WCIRB Study Links Treatment Delays to Higher Claim Costs

Originally published by WorkCompCentral on November 17, 2020

A recent study by the Workers’ Compensation Insurance Rating Bureau of California found that claims with delays in medical treatment have higher medical and indemnity costs, slower claim closure rates, longer temporary disability duration and are more likely to end in permanent disability

For researchers, the results may help them understand how COVID-19-caused treatment delays could impact workers’ comp claim costs down the road. For applicants’ attorneys, the findings confirm long-held suspicions that failing to treat injured workers in a timely manner can result in bad outcomes for all sides.

“Access to medical treatment for injured workers has been under attack for years in California, with hurdles such as utilization review, independent medical review, medical provider networks and restrictive treatment guidelines being thrown up as roadblocks,” said Diane Worley, executive director for the California Applicants’ Attorneys Association.

Now that a correlation between delayed care and high claim costs is being acknowledged, Worley said she hopes employers will “loosen their grip” to allow workers to receive care more quickly and return to work.

WCIRB researchers relied on historical data on indemnity claims filed between 2013 and 2017 in hopes of predicting how the system may react to treatment delays caused by the COVID-19 pandemic, said Dr. Julia Zhang, WCIRB managing director of data analytics.

“During the early days of the pandemic, the statewide shelter in place orders brought substantial disruption to all non-urgent health care access,” Zhang said during a Research Forum webinar.

For the study, the WCIRB looked at claims involving common workers’ comp conditions such as soft tissue injuries, lower back pain, dislocations and sprains, minor wounds and fractures. 

In all five injury categories, claims where first treatment was delayed tended to have higher medical and indemnity costs, both incurred and paid, according to the study.

Delays in treatment also contributed to slower closure rates, prolonged temporary disability duration and the increased likelihood of permanent disability, according to the study.

For soft tissue claims, delaying treatment caused median incurred medical costs to rise as much as 32% by the fourth report level — 54 months after policy inception.

Delays in treating lower back pain contributed to a 253% increase in median incurred medical costs at the same period 54 months after policy inception. Costs for dislocations, sprains and fractures increased by 50% when treatment was delayed.

The COVID-19 pandemic may have provided a jumping-off point for the study, but recent delays have been relatively minor compared with claims where injured workers have continued to suffer while treatment is delayed or denied, said applicants’ attorney Alan Gurvey, managing partner of Rowen, Gurvey & Win, in Sherman Oaks.

Gurvey called laws related to medical provider networks, utilization review and independent medical review “draconian.” He said the current system is not sustainable because injured workers are not recovering and getting back on the job as quickly as they should.

He said the lack of quick and effective authorization for treatment requested by medical provider network physicians has been a big factor in treatment delays.

“It is not uncommon for our firm to have to wait two or three months before we get an authorization for a doctor’s appointment for our clients,” he said. “And that typically involves the filing for an expedited hearing that requires judge intervention to order the authorizations or at least pressure the defendant to authorize the appointments. That is separate and apart from the actual treatment delays. The pandemic has just underscored this problem.”

Gurvey said the industry itself needs an overhaul, perhaps beginning with state legislators examining why, despite being covered by insurance, injured workers can have a difficult time receiving fast, efficient medical treatment.

“The fix is easy,” he said. “Come up with a fair system of dealing with medical treatment requests from treating doctors who are not beholden to a flawed selection process for MPN doctor selection, and then making sure that the treating doctors actually know what they're doing within the system.”

Michael Duff, a University of Wyoming law professor and workers’ comp expert, said the study’s findings aligned with his intuitions.

Duff said he had assumed delayed treatments led to increased claim costs as far back as the mid-1990s when he was a claimants’ attorney.

The WCIRB study does have some limitations, he said. Although researchers were working with “good data,” the short, five-year span makes it difficult to project any future findings with confidence, he said.

“Furthermore, the herky-jerky injured worker medical access post-pandemic 'reopening’ in May does not cleanly parallel the modeled treatment delays in the study,” Duff said. “Nevertheless, this is a very useful study both for what it says about the relationship between claim cost and delayed treatment generally and in what it suggests about factors to consider in predicting aggregate pandemic-period workers’ compensation costs in California and elsewhere.”

Duff said the data may prove useful as many states begin to enter new lockdown periods as the COVID-19 virus continues to spread.

In the early days of the pandemic, non-urgent and non-COVID-related medical care were all but suspended in many places, causing some patients to either wait it out or reach their doctors via telemedicine, said Dave Bellusci, WCIRB executive vice president and chief actuary.

Treatment and payment levels in California’s workers’ comp system declined in March and April before rebounding in May and June, he said.

“These delays in medical treatment likely impacted the cost of claims,” Bellusci said.

From March 15-31, medical services per claim were down 7% compared to the same period last year, while medical payments per claim were down 6%, according to the study.

The drop continued in April, with services per claim down 10% and payments per claim down 18% compared with 2019, according to the study. 

Expectedly, based on the data, the pandemic also had a brief impact on utilization of leading medical services. In the first half of March, physician services dropped 8% versus 2019, while inpatient services dropped 28% and outpatient services fell 33%, according to the study.

Pharmaceutical use was up 6% during that period but showed a 6% drop in April compared with the previous year.

For April, physician services were down 9%, inpatient services were down 24% and outpatient services were down 31%.

“Prior to the pandemic, things were pretty flat,” Bellusci said. “When we looked at all of the services, all of them dropped pretty dramatically.”

Payments for leading medical services also showed a decline, according to the study.

In the first half of March, payments for physician services and payments for inpatient services were down 7% while payments for outpatient care were down 11%. 

Payments for pharmaceuticals were up 25% in the first half of March, a phenomenon Bellusci ascribed to patients possibly ordering larger quantities of prescriptions because they anticipated quarantining.

In April, payments for physician services were down 11%, payments for inpatient services were down 41% and payments for outpatient services were down 27%, according to the study.

Service and payment levels began to recover in late spring and early summer, Bellusci said.

“From what we’ve looked at, that subsequently has kind of continued,” he said.