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What’s Really Behind the Decline in Workers’ Comp Claim Rates?

May 09, 2015 (7 min read)

New study suggests improved safety is only partially the answer given the considerable shift of care from workers’ comp to private insurance coverage

Thomas A. Robinson, J.D., the Feature National Columnist for the LexisNexis Workers’ Compensation eNewsletter, is the co-author of Larson’s Workers’ Compensation Law (LexisNexis).

A study recently published in American Journal of Industrial Medicine suggests that the decline in workers’ compensation (WC) claim rates for musculoskeletal symptoms, disorders, and injuries (MSDIs) observed in recent years is only partially the result of improved occupational safety practices and conditions in the workplace; the decline in claim rates also stems from considerable shifting of care over time from the WC arena to private insurance coverage. The study suggests that since an important segment of the reduction in claim rates comes via care shifting, and not just from improvements in safety conditions and practices, additional effort will be required if our society is to enjoy real reductions in the number of work-related MDSI injuries. As the study indicates, the true slope of the curve representing falling MSDI claim rates is not nearly as steep as some occupational injury experts have heretofore perceived [See Lipscomb, Hester J., PhD, et al., “Contrasting Patterns of Care for Musculoskeletal Disorders and Injuries of the Upper Extremity and Knee Through Workers’ Compensation and Private Health Care Insurance Among Union Carpenters in Washington State, 1989 to 2008," Am J Ind Med, May 4, 2015 (DOI: 10.1002/ajim.22455)].

MSDIs common both in general population and among work-related injuries

As the researchers note, MSDIs are common complaints within the general population. They are also common work-related phenomena. While assigning work-connectedness to an acute injury event at the workplace is ordinarily quite easy, it is often much more difficult to attribute MSDI pain and discomfort to the workplace; the onset of symptoms can be quite gradual and can occur when the employee is at home or otherwise away from the employer’s premises. For this and other reasons, it has been recognized for some time that many MSDIs having a work-related origin go unreported as WC claims.

Earlier studies, using data from the Carpenters Trusts of Western Washington (CTWW), had surveyed back injuries and disorders among a large group of union carpenters. Those studies had shown over time a marked decline in the yearly rates of MSDIs treated through workers’ compensation. The studies had also noted an increase in treatment and associated costs of the same disorders as captured through the union carpenters’ private health insurance. The earlier findings raised concerns over just how much the decline in comp claims was attributable to better working conditions and safety programs and how much of the decline was represented in a migration to personal insurance. The current Lipscomb study sought to determine if the phenomenon could be calibrated.

Study Methodology

The researchers had previously identified a cohort of union carpenters who worked in the State of Washington between 1989 and 2008. Included in the data sample was information regarding the workers’ dates of birth, gender, earliest date of union activity, and their hours of union work. In addition to being covered by the state workers’ compensation act, the union carpenters also receive health and retirement benefits through the CTWW. Because their health insurance was tied to the union and not to specific employers, workers with multiple employers over the 20-year period were able to remain covered in spite of temporary breaks in service.

The Washington State Department of Labor and Industries (L&I) provided data relative to the WC claims for the cohort. Because of available identifiers, the data from the CTWW and L&I could be merged on an individual basis without personal identifiers. The result, said the researchers, was “a comprehensive view of health care utilization”—both within the WC arena and within the context of private insurance—by members of the cohort over a 20-year period.

Decline in reported WC claims matched by similar increase in utilization of private insurance

The merged dataset provided the researchers with granular information related to 24,830 individuals (97 per cent male) who had reported at least 3 months of union hours between 1989 and 2008 in Washington State. The researchers examined the number of upper extremity (UE) and knee disorders through WC and/or their private insurance. Also as one might expect, the carpenters required more care for UE disorders than for knee disorders, both in WC and in private insurance.

The researchers observed declines both in reported WC claims for UE and knee injuries and disorders (250 percent and 300 percent, respectively). The declines were matched by an increase in health care utilization over the 20-year period for those same outcomes (300 percent and 340 percent, respectively). The researchers observed, however:

When adjusting for temporal trend, the magnitude of the utilization increase over time is muted by approximately a third; however, the patterns of decreasing WC claim rates and increasing private utilization remain.

So the study establishes that while no one-to-one relationship exists between the decline in WC claims and the increase in utilization of private insurance, there does appear to have been a significant amount of care shifting over the 20-year time frame.

Among the other interesting points brought out in the study: a very small proportion (less than 10 percent) of the carpenters sought medical care through both the WC and private health care systems for MSDIs of the extremities.

Data alone does not identify particular factors associated with the care shifting

The researchers carefully point out that one could not get a clear picture from an examination of the data alone. Many factors could cause or influence a shift from care provided by the WC system to alternative care provided by private insurance. The researchers suggest a number of possible factors that could be causing the shift:

> Use of the WC system may be considered more stressful or more of a hassle than utilization of private insurance;

> Some workers may sense supervisors’ or employers’ concerns over increased WC insurance premiums associated with the filing of claims;

> Some employers provide individual or group rewards for no injuries or low injury rates;

> Following a work-related injury, some workers do not want to be labeled as “damaged,” particularly during periods of a “soft” economy;

> Because musculoskeletal symptoms often arise over time, they can “appear without clear-cut causality.”

Other care shifting factors

The researchers noted that physicians and other caregivers could often be “partners” in care shifting. For example, one form of insurance may reimburse caregivers differently than another, providing an economic incentive to shunt the care in one direction or another. Although not mentioned by the researchers, some physicians have concluded, rightly or wrongly, that paperwork burdens associated with WC care are too onerous. These sorts of incentives and disincentives can cause a shift in treatment toward private insurance. Sometimes a worker fails to reveal the work-related nature of the injury.

Another important issue with the study: the researchers posited that cost shifting might be more prevalent among construction workers than other types of employees. All work on a construction project eventually ceases with the project’s completion. If the economy is soft, the construction worker must wait for a new assignment. Carpenters and other construction workers may accordingly be reluctant to assign work-connectedness to the aches and pains associated with MSDIs. Complainers are the last rehired.

Strong alternative insurance programs may be partial cause of care shifting

Although the researchers did not mention this, the strong private insurance program established by CTWW might itself be part of the care shifting equation. The stronger the alternative private insurance program, the more likely it will be used as an alternative to WC coverage. In industries without strong private insurance programs, particularly industries dominated by small business employers who provide little if any private health care insurance coverage, there simply may be no private insurance to which the care can be shifted.

Workers safety groups may have overstated

While the researchers admit that care shifting across different payment systems is difficult to calibrate, the study data appears to suggest strongly that the back-slapping among some workplace safety firms and organizations in recent years who argue that their policies have resulted in a steep decline in claim rates is misplaced. The interrelationship between the WC world and the private insurance market seems to involve a type of fluid mechanics: when pressure is applied on the WC side so as to reduce the number of MSDI claims, the result is a counter-balancing increase on the other side of the equation represented by private insurance costs.

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