also involved hospitalization or death.

Sixth, COVID-19 patients with comorbidities were much more likely to be hospitalized, and among those hospitalized, COVID-19 patients with comorbidities had on average 25% higher inpatient costs than COVID-19 patients without co-morbidities.

Seventh, at four months post-acute care, 11% of workers with mild COVID-19 infections received medical treatment for long-COVID symptoms in the workers’ compensation system. The percentages were much higher for those workers who had been hospitalized without ICU care (36%) and those hospitalized with ICU care (40%).

The March 2022 study analyzed a claims dataset that largely pre-dated the availability of COVID-19 vaccines and other treatment modalities. Even within the limitations of the available claims database, the study’s authors were able to gain insights into the prevalence of long COVID and the costs (medical and indemnity) associated with long COVID. At the conclusion of the study, the authors stated their intent to update their analysis and explore estimating the extent of permanent disability associated with COVID-19 in the workers’ compensation system.

2023 Update

The initial study has been updated and it was recently released by the WCIRB (https://www.wcirb.com/sites/default/files/documents/wcirb-report-long-covid2023_ar.pdf). The 2023 update is especially informative for several reasons. First, the dataset available to the authors included a larger number of insured COVID-19 claims with medical payments (10,000) over a longer period (April 2020 to December 2021). Second, the significance of the 2023 update’s study period in comparison to the March 2022 study is the inclusion of claims after vaccines became more widely available to California workers. Third, the 2023 update examines the prevalence of long COVID over a 12-month post-acute care period, as opposed to 4 months in the original study. It also provides better understanding of the nature of long COVID and the characteristics of workers experiencing long COVID. Further, the 2023 study estimates the prevalence of long COVID among workers being treated in the California group health insurance system to validate the estimates in the workers’ compensation system. Finally, the 2023 update estimates the impact of long COVID on permanent disability. The significant findings are reviewed below.

Comparison of Medical Treatments and Costs of COVID-19 Claims in 2020 and 2021

The study used WCIRB’s medical transaction and indemnity database to identify insured COVID-19 claims with an injury date between April 2020 and December 2021 that incurred medical payments. Claims in which only indemnity was paid (41%) were excluded as were denied claims. Approximately 10,000 COVID-19 claims were reviewed.

Mild Cases

Interestingly, the clinical severity of the claims was quite similar in 2021 when compared to 2020. In both years, 91% of the claims were identified as “mild,” meaning no hospitalization was required and the main types of treatment during the acute phase (i.e., the first 30 days following initial treatment) were physician services, medical supplies and equipment, accounting for 80% of payments. Pharmaceuticals accounted for only 2% of payments. The average medical payment for mild COVID-19 cases in the first six months was $759 in 2020 and $941 in 2021. The study explains that the increase in medical payments seen in 2021 is not attributable to increased treatment but can be explained by the 2021 update to the Medicare-based fee schedule that increased the reimbursement allowance for office visits.

Severe or Critical Cases

Those COVID-19 claims identified as “severe” (hospitalization but no ICU stay) or “critical” (hospitalization with an ICU stay) for years 2020 and 2021 were also reasonably comparable. In 2020 3.3% of the claims were classified as severe in comparison to 4.3% in 2021. However, in 2020 3.3% of the claims were identified as critical, but in 2021 only 2.7% of the claims were critical. The study suggests that the shift in the distribution of severe and critical claims seen in 2021 is explained by more effective triaging and treatment of patients in the second year of the pandemic. Also, the availability of vaccines and immunity from prior infections likely lowered the risk of critical illness from a COVID-19 infection. Not surprisingly, the costs of inpatient care are quite high due to such factors as the length of hospital stay required, the intensive nature of the medical treatment needed, and whether ventilation is necessary. The average payment for COVID-19 inpatient care for severe cases was $25,490 in 2020 and $21,017 in 2021. However, the average cost of inpatient care for critical cases was significantly higher in 2021 ($109,937) when compared to 2020 ($71,645). The study’s authors attribute this finding to some very costly COVID-19 claims in 2021.

Death Claims

Finally, the percentage of COVID-19 death claims in 2020 and 2021 were nearly identical. 2.2% in 2020 and 2.1% in 2021.

Estimated Prevalence of Long COVID in the California Workers’ Compensation System

Long COVID is the common name used to describe a condition formally known as “post-acute sequelae of SARS-Cov-2 infection” or PASC. Essentially long COVID refers to a constellation of persistent symptoms in various body systems that can either emerge or linger long after the initial infection from COVID-19. The 2022 study identified long COVID as having the potential to significantly impact medical costs and permanent disability among workers infected with COVID-19 and recommended further research.

