The Data Connection - January 2020 Issue

Welcome to the January edition of The Data Connection newsletter

With nearly 60 years of experience between them working in the actuarial field, Sean Cooper, practice leader and senior actuary and Cary Ginter, executive director and senior actuary are in a unique position to share what they have seen as significant game changers.

Q: What are some of the significant changes you have seen that have impacted workers compensation?

Cooper: When I started my first workers compensation insurance job in 1992, the system wasn’t very healthy. Benefit costs were increasing faster than loss costs, as NCCI filed double-digit loss cost increases in many states. Furthermore, over 90% of premium was written in the residual market in some states. The industry responded by implementing legislative reforms and cost containment measures, but automation in workplaces may have been more significant, as it has certainly contributed to the claim frequency reduction that we have seen for more than two decades.

If we fast-forward some 25 years, we see a competitive marketplace with a small, stable residual market. NCCI has filed loss cost decreases in virtually every state over the last two years, as frequency continues to decline, and loss severity has moderated.

Many workers compensation stakeholders believe that the reduction in opioid use has been a significant factor in lowering indemnity and medical claim severity trends in recent years.

Q: In your keynote presentation, you mentioned the impact of telehealth and wearables. What are some of the advantages to the industry of using telehealth and wearables?

Ginter: In general, we’ve become much more comfortable with the use of technology in our lives, whether it’s smartphones to keep us up to date on what’s going on around us or fitness trackers to keep apprised of our physical activity. As a result, the use of electronic devices in the workers compensation system has seen increased adoption.

From an injured worker standpoint, the convenience of getting a medical consultation without having to leave home, and deal with traffic and distracted drivers, is one of the most obvious benefits. There are several other notable benefits to an injured worker, including the ability to seek a second opinion from a specialist outside of their local area. For employers, telemedicine can provide the worker with quicker access to medical care. Among other things, this may reduce the number of emergency room visits and ultimately the length of time an employee is away from work.

As for wearable devices, these are not only being looked at to optimize the recovery for injured workers, but also in accident prevention and minimization. That is, the ability to monitor worker movements and posture, vitals, and external conditions (e.g., temperature and humidity) could help eliminate an injury from occurring, or at least limit its potential severity. Think of a device that can alert a worker that they are lifting too much weight, or that the way they are lifting is placing unnecessary strain on their back. For workers with an injury requiring surgery, the use of wearables in the recovery process can provide an immediate warning if they are overexerting themselves. Or the device may indicate that more activity or increased range of motion would be beneficial.

Together, telemedicine and wearable devices are just two examples of technological changes that have the potential to improve outcomes for both employees and their employers.

Q: NCCI has been collecting medical data for 10 years. How has this data framed your view on the workers compensation industry?

Cooper: Medical data has given us a clear and detailed picture of current medical costs, as well as the key drivers of medical cost trends. The Medical Data Call is an extremely powerful tool that allows us to price the impact of key workers compensation initiatives, such as changes to medical fee schedules and the implementation of drug formularies. The details provided in the Medical Data Call have also allowed us to produce annual medical data reports and a plethora of research studies that cover a variety of topics, such as:

• Prescription drugs
• Medical transportation costs in workers compensation
• A comparison of medical treatment and costs between group health and workers compensation

Q: What are some of the benefits of implementing the Indemnity Data Call?

Ginter: The Indemnity Data Call (IDC) is being implemented to enhance NCCI’s ability to support the workers compensation industry through the objective pricing of legislative proposals. The Call for Detailed Claim Information has served a valued purpose but receiving transactional and additional data elements on all indemnity claims will increase the accuracy of NCCI pricing analyses. So the increased ability for NCCI to provide credible, aggregated information to the industry on how an enacted change is expected to affect the workers compensation system can reduce uncertainty.

The use of the IDC will go beyond just benefit pricing analyses, through improved insight into indemnity cost drivers and enhancements to ratemaking methodologies.