The True Risk of Workers Comp Claims
Workers compensation payors are always looking for ways to control pharmacy expenses and help injured workers get back on the job. Solutions that help offset external influences, such as medication dependence, average wholesale price inflation and out-of-network prescription fills, can make a huge impact on the bottom line. Predicting which claims have the potential to become costly can reap major benefits.
Since most payors have claims data at their fingertips, it is easy to believe an evaluation of the type of injury and the use of narcotics can pinpoint such claims accurately. But medication spend does not necessarily present the full story. The number of medications prescribed can also be an unreliable trigger for potential misuse or abuse.
In fact, analysis shows that in the first few months of a claim, additional variables, such as prescriber specialty and the geographical location and socioeconomic status of the injured worker, are twice as important when forecasting risk.
Successful risk models combine clinical and nonclinical data. Demographics of the injured worker, including age and income level; and information about their location, such as industry mix, economic conditions and even state workers compensation laws, help gauge the likelihood of insurance fraud or medication misuse.
The specialty of the treating physician also carries some weight. For example, an injured worker with a severe injury is more likely to visit a pain specialist than a family practice or sports medicine physician. Two claims may have the same medication history, but the injured worker who obtains prescriptions from a pain specialist has a much higher long-term medication risk. The circumstances of the claim and the prescriber’s practices should also be considered.
To highlight this a bit further, consider an injured worker with a back strain who is prescribed two narcotics within three months of his injury. Many would view this claim as high risk solely because narcotics have been prescribed, but by looking beyond the medications, a different story unfolds. The injured worker is seeing a primary care physician for treatment, resides in an affluent suburb of Boise, Idaho, and works for a local technology company—all indicators that the potential for misuse and abuse is actually quite low.
Access to historical data and longevity in the marketplace is also helpful. A company with a track record of performance can use its claims knowledge to make educated assumptions on the claim path of certain injuries—especially those that are unique for industries in its book of business. For instance, a company’s experience may provide them with enough data to calculate that a worker with strained, but unruptured and unherniated, spinal disc is actually associated with nearly 10% more long-term pharmacy spending than a worker with a gas inhalation injury.
So while the use of national industry benchmarks may be extremely helpful in anticipating recovery trends, a company’s own experiential data with specific injuries is invaluable to the statistical model and will go a long way toward developing an accurate picture of the risk.