The updated study found that 12% of COVID-19 claims with mild infections involved long COVID over one year following the initial period of acute care. Not surprisingly, the estimated prevalence of long COVID was found to vary, based on the severity of the initial infection. Severe COVID-19 claims (hospitalization without ICU care) have an estimated long-COVID prevalence rate of 38%, and critical COVID-19 claims (hospitalization with ICU care) have an estimated long-COVID prevalence rate of 41%. According to the study, these estimates were like those reported in other jurisdictions. The ongoing post-acute care often involved the respiratory, musculoskeletal, and neurologic systems. Data showed that medical treatment was provided for the emergence of new symptoms as well as periods of relapse. Sixty percent of mild claims received medical treatment for multiple long-COVID symptoms, and nearly eighty percent of COVID-19 claims with hospitalization received medical treatment for multiple long-COVID symptoms.

The study also identified the frequency of treatment of long-COVID symptoms by claim severity. In mild claims (no hospitalization) treatment for respiratory symptoms was provided in over 50% of the claims. For those claims that required hospitalization (severe and critical), respiratory symptoms were treated in 71% of the claims. Musculoskeletal and neurological symptoms were treated in about 25% of claims that required hospitalization and in about 17% of mild claims. Other symptoms treated include circulatory and psychiatric.

The study also examined how long the post-acute symptoms persist in long-COVID claims. The study’s authors reviewed medical treatment received for long COVID at 30-day intervals. For mild COVID-19 claims, the percentage of claims that received medical treatment for long-COVID symptoms declined from 12% in the first month to 2% by 12 months. For COVID-19 claims that involved hospitalization, 20% continued to receive medical treatment for COVID-19 symptoms 6 months following acute care, and 12% continued to receive medical treatment by 12 months. This information is particularly relevant to forecast the potential costs of a long-COVID claim. Additionally, many of the symptoms experienced by workers with long COVID can affect productivity and daily life.

The Characteristics of Workers Experiencing Long COVID and the Likelihood of Developing Permanent Disability

The updated study confirmed what many of us suspected—that the likelihood of developing long COVID increases with age. Ten percent of workers aged 30 to 39 who were previously treated for COVID-19 received treatment for long-COVID symptoms. Nearly 20% of workers aged 50 to 64 who were previously treated for COVID-19 were treated for long-COVID symptoms. Twenty-five percent of workers over 65 who were previously treated for COVID-19 received treatment for long-COVID-symptoms. The authors explain that these findings are consistent with published research. Likely, they can be explained by the fact that older workers tend to have pre-existing comorbidities. There is a caveat, however: Although vaccines became available early in 2021, 85% of the long-COVID claims in the study sample had the initial infection in the pre-vaccine period. The authors explain that their findings of the risk of long COVID across age groups may not reflect the full effects of vaccines and boosters.

Next, the study estimated the prevalence of long COVID by gender. Overall, female workers were more likely to receive treatment for long-COVID symptoms during the 12-month post-acute period. The key driver of this finding is the significantly higher percentage of female workers than their male counterparts with mild COVID-19 infections who were treated for long-COVID symptoms. The authors suggest this finding may be explained by the high number of COVID-19 claims filed by healthcare workers and the high percentage of female workers in that industry.

The study also considered the risk of long COVID by industry sector. The healthcare industry accounts for 54% of long-COVID claims in the workers’ compensation system. Other industries impacted, but to a lesser degree, were manufacturing and retail. Healthcare workers have been on the front-line through the pandemic, as have many manufacturing and retail workers.

Vaccines became available for healthcare workers in early 2021 and were mandated for all healthcare workers in August 2021. Although the study data does not reflect the vaccine status of individual workers, the authors found it reasonable to conclude that COVID-19 claims in the healthcare industry between January and May 2021 were more likely to involve healthcare workers who had been vaccinated. Using available claims experience during the vaccine period, the study found that healthcare workers who had a COVID-19 infection in early 2021 had a 14% lower risk of developing long COVID in the 12-month post-acute period than in 2020. However, workers in other industries who were less likely to be vaccinated in the early months of 2021 had a 27% higher risk of developing long COVID. These findings suggest that vaccination may protect workers against long COVID. The authors point out that published research shows some evidence of decreased risk of long COVID among vaccinated populations.

Another important finding is the percentage of indemnity (TD or PD) paid in a long-COVID claim compared to a COVID-19 claim without long-COVID symptoms. Ninety-one percent of COVID-19 claims with long-COVID treatment incurred TD or PD, while only fifty-six percent of the COVID-19 claims without long-COVID symptoms incurred TD or PD.

