Complex claims in workers’ compensation are defined by two primary factors – cost and duration – exceeding those of typical claims. The prevailing consensus among industry leaders is that the incidence of complex claims is increasing, and over 50% of surveyed stakeholders think that complex claims are a major challenge for the industry.1
Complex claims come in multiple forms and the reporting metrics can vary, depending on the criteria and parameters used, but there is ample evidence to support the conclusion that a higher number of claims are costing more and taking longer to resolve. Both medical and indemnity claim severity increased by 6% in 2024,2 and, according to one large carrier, the average number of injury workdays lost has increased by more than seven days over the last five years, reaching a total average of 80 days.3 Somewhat paradoxically, the overall frequency of workers’ comp claims decreased by 5% in 2024.2
Fewer injuries are not resulting in lower costs, partly due to an increase in what are known as “mega” claims. Mega claims are defined by their multi-million-dollar costs and often include “catastrophic” claims that involve severe injury or illness. Although few in quantity as compared to other types of complex claims, mega claims account for a disproportionate share of total costs.
A far greater number of claims, while never reaching mega status, are still considered large and complex. A recent study from the Workers’ Compensation Research Institute (WCRI) found that the top 5% of claims with seven or more days of disability accounted for 28% of total costs (excluding catastrophic claims and those with very high or very low initial medical costs).4 From a sample size of 720,000 claims across 32 states, the top 5% equals 36,000 claims for which the average medical cost was $100,000. That is more than seven times higher than the average of the other 95% of claims, and the disability duration period was 64 weeks, versus 18 weeks.4
Defining complex claims by their cost and duration is helpful in assessing their scope and how they are trending, but less helpful in explaining why claims become complex in the first place.
The factors that can lead to claim complexity are multiple, intricate, and often overlapping. Some are more likely than others to cause complexity. Depending on the claim, factors associated with and/or contributing to high-cost claims may be unavoidable. But understanding which factors influence the course of a claim is key to identifying and mitigating risk.
Common influencers of claim complexity and/or costs include:
Surgery and physical therapy both increase the chances that a claim will enter complex/high-cost territory. Surgery, which carries a high unit cost, increase the chances of a high-cost claim by 335%, while physical medicine, which is low cost but high utilization, increases the chance of a complex claim by almost 250%.4
Patterns of late resource-intensive care was the largest single factor associated with high-cost claims according to WCRI. Claims with one or more months of resource-intensive care after 12 months are 35 times more likely to be high-cost claims, while claims that receive resource-intensive care within the first four months are 5.7 times more likely to become high cost.4
Costly treatment that occurs later in the life a claim can occur for any number of reasons, from incorrect diagnoses to new or coexisting conditions that cause complications. But if appropriate treatment can be determined and delivered earlier in the claim, it should be.
In the case of physical therapy, previous studies have shown that a shorter amount of time from the onset of pain to receiving physical therapy treatment results in significantly greater functional improvement. For example, patients who received physical therapy within one week obtained functional status scores that were more than 120% higher than patients who waited over six months before receiving physical therapy treatment.5 In addition, average medical claim costs for injured workers who waited 30 days or more for physical therapy treatment were 24-28% higher than claim costs for workers who received treatment within seven days. Temporary disability duration for the injured workers who waited more than 30 days for physical therapy is 58-69% higher than for those who had physical therapy within seven days. 6
Injured workers often require a variety of medical services, which can inevitably mean care from multiple providers. In some circumstances, injured workers visit one provider for an initial visit and then are referred to specialists and/or in-network providers. Whatever the reason, disruption in the continuity of care influences claim trajectory. According to WCRI, claims that received care from four or more healthcare providers during the first three months of treatment are 50% more likely to become high-cost claims than identical claims with three or fewer providers. Conversely, claims that continued to receive physical medicine treatment from their initial provider were 33% less likely to become high-cost claims than other physical medicine claims.4
Non-catastrophic, but still serious, injuries, such as burns, fractures, dislocations, and neurological injuries are common in workers’ comp. Claims for these types of injuries are often straightforward, but they can become complex and may be more likely to do so depending on their precise nature and the body part involved. For example, fractures between the ankle and hip and fractures of the spine make claims 4-5 times more likely to escalate in cost than other fractures.4
Among injuries commonly seen in workers’ comp, rotator cuff disorders and neurological back pain take up the largest portions of high-cost claims with 28% and 25% respectively.7 However, less common degenerative back conditions (as a primary diagnosis) incurred the highest costs with average medical payment of $67,103, average indemnity payment of $64,010, and total claim cost of $150,455.7
Comorbidities, such as hypertension, obesity, and diabetes, have become an increasing concern in workers’ comp over the past decade. Sixty-three percent of surveyed industry professionals believe that comorbidities are the top barrier to injured worker recovery and 60% selected comorbidities as their most concerning claim complexity.1 WCRI found that comorbidities increase the likelihood that a claim will become complex by 33%.4
For a review of degenerative comorbid conditions – a comorbidity identified in nearly 1 of 5 claims in a 2025 WCRI report, please see “Wear and Tear: A Breakdown of Degenerative Comorbid Conditions” in this issue.
