Sedgwick Experts Outline Key Workers’ Comp Claims Trends

Two experts from risk and claims administration partner Sedgwick outlined a few key workers’ compensation trends worth paying attention to today.

The topics were based on Sedgwick data and primarily related to the medical arena within the workers’ comp space.

How Early Behavioral Health Engagement Affects Mental Health Claims

Sedgwick has found that early engagement with behavioral health specialists can have a significant impact on the number of missed workdays for employees who file mental health claims.

Max Koonce, chief claims officer at Sedgwick, explained that mental health claims account for only about 2% of total annual claim volume. These include primary mental health claims and secondary mental health claims, which are part of a physical injury and are not the sole reason for the claim’s filing.

Koonce said Sedgwick’s analysis showed that the cost of mental health claims is about three and a half times the cost of non-mental health claims. Mental health claims also last more than three and a half times longer in duration than claims that don’t involve mental health, he said from the RIMS RiskWorld conference in Chicago, .

“What was interesting in the data, though, was how can you impact that,” Koonce shared. “What can you do differently that will have an impact? And one glaring thing stood out: behavioral health specialist engagement.”

Engaging with a behavioral health specialist in a primary or secondary mental health claim within the first 90 days of the claim reduces workdays missed by 40%, Sedgwick data shows. Compared to waiting until after 180 days, early engagement results in a 70% reduction in the number of days off work.

Beth Burry, the head of managed care at Sedgwick, explained that Sedgwick has developed a team of behavioral health specialists. These former mental health clinicians, who previously counseled and provided psychological services for individuals, now offer support and ensure claimants see the right providers at the right time.

“I think having our behavioral health specialists who understand those dynamics can get folks to a qualified provider,” she said. “Because again, it’s really important that the provider knows how to treat the specific mental health condition.”

Accessing care through qualified psychologists and psychiatrists was a big issue during and after the Covid-19 pandemic, however Telehealth has lately started to alleviate access issues, while the Psychology Interjurisdictional Compact has improved access by addressing licensure issues and enabling providers to offer services across state borders, Burry said.

Aging Workforce Poses Safety, Risk Management Questions

According to Koonce, workers’ comp claim volume was up slightly in 2024. The largest year-over-year increase came in the 60-plus worker age category, which has seen the largest increase in claim volume in each of the last five years.

“When you look at it from the standpoint of what does that mean on the actual workers’ compensation result, that age group has the highest percentage of indemnity claims,” Koonce said. “Seven points over the average when you consider all age groups.”

The 60-plus worker segment also has the highest number of temporary disability days (nine more than the average of all age groups) and pays 35% more for medical costs compared to the total average.

That is part of the challenge that lies ahead: more Americans plan to work later in life.

According to a Pew report released in late 2023, roughly one-in-five Americans ages 65 and older were employed in 2023. That was nearly double the share of those who were working 35 years ago. Meanwhile, the Bureau of Labor Statistics projects that between 2023 and 2033, the U.S. will see a 22.4% increase in workers aged 65 to 74. During that time, the number of working individuals aged 75 and up is expected to increase by 79%.

“So, this is a fact of life we as employers, we as businesses, are going to be coping with over the next several years,” Koonce said. “This group is going to grow. So, how do you approach that from the standpoint of safety? How do you approach that from the standpoint of risk management? How do you approach that from the standpoint of workers’ compensation cost?”

Along these lines, Burry spoke of physician shortages that are expected to worsen during the next decade. In a joint letter sent in early 2024 to the U.S. Senate, the American Hospital Association and other organizations expressed concern that the country is expected to face a shortage of up to 124,000 physicians over the next decade, with a shortfall of up to 48,000 primary care physicians and between 21,000 and 77,100 non-primary care physicians, including up to 30,200 surgical specialists.

“And that exactly couples with the increase in the population of older adults that are in the workforce,” Burry said. “So, this is something that we’re seeing today in terms of access to care.”

Burry believes it’s critical to use data models to identify age-related issues when healing from injuries or receiving care.

Cumulative Stress Can’t Be Ignored

One-in-three workers report being stressed either sometimes or often at their jobs, Burry said. When coupled with circumstances within a job that contribute to stress, “then you kind of have the recipe for a disaster,” she said, adding that leaning into proactive employee assistance programs or other benefits can help to address stress issues before they manifest in catastrophic ways.

Ensuring that examiners understand jurisdictional requirements and how quickly they can get the required evaluations to substantiate if a claim is compensable is also important, as is getting a claimant to a provider as fast as possible to begin treatment plans.

“I will say the accumulation of stress is something that we’re just going to continue to see, I think, as part of our world,” Burry added. “And we can’t just ignore it. When I think about denying a mental health claim, it’s just kind of squeezing the balloon. Right? It just goes to the other end. It’s going to be there.”

Could Tariffs Affect Rising Medical Costs?

Medical costs continue to rise in the workers’ comp sphere. Over the last several years, those increases have averaged between 2.5% and 3.5% each year, Koonce said. He added that more than inflation could impact those numbers moving forward.

Tariffs could also leave their mark on prices.

“I think all of us are waiting to see what the exact impact is going to be,” Burry said. “The situation is obviously very volatile. It’s fluid right now. What we can say, though, is that there’s an amazing amount of medical supplies, durable medical equipment, pharmacy — all of those things are impacted by what the U.S. imports.”

As of now, Sedgwick’s pharmacy partners are saying they’re not as concerned with the cost of drugs as with the importing of bulk product ingredients from China, specifically. Those ingredients help make a lot of drugs, Burry explained. While drug prices may not increase immediately, “we could certainly see supply chain issues and shortages,” she said.

Topics Trends Claims Workers' Compensation