Winter 2019/2020

Better Care = Lower Costs

As a nation, we spent $3.65 trillion on healthcare in 2018, which is approximately equal to the entire combined economies of Canada and Spain.1 And healthcare spending is expected to grow an average of 5.5% per year from 2018 to 2027,2 eventually accounting for 19.4% of the American GDP.3

Healthcare spending has also risen steadily in workers’ comp as well and is now approaching 70% of total claims costs.4 So it did not come as a surprise that rising medical expenses was the number one challenge cited by workers’ comp industry stakeholders in a recent survey conducted by Healthesystems and Risk & Insurance magazine. In fact, all of the top five greatest challenges cited were related to costs, with the subsequent four – comorbidities and worker health, opioids/substance abuse, the growth of complex claims, and mental health exposures – direct contributors to higher medical costs, as demonstrated by the following examples:

The presence of comorbidities correlates to a 341% increase in total claims costs and a 285% increase in temporary total disability5

Medical claim costs for chronic opioid users is almost five times higher than non‐opioid users,4 and temporary disability duration is more than three times longer for injured workers who receive opioids long‐term6

Mental health conditions are the most expensive health challenge in the nation behind cancer and heart disease, and 17 states are now covering mental‐only PTSD claims in workers’ comp with at least 26 states considering the matter as of August 20197

Claims that are open for 180 days or more drive 80%-90% of total claim costs. Opioid use, comorbidities, and psychosocial issues are key reasons for longer claim duration8

See Hero’s Welcome: Growing PTSD Coverage for First Responders? from our Winter 2018/2019 edition for more.

Interestingly, claims professionals, one of several stakeholder groups whose responses were tracked separately in our 2019 Industry Survey results, did not cite rising medical costs as the number one challenge, expressing greater concern for the individual factors that contribute to those costs. This is likely because they face these challenges every day and, unlike physician fees, hospital rates, and drug prices, these cost drivers can be positively affected by claims professionals and case managers using best practices, such as:


Conducting careful reviews of medical and pharmacy records to identify comorbidities early in the claims process


Noting patient age and proactively inquiring about chronic conditions for patients aged fifty and older, who are at higher risk


Staying alert to polypharmacy and referring patients with multiple concurrent prescriptions for medication counseling


Keeping informed about clinical guidelines and non-opioid alternatives for pain relief


Proceeding cautiously and consulting with 10 pharmacists and prescribers on opioid-related prior authorization requests


Paying careful attention to automated alerts from their PBM program regarding drug utilization for opioids and potentially dangerous interactions with other drugs, such as benzodiazepines


Taking note of claims from populations at higher risk for PTSD, such as entities in the public sector that provide coverage for first responders


Checking clinical guidelines for PTSD and other psychosocial conditions to ensure that detrimental drugs, such as opioids and benzodiazepines are not given to these patients


Monitoring ancillary benefits, such as durable medical equipment (DME) and physical medicine, which can impact costs and serve as red flags for potentially complex claims


Proactively reaching out and engaging at-risk patients to offer information and assistance, while also building trust

Careful claim management focused on health outcomes can reduce return‐to‐work time by as much as 42%9 and, even more importantly, restore the well‐being of individual patients. Unlike physician fees, hospital rates and drug prices, patient health – arguably the biggest cost driver of all – can be positively affected by meticulous management from the claims team.

For deeper analysis and clinical insights on best practices, please see:


  1. Herman R. America’s healthcare economy keeps ballooning. Axios. February 21, 2019.
  2. Sisko AM, Keehan SP, Poisal JA, et al. National health expenditure projections, 2018 – 27: economic and demographic trends drive spending and enrollment growth. Health Affairs. February 2019.
  3. Sherman E. U.S. healthcare spending skyrocketed to $3.65 billion in 2018. Fortune. February 21, 2019.
  4. Davis J. Workers compensation claim frequency – 2012 update. National Council of Compensation Insurers. July 2012.
  5. Savych B, Neumark D, Lea R. The impact of opioid prescriptions on duration of temporary disability. Workers Compensation Research Institute. March 2018.
  6. Leider HL, Dhaliwal J, Davis EJ, et al. Healthcare costs and nonadherence among chronic opioid users.” American Journal of Managed Care. 2011.
  7. Mental health and well-being in workers compensation. International Risk Management Institute. September 2017.
  8. McClaren C, Reville RT, Seabury SA. How effective are employer return to work programs? Rand Center for Health and Safety in the Workplace. 2010.


Since 2010, the semi-annual RxInformer clinical journal has been a trusted source of timely information and guidance for workers’ comp payers on how best to manage the care of injured worker claimants and plan for the challenges that lay ahead. The publication is an important part of Healthesystems’ proactive approach to advocating for quality care of injured workers while managing the costs associated with treatment.