Originally Published on PropertyCasualty360 | November 1, 2021
In February 2021, Out Front Ideas with Kimberly and Mark, hosted its most attended webinar to date, which featured data around COVID-19 claims and provided valuable insight into current trends, claims development and the real impact the pandemic has had on workers’ compensation.
At their September 2021 virtual conference, Elevate, a panel of experts provided updates on the most comprehensive and current COVID-19 claims data available. Panelists were:
Currently, COVID-19 represents about 13% of all workers’ compensation claims. Since the last Out Front Ideas presentation of CWCI’s data in February, California’s claims count of infections has grown by 31% and 51% in terms of additional fatalities. California represents about 12.5% of the U.S. population but makes up about 10.7% of infections and 10% of deaths.
In the early days of the pandemic, California’s working-age population was used to estimate the overall effect and cost on the system. This group’s infections and fatalities have increased, representing three out of four infections and about one in every four deaths. However, death claims continue to be more prominent in the older age groups. The over 50 age group represents 54% of non-COVID-19 death claims and 72% of COVID-19 death claims. There is also a higher proportion of females represented in COVID-19 fatalities due to the gender mix in the hardest-hit industry, health care.
Health care and public safety workers still make up the majority of COVID-19 claims, including death claims. Since February 2021, health care’s COVID-19 claims have dropped from 31% to 23%. In that same time frame, first responders’ COVID-19 claims increased from 17% to 23%, and transportation’s COVID-19 claims doubled from 6% to 12%.
CWCI has also seen a drop in claims reporting in the 14-30 day period on COVID-19 claims. This could be an early indicator of the emergence of long-hauler claims or a new trend in litigated claims for COVID-19.
Denial rates are also increasing due to the pandemic having a broad societal impact. Nineteen out of every 20 infected working-age Californians did not report an industrial cause. Other factors impacting compensability include essential employee status, presumption laws, outbreaks, shelter-in-place requirements, investigation and reporting requirements.
In a sample of 20 insurance carriers and 13 public and private self-insureds, representing 65% of all fourth-quarter denials, three core denial reasons were cited: medical verification, non-industrial reasons and reporting errors.
Medical verifications dealt with employees that had a negative COVID-19 test or did not take a required polymerase chain reaction (PCR) test. Non-industrial reasons involved claims where the employee was not exposed at work, withdrew the claim or failed to cooperate. Reporting errors were due to a submitted claim not representing an employee, or a positive test was not associated with industrial causation. Since medical verification and reporting errors are unique to COVID-19, if these two categories are removed from the fourth quarter figures, the adjusted denial rate, only including non-industrial reasons, drops from 37% to 11.8%. Compared to a non-COVID-19 denial rate of 11.6%, there is virtually no difference.
As a leading provider of excess workers’ compensation for self-insured entities, around 40% of Safety National’s accounts fall into two largely self-insured industries: public entities and health care networks. Because self-insureds are not required to report data to bureaus, much of these two industries are likely not included in bureau data. These industries also represented the front-line workers more likely to be exposed to COVID-19, making up the majority of claims.
Roughly 40% of Safety National claims came through as report only, and the other 60% make up the actual claim activity. Even with the Delta variant on the rise, Safety National’s COVID-19 claims are trending down as of August. This inconsistency with CWCI data could be due to municipalities and health care workers missing from the data, vaccine availability and safety protocols.
Between January and August 2021, there hasn’t been a considerable change in the percentage of each age group’s makeup of the COVID-19 claims share. The 26-35 age group make up the largest portion at 29%. Consistent with CWCI data, the older age groups, age 56-65 and older, make up the largest portion of the death claims. Unlike CWCI’s data, male deaths continue to exceed female deaths in Safety National claims.
The health care sector still makes up the largest portion of death claims but saw a 3% decrease in reported claims since February. From January through July, COVID-19 death claims increased from 0.36% to 0.60%.
When reviewing the cost breakdown of COVID-19 claims, 99% of Safety National’s claims are under $100,000. Of those that exceed $100,000, 89% range from $100,000 to $1 million and 11% are over $1 million. Safety National has seen a number of COVID-19 claims with incurred over $1 million including death claims and extensive hospitalizations. There have also been a few claims with incurred over $3 million due to extensive complications that led to organ transplants, brain injury and even quadriplegia.
Most of Sedgwick’s COVID-19 claims occurred within their top three represented industries, including retail, public sector and health care. Health care represents 46% of the total claims, remaining unchanged since the end of 2020. The public sector claims volume has increased, representing about 20% of the claims volume. Retail accounts for roughly 16% of the claims volume. These three industries are responsible for 80% of the total COVID-19 claims.
Sedgwick has received roughly 110,000 workers’ compensation COVID-19 claims since the beginning of the pandemic. In comparison, that figure was closer to 75,000 at the end of 2020, with the majority of additional claims added between January and February 2021. The top five states reporting COVID-19 claims are California, Texas, Michigan, Florida and Illinois, with California representing roughly 28% of the total claims.
More than 7% of Sedgwick’s COVID-19 claims remain open, and 90.4% are closed with an average paid cost of less than $2,500. The remaining 1.4% are litigated, which mostly involves denied claims. The average incurred cost is 75% lower than non-COVID-19 claims, and the duration is also 33% shorter than non-COVID-19 claims.
Sedgwick’s COVID-19 claims are evenly distributed across all age groups with no definitive breakouts. However, the severity of cases was higher among the older age groups.
When looking at cost breakdown, 96% of the claims have very nominal costs, involving little to no missed work. The high-dollar claims associated with complex cases and fatalities represented only 4% of the total claims but accounted for 81% of the costs.
Of the claims involving workforce absences, 85% involved leave of absence, 14% involved short-term disability and 1% involved Americans with Disabilities (ADA) regulations. Roughly 20% of short-term disability absences were COVID-19-related. Still, the average cost on those was 29% lower than non-COVID-19 cases and had an average duration that was 65% lower than non-COVID-19 cases. California also had more than twice the number of COVID-19 leave of absence cases than any other state during the prior 19 months. Slightly more than 5% of COVID-19 leave of absence cases were denied and 46% of all COVID-19 leave of absence cases were from the retail industry.
Telehealth has made incredible progress throughout the pandemic, with about 20% of initial evaluations or doctor visits performed virtually at its height. Prior to the pandemic, telehealth represented less than 10% of those visits. Now, telehealth makes up about 10% of those visits but continues to be utilized in workers’ compensation. Its impact has resulted in a shorter duration of short-term disability in both surgical and non-surgical claims. It also resulted in less time away from work, and cases involving physical therapy telehealth saw a shorter duration versus in-person visits.
While vaccine reaction claims have occurred, they represent a tiny percentage of COVID-19 claims. With these claims accounting for only 0.2% of total claims, 91% were medical only, involved only a few days of missed work and were closed within 45-60 days. Additionally, 31% of those cases have been denied, as this is a state-specific issue.
You can view the archived recording of this session here.