Mental health conditions in workers compensation can present as a primary diagnosis, a co-existing condition, or both. Post-traumatic stress disorder (PTSD) is a compensable condition in many states, particularly for first responders. Other mental health conditions, such as anxiety and depression often become part of a claim, either as a secondary diagnosis resulting from the initial injury or a pre-existing condition. Studies have found that workplace injuries can negatively impact mental health,8 and claims with a mental health component are 2.5 times more costly than other claims according to NCCI.9
Social Determinants of Health are conditions outside of the workers’ compensation and/or healthcare system that affect health risks and outcomes. These include factors such as housing, food and nutrition, transportation, social and economic mobility, education, and environmental conditions. SDoH’s are thought to comprise 80-90% of modifiable contributors to healthy outcomes, while medical care accounts for the remaining 10-20%.10 SDoH include behavioral health issues, such as drug or alcohol abuse, which can also impact worker recovery and cause a claim to become complex. Analysis by Healthesystems found 80% of claims included at least one SDoH11 and WCRI found that 8.5% included substance abuse.12
Opioid prescriptions have decreased dramatically in workers’ compensation, but they remain among prescription drug classes commonly prescribed in workers’ comp, and can still pose risks. Long-term opioid use is associated with temporary disability duration more than triple the duration of claims without opioid prescriptions.13 As opioid use has decreased, prescriptions for other drugs, such as Gabapentinoids and Benzodiazepines, which have potential for abuse, are more common. Utilization of high-cost dermatologicals, migraine medications, and specialty drugs are also on the rise and driving up claim costs.14
Specialty drugs utilization in workers’ compensation has been limited in the past, but expanding coverage for diseases such as cancer and respiratory conditions, along with more specialty drugs available – at increasingly higher costs – have made specialty drugs a noteworthy factor. Specialty drugs account for a disproportionate share of cost in the prescription drug market overall. According to a study on Medicare Part D spending, specialty drugs account for approximately 6% of total prescriptions but 71% of total spending.15 More specialty drugs are entering the market as well. Currently, about 75% of new drugs under development are specialty drugs.16
In addition to cost considerations, many specialty drugs require administration by a healthcare professional at an infusion center, physician’s office, or pharmacy. Due to specialized delivery and administration of these drugs, they are not captured in pharmacy transaction data and are billed differently, including components such as professional services, medical supplies, DME, and medical waste.17
Polypharmacy also adds complexity to a claim. Injured workers who have comorbidities and/or mental health conditions are likely to be taking medications that may not be visible in the medical record. While often necessary, polypharmacy increases the risks of adverse drug reactions that complicate treatment and recovery.
