The Changing Landscape of Workers’ Compensation

Industry keynote speaker, Vincent T. Donnelly, President and Chief Executive Officer at PMA Companies, kicked off WCI’s 2016 Workers’ Compensation Educational Conference with an update on the workers’ compensation industry.

The workers’ compensation industry has been around for 100 years and continues to evolve. The industry has had to adapt with a changing landscape that includes vastly different types of jobs today than when the system was originally created, expanded life expectancy, advances in healthcare and drastic regulatory changes. Overall, Donnelly says that the industry has kept up with these challenges and continues to have a positive impact on workers.

It’s now the beginning of a new century for the industry and new challenges are emerging. Continued rising medical costs are presenting unique challenges in claims management, with pharmaceutical costs being the major cost driver. Opioid over-prescribing rates continue to be a huge problem and, too often, offer poor outcomes for the injured worker.

How do we navigate through this environment? The industry must be relentless in utilizing the data available to drive better outcomes. In addition, the industry needs to have strong utilization controls and closed formularies.

The aging workforce is also having a huge impact on the industry. Severity costs are higher for older workers because they often have comorbidity issues, which delay claims resolution. In addition, the original workers’ compensation industry was created when lifespans were much shorter. Now, a potential 20-50 years of costs could accompany a workers’ compensation claim.

Finally, attitudes are starting to shift related to legalization of marijuana. Today, nearly 50% support it and 25 states have approved it for medicinal use. How will this affect our industry? With the variation between federal and state laws, there will be a conflict between rules related to drug-free workplaces. What will be the quality control? There is inconclusive evidence about addiction and there is also a debate on how marijuana reacts with other prescription drugs. As an industry, we need to be engaged with public policy makers to come up with solutions for these issues that will so heavily impact our industry.