Focus on the election year, federal interest in state workers’ compensation programs and changes to the employee health and claims models are all issues to watch in 2016, according to industry experts.
On Tuesday, January 11, Safety National hosted a webinar on the top issues to watch that could affect workers’ compensation in 2016. The hosts of the Out Front Ideas webinar, Mark Walls, vice president of communications and strategic analysis at St. Louis-based Safety National, and Kimberly George, senior vice president and senior health advisor for Sedgwick, discussed the trends, market conditions and concerns facing the industry.
According to Walls, this election year will have an impact on the insurance line. Currently, 11 states elect insurance commissioners, while 39 have appointed insurance commissioners. He said the industry should pay attention as these changes can have a significant influence on the workers’ comp market. George added that while the Affordable Care Act Cadillac tax extension has been pushed to 2020, health reform will likely be revised by a new president. She said industry consolidation in the area of the ACA will continue, noting that there was over $700 billion in mergers and acquisition activity last year by pharma and health insurers.
There is a movement by employers to a new employee health model, where the patient is viewed as a consumer, said George. Insurers are taking notice of the value of healthcare and tying extra benefits into it. The idea is to provide consistency and tie in health and productivity in order to increase engagement.
George also pointed to an evolving claims model where patients deal with advocates to ensure they understand the issues surrounding their medical condition, treatment and claim. She said this is an important step for the viability of the workers’ comp system.
There’s growing debate regarding whether workers’ comp remains a grand bargain, George said. Insurers can expect stakeholders to evaluate its viability. The Padgett case in Florida is considered one threat to the concept. There are workers’ comp exceptions or gaps in protection in 14 states with companies that have five or fewer employees. In addition, 17 states don’t offer workers’ comp to agricultural workers. Critics point to occupational disease and the problem of tolling statutes before a disease can be identified. Walls said this is another area where the federal government could get involved.
While some areas of the federal government already have a tremendous impact on the system – think OSHA and Medicare Secondary Payor – there has been some action by legislators to federalize in-state workers’ comp systems. Some government officials think there are too many benefit differences among states. In addition, there is growing concern that some on workers’ comp are being shifted to Social Security disability. As a result, Walls expects minimum benefit recommendations from the government. Also, in Texas and Oklahoma employers have the ability to opt out of the workers’ comp system and offer a private benefit plan. Walls said there are bills in Tennessee and South Carolina seeking this option despite oversight concerns.
The industry will continue to be impacted by OSHA, Walls said, as a result of the increased reporting and recordkeeping requirements as well as increases in fines and penalties.
In Florida, there are four workers’ comp cases arguing constitutionality set to be heard by the Supreme Court: Padgett (Florida Workers’ Advocates v. State of Florida), Bradley Westphal v. City of St. Petersburg, Marvin Castellanos v. Next Door Company, et al., and Daniel Stahl v. Hialeah Hospital. Walls expects the state’s high court to address the cases in 2016.
States are taking action too. According to George, states are retroactively conducting audits, going back several years and fining insurers.
According to Walls, employers in New York are pushing for additional workers’ comp reforms. In Florida, changes to the state system will depend on the decisions in the previously noted cases. Currently, governor reforms to reduce employers’ costs have been blocked by legislators. In California, legislators are attempting to undermine reforms already in place.
Another area of concern is talent acquisition and retention, according to George. Citing McKinsey data, she said 25 percent of the insurance workforce will retire by 2016. And while 2.3 million people currently work in the insurance industry, one million workers are expected to retire within the next four years. The concern here is that there are few college insurance programs to educate incoming adjusters. In addition, according to George, many adjusters are generalists, responsible for a broad range of workers’ comp claims in multiple jurisdictions.
With respect to predictive analytics, George said the industry needs to move away from an intervention model where limited outcomes and results are shared. This can be improved by adding new resources to improve outcome and utilizing smart analytics to learn, rather than push out statistics. The real time information smart analytics provides can streamline the claims process and improve outcomes.
Other issues to watch include utilization review, the erosion of exclusive remedy, ICD 10, marijuana and the on demand economy.