Similarly, the PD rating for long-COVID claims is higher than the PD rating in COVID-19 claims without long-COVID symptoms, and this finding holds true for both mild COVID-19 infections with long-COVID symptoms and hospitalized COVID-19 infections with long-COVID symptoms. In the case of hospitalized COVID-19 infections with long-COVID symptoms, the average estimated PD rating is 36% compared to 24% for COVID-19 claims without long-COVID symptoms.

While average incurred medical payments were higher for long-COVID claims in comparison to those COVID-19 claims without long-COVID symptoms ($7,108 versus $1,445), they were significantly higher for long-COVID claims with paid indemnity. In the case of long-COVID claims with TD benefits compared to other COVID-19 claims in which TD was paid, long-COVID claims eclipsed other COVID-19 claims: $37,333 compared to $6,266. In the case of long-COVID claims in which PD was paid compared to other COVID-19 claims with incurred PD, the same holds true except to a far greater extent: $154,531 compared to $59,808. The cost drivers were found to be home health care, including nursing care and rehabilitation services, ambulance services, and portable oxygen.

Comparison of Long COVID Prevalence in California’s Workers’ Compensation System with Long COVID Prevalence in California’s Group Health Insurance System

One objective of the updated study was to validate long-COVID prevalence estimates in California’s workers’ compensation system with estimates for long-COVID prevalence in California’s group health insurance system. The group health insurance data available was limited to COVID-19 infections during 2020. Interestingly, the findings were quite similar. The overwhelming majority (95%) of COVID-19 infections treated under group health insurance were mild. This finding is slightly higher than the number of mild COVID-19 infections (93%) observed in the workers’ compensation data. This slight disparity might be explained by the fact that in the early days of the pandemic, many individuals sought care under group health insurance rather than assert a workers’ compensation claim.

Because group health insurance covers medical treatment for medical conditions regardless of whether they are work-related, the authors created a control group of non-COVID-19 patients similar in age and gender and who were treated during the same period as those group health insurance patients who received treatment for a COVID-19 infection. To identify long COVID more accurately in the group health insurance data, the authors only looked at those COVID-19 claims that involved treatment for at least two long-COVID symptoms during the post-acute infection period. Using this methodology, they found that 12% of patients with a mild COVID-19 infection developed long COVID, which is consistent with the findings using workers’ compensation data.

However, as regards COVID-19 patients who were hospitalized during the acute phase of the initial infection, the prevalence rate of long COVID is 20%, which is substantially lower than the prevalence rate of hospitalized patients as reflected in workers’ compensation data (36% for hospitalized patients without ICU care and 48% for hospitalized patients with ICU care). The authors surmise that the difference in these prevalence rates might be attributable to several different factors. For one, in the early period of the pandemic, many group health insurers waived deductibles and co-payments, but later reinstituted them, perhaps discouraging workers covered by group health to seek treatment. Next, work was quite unstable during the pandemic with industries shutting down, and employees being laid off. Many workers lost group health coverage during this period. As group health insurance coverage declined, many workers were able to receive health care through Medicaid and other public programs. Thus, it is possible that the group health insurance data does not accurately reflect treatment for long-COVID symptoms that was provided by public programs.

Overall, the persistence of long COVID in the one-year post-acute period was substantially similar in the California workers’ compensation system and the California group health insurance system.

How Do Comorbidities Affect the Prevalence Rate of Long COVID

The author’s report that published studies, including one study in the United Kingdom, suggest that people with comorbidities who become infected with COVID-19 are more likely to develop long COVID. Because workers’ compensation data does not contain reliable information on a claimant’s pre-injury health status, the author’s used group health insurance data to estimate the relationship between comorbidity and the development of long COVID. The comorbidity status of a patient in the group health insurance database was based on whether the patient had received medical care for any comorbidity during the two years preceding the pandemic. The results showed that patients with any comorbidity were twice as likely as those without a comorbidity to develop long COVID than those treated without any comorbidity. This finding held true for patients with mild COVID-19 symptoms and those who were hospitalized with a COVID-19 infection. The comorbidities most associated with long COVID include diabetes, obesity, cancer, hypertension, and the use of corticosteroids.

What the Future Holds

The WCIRB concludes its 2023 update with the announcement of its intention to conduct a further study as the results of more research on long COVID become available. The anticipated future study will address medical costs and treatment patterns for long-COVID claims, the potential reopening of claims to treat long-COVID symptoms, and the impacts of long COVID on permanent disability.

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