Beware: What You Thought Was A Medical-Only Workers Compensation Claim May Actually Become A Disability Claim
The vast majority of work-related claims (77.9%) are medical-only that keep employees out of work only for a short period of time if at all. However, medical-only claims account for only 6.0% of loss dollars. For that reason many insurance companies have “medical-only” units for fast-tracking the vast majority of medical-only claims.
While this fast-track approach works well for the vast majority of medical-only claims, a small percentage (3.8%) that are medical-only claims 90 days from the date of injury but evolve into lost-time claims. In fact, studies have shown that one out of every six lost-time claims were medical-only in nature after three months. Also, medical-only claims that become lost-time claims cost, on average, 40 times more than those that remain in medical-only status. To put this in perspective, an average medical-only claim that stays a medical-only claim costs $500. A medical-only claim that transitions to a lost-time claim cost, on average, $21,100.
The National Council On Compensation Insurance (NCCI), in its study “Medical-Only Claims That Become Lost-Time Claims-A Study Of Characteristics” revealed many of the characteristics that create a transition from medical-only to lost-time status. This study analyzed the probability of medical-only claims transitioning to lost-time after 90 days of injury. It evaluated 10 combinations of body part/nature of injury/cause of injury with the greatest probabilities of transitioning from medical-only to lost-time. It found, for example, that carpal tunnel claims transition from medical-only to lost-time far more often that other types of claims. In fact, the average transition probability among the seven carpal tunnel categories is 34%, meaning that medical-only carpal tunnel claims at three months are roughly seven times more likely to incur indemnity losses that the average medical-only claim at three months.
The study found additional factors that increased the probability of a medical-only claim transitioning to lost-time. For example, the larger the incurred value (paid plus case reserves) the greater the probability of the claim becoming a lost-time claim. In fact, for claims greater than $20,000 the probability is nearly 50% that eventually there will be a disability payment.
Also, the probability of the medical-only claim transitioning to lost-time increases with the age of the claimant. For an example, the probability of a medical-only claim transitioning to lost-time for a 55-year old claim is approximately 8.1%. The probability for a 20-year old worker is approximately 1.8%.
What all this means is that the claim management team must be able to quickly identify claims with these characteristics and remove them from the “fast-track” process. It also means that the Claim Coordinator must be extremely pro-active in finding temporary duty work and monitoring the injured employees work status in these situations.
CompEraser comes with on-line, on-demand resources needed to CONTROL your workers compensation claim management process. Resources also include the formalization of your safety team, injury prevention, OSHA compliance, safety training, prompt injury response, workers compensation disability management, plus more. These resources are available 24/7 and used irrespective of which workers compensation carrier you select. Its patent-pending technology also provides unique financial reports for monitoring the effectiveness of your safety and health program on an on-going basis. For more information visit our website at www.CompEraser.com.
