Economic Downturn Puts Pressure on Return-to-Work Programs

The recent recession and record unemployment rates have increased pressure on the workers’ compensation insurance system to help return injured employees back to work while effectively managing costs.

That was one of the messages shared by presenters at the Workers Compensation Research Institute’s 26th Annual Issues and Research Conference discussing how the economy is affecting workers’ compensation.

Injured worker claims are down but so is funding for return-to-work programs, anti-fraud efforts, new regulations and overall monitoring of state workers’ compensation systems, attendees were told.

Several states, such as California and Colorado, are attempting to use monies from their state funds or state workers’ compensation insurer of last resort to help balance their state budgets.

There is very little legislation on the horizon to address fraud, said William Zachry of Safeway Inc.

Colorado has seen an increasing number of fee disputes, said Kathryn Mueller, professor at the University of Colorado’s School of Public Health & Division of Emergency Medicine, and also a conference presenter.

The economic downturn and increased unemployment have led to a reduction in claims, but also has led to a drop in funding for return-to-work services, according to John Shilts of the Oregon Department of Consumer and Business Services.

State agencies also have had to become more vigilant in monitoring employers to ensure that they are meeting their claims payment obligations, Shilts said.

In the claims area, because of staff layoffs and unemployment, claims organizations have been under pressure to become more efficient at claims handling.

Colorado workers’ compensation insurer Pinnacol Assurance, for instance, said it had not filled positions that have become vacant since 2008. Nevertheless, the company noted claims handling organizations still have to focus on prompt decision making and prompt payment, good communication, empathy, and adherence to rules and regulations — even if there are fewer people to handle that part of the business.

People might feel like they’re at the end of their rope, yet the current environment “isn’t a case of there is nowhere to go.” Instead, the speakers suggested parties in the workers’ compensation system look at the current environment as a “new frontier.” More attention needs to be paid to return-to-work programs, the speakers suggested.

There also are areas where costs in the workers’ compensation system could be cut without decreasing patient care, attendees were told. For instance, costs of claims are always higher if claims processing or payment, or getting the injured worker treatment, is delayed, research indicates.

Data also seem to indicate that prescription drug costs could be lowered, especially by reducing the use of narcotics to treat patients. Dr. Gideon Letz, medical director for California’s State Compensation Insurance Fund, said that narcotics are often overused to treat pain, instead of treating the patients’ underlying medical problems.

Employers and employees can evaluate whether litigation is necessary when there are disputes in claims. Employers should evaluate any trends in employees who seek out an attorney’s help in settling claims, the speakers suggested.

“Integrated medical care systems directed at returning the patient to work and functionally oriented [medical care] guidelines can decrease costs and improve outcomes,” the University of Colorado’s Mueller said. So before tweaking the workers’ compensation insurance system too much to compensate for the recession, system participants should evaluate the short-term and long-term effects of such changes, she cautioned.

The WCRI noted research has not yet been conducted on the effect of the recession on the workers’ compensation system across different industries. Nor have there been studies on how aging employees, when they are forced to stay in the workforce longer due to the economic downturn, affect claims. Also, no one knows how unemployed workers, when they return to jobs in new fields where they have less expertise, contribute to claims.

Nevertheless, given the shrunken economy, “successful businesses will have to do more with less, and successful workers’ compensation systems will have to eliminate unnecessary costs paid by employers that do not improve worker outcomes,” summarized Dr. Richard Victor, WCRI executive director.

The Workers Compensation Research Institute’s 26th Annual Issues and Research Conference was conducted via video in several regional locations this week. For more information, visit