Risks of polypharmacy include:
Therapeutic duplication
Long term prescribing of short-term agents
Non-adherence due to side effects
Hindered functional improvement
Multiple drug-drug and drug-disease interactions
Serotonin syndrome
Risk of cardiac event
Severe respiratory depression and/or death18
Out of network care is known to be a cost driver in workers’ compensation and a recent study from the Texas Division of Workers’ Compensation found that the average cost for lost-time claims was $6,851 for in network claims and $8,645 out of network claims.19 But the impact of out-of-network care extends beyond dollars and cents. Injured workers who received in-network care had a 93% return to work rate, as compared to an 84% return to work rate for those who receive out-of-network care, and patient satisfaction levels for in-network care were 63%, as opposed to 55% for out of network.19
Out-of-network activity also impacts pharmacy programs, resulting in 27% higher costs, according to the Texas study.17 That is at least partly due to physician dispensed drugs, which can cost as much as 60-300% more for workers’ comp patients.20 As with out-of-network activity overall, however, higher drug cost is not the only consequence of physician dispensing. In a study of over 100,000 claims, 54,000 of which had physician dispensed drugs, Sedgwick found that lost time was 73% higher for physician dispensing claims. 21 Most important, physician dispensing poses patient safety risks because there is no opportunity for a pharmacist to review the prescription for concerns, such as the potential for negative interaction with the injured workers’ total drug regimen.
Injured workers who received medical care in network had physical and mental functional scores that were 4 points higher than injured workers who received care out of network.19
Over 61% of industry stakeholders cited litigation as the top workers’ comp challenge in our 2025 Workers’ Compensation Industry Insights Survey, and in subsequent interviews survey participants strongly expressed their opinions that claims complexity and attorney involvement are inextricably linked. A 2024 study from WCRI did conclude that attorney involvement increases lost time days by 284% and inflates expense payments by 200%.22
None of these contributing factors to claim complexity is independent and some have their own antecedent causes. Certain social determinants of health can lead to comorbidities, for example, and discontinuity in care might be attributed to shortages of healthcare providers or even the disparate way medical services have traditionally been managed, which can cause added complexity for claims professionals. Worker tenure and age can influence the likelihood of being injured, as well as recovery time. Expanding presumptions require treating more complicated conditions, and healthcare price inflation directly affects all medical claims and multiplies the economic impact of all treatments. So, as noted earlier, the determinants of claim complexity are multiple, intricate, and overlapping. But that does not make them unmanageable.
Mitigating complexities depends, to some degree, on the specifics of the claim, but the components of an effective claims management strategy are similar and include:
Technology: Advanced technology is making it easier to identify complexity risks, earlier in the claim. Machine learning and other types of artificial intelligence (AI) make it possible to extract previously obscured data, such as notes in the medical record, which provide additional clinical insights. The resulting information can be used to inform rules and edits that drive automated identification and escalation of at-risk claims, as well as ensuring evidence-based treatment.
Claims Tools that Simplify and Streamline: Many different therapies, services and providers may be involved in an injured workers’ care – bringing complexity at the front line even in the best of circumstances. But it is possible to consolidate visibility and management to support continuity of care at the claims team level. Capabilities through a partner like Healthesystems, who offers claims portal technology that consolidates pharmacy and ancillary medical activity into one user interface with integrated workflows, can provide such support.
Network and Vendor Management: Costs can vary greatly among healthcare providers and medical product/service vendors. Maintaining high rates of network penetration and directing referrals to vendors that demonstrate the best combination of quality and cost is essential to achieving desirable outcomes.
Clinical Intervention: Once claim risks are identified, swift intervention can minimize, or even entirely prevent, unnecessary complications and costs. Outreach to healthcare providers to request additional information, express concern, and/or recommend alternative treatment can result in adjustments to keep a claim on course.
Patient Engagement: Injured worker patients are often unfamiliar with the workers’ comp system and providing clear and timely information is essential to help them navigate their treatment options. Regular communication using their preferred communication channels can facilitate the flow of information, save time for adjusters, and increase injured worker satisfaction, reducing the likelihood of attorney involvement and other complexity factors.
It is, unfortunately, true that complex and costly claims are occurring more frequently in workers’ comp. Some factors that influence complexity, such as expanding presumptions and medical price inflation, are outside of payers’ control. But other factors – from comorbidities to continuity of care – can be effectively managed. The good news is that as complexity has increased, better tools to identify and mitigate the risks have become available to inform smart strategies that lead to successful solutions.
