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It’s not always physical injuries that can lead to the most costly workers compensation claims; psychosocial issues such as depression or anxiety also can delay return to work and increase claim costs, experts say.
“How these claims usually morph is you have the fractured ankle, which morphs into the bad knee, which morphs to the bad back, then to a psych claim, then to sexual dysfunction, and before you know it it’s permanent disability,” said Bill Barbagallo, Los Angeles-based managing director who leads the claims and insurance operations practice nationally for PriceWaterhouse Coopers L.L.P.
According to experts, psychosocial issues run the gamut and include depression, anxiety and addiction — the leading issues affecting comp claims, they say.
Anecdotally, most workers comp payers have a horror story, experts say, adding that concrete data is hard to come by because psychosocial claims can sometimes cross over into group health coverage.
Hartford Financial Services Group Inc. in 2016 analyzed its workers comp claim data from 2002 to 2015. The analysis found that 10% of claims featured at least one psychosocial issue, and that those claims account for 60% of claims costs, according to Dr. Marcos Iglesias, the insurer’s vice president and medical director based in Hartford, Connecticut, who helped mine the data.
The problem for the workers comp industry is two-fold; sometimes an injured worker’s mental illness existed before a work-related injury or illness, and the risk factors that lead to psychosocial issues creeping into a workers comp claim are often out of the employer’s hands, experts say.
“It’s controversial (because) we are seeing a lot of depression and anxiety arise out of an injury,” said Michael Gavin, president of Prium, a Duluth, Georgia-based medical cost management firm. “But a lot of those issues were pre-existing, they just weren’t documented. This creates a significant burden on the workers comp system.”
A spokesman for third-party administrator Gallagher Bassett Services Inc. said environmental factors are also at play: “You have the situation in the home, family conditions … financial condition.” Getting a better grasp on the injured worker’s life is key, and predictive modeling tools could help in that effort, experts say.
Many workers comp insurers are “beefing up their departments with predictive modeling staff” to help mitigate the risk of a physical injury claim morphing into a psych claim, said Mr. Barbagallo, who added that insurers are “loath to pay for” such claims.
“Insurers are collecting an exorbitant amount of information about the injured worker,” he said. “Culture, divorces, home life … The industry is relying on sophisticated algorithms and data.”
The investigations involve case managers doing much more than collecting forms, according to Gallagher Bassett’s spokesman.
“You will have to observe these issues on the front line and actively listen to what could be plaguing the individual in his or her environment,” the spokesman said.
For claims related to pre-existing psychological conditions, work is now being conducted to better understand the worker’s mentality, said Dr. Teresa Bartlett, Troy, Michigan-based senior vice president of medical quality for TPA Sedgwick Claims Management Services Inc. That can include tests that gauge the likelihood that a person would become addicted to opioids or what that person’s childhood was like.
The early identification of potential mental issues in a claim can make the difference between a claim with an injured worker experiencing a speedy recovery and one that remains stagnant, she said.
For example, injured workers who are identified early as likely to exhibit psychosocial issues tend to feel more pain or think “catastrophically,” both increasing the claim’s resolution time and creating the potential for litigation, Dr. Bartlett said.
Tom Lynch, Shirley, Massachusetts-based principal at workers comp consulting firm Lynch Ryan & Associates Inc., said the earlier an insurer can identify a potential issue, the better.
“(The industry) is starting to realize that their old system doesn’t really accommodate the discovery of these issues until it is pretty late,” he said. “It takes way too long for adjusters, nurses, and case managers to come to the conclusion that something is going on there. It has been the last thing they look at, and by the time they see it, it’s an iceberg straight ahead and they are about to hit it.”
In addition to early intervention, better communication and worker advocacy are fast becoming best practices, according to experts.
“There are some good proactive management techniques that can be utilized to help avoid these claims or manage them,” said Paul Primavera, Washington-based executive vice president and practice leader of national risk control group for Lockton Cos. L.L.C. “There is a potential link between a lack of communication and the unknown that leads to stress and the mental component of a claim.”
Workers compensation payers are now relying on tests that screen for potential mental health issues that could affect the outcome of a claim, including one that mines a person’s childhood for signs that a physical injury could eventually lead to a mental one.