WC Future Medical Claims: The Ticking Time Bomb
Throughout the country, self-insured employers go about their business administering
workers compensation benefits and managing claims litigation unaware of the growing
risk developing within their future medical claim inventory. Very few self-insured
employers are aware of the distinct administrative approaches between active indemnity claims and future medical claims. This knowledge and implementing a proactive approach to future medical claims inventories can save employers hundreds of
thousands of dollars.
There are a number of reasons to be wary of a growing future medical inventory.
• The Obesity Epidemic
o In 1994, in no state had a percentage of obese adults as high as 20%.
o In 2010, all 50 states had adult obesity rates of 20% or more.
o In 12 states, the rate was 30% of adults deemed obese.
These are very startling statistics. It speaks to our changing techno-dependent culture.
However, of interest to us is a statistic published by Duke Medicine & Communications.
A 2007 Duke University Medical Center analysis found that obese workers filed twice
the number of workers’ compensation claims; had seven times higher medical costs
from those claims and lost 13 times more days of work from work injury or work illness
than did non-obese workers. Workers comp claims and indemnity costs are five to ten
times higher for most obese workers. The effects of obesity, i.e. diabetes, can quickly
turn a dormant future medical claim in a complex medical issue that can costs hundreds
of thousands in additional medical costs.
• The Aging Future Medical Claim
o A greater portion of the workforce is close to or at the age range that
requires Medicare involvement in workers’ compensation claim settlement
discussions. This alone leads to greater levels of future medical settlement
o Due to the progressing age of claimants, future medical claims will begin
to incur higher medical and pharmacy costs.
o Medical treatment will become increasingly complex and costly as elderly
claimants’ multitude of ailments complicate treatment.
Aside from the challenging concerns noted above, an extensive open future medical
claim inventory can negatively impact an organization, especially self-insured employers
and public entities. Claim administrators that suffer consistent budgeting challenges
such as cities and school districts will find that a growing future medical claims inventory is costing them not only reserve dollars, but resources such as time and productivity. Most notably, cities and other public entities may find that an increasing percentage of workers compensation benefits are being paid to individuals who are no longer employees!
A partial answer to this ticking time bomb is a proactive approach to future medical
• Claims administrators can establish focused claims units that are responsible
solely for handling and resolving future medical claims.
• By establishing specific goals and strategies for handling these claims and
separating them from active indemnity cases, employers can see a better
balance of future medical and active indemnity claims; fewer Medicare
conditional payment liens
• Implementing a Best Practices protocol can help to reduce medical costs.
• Maintaining an aggressive claims settlement practice can help to eliminate the
culture of entitlement and dependence that develops amongst employees.
• Establishing a practice of aggressively reducing the future claim inventory by
buying out future medical claims.
These and many other proactive approaches can be instituted by any self-insured
employer. New ideas may be a bit more challenging for budget strapped public
entities, but not impossible to implement. An aggressive and proactive approach to
future medical claims is synonymous with other proactive risk management efforts
such as ergonomics service, return-to-work efforts, wellness programs and the like.
However, bringing this issue to the forefront is vital for a successful claims and risk
management program. Remaining open to a change in claims administration
practice is vital.