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Workers' Comp "tail" continues to grow

In insurance lingo, Workers' Comp has a long tail. When an injury occurs, the insurance company sets aside reserves to cover the estimated cost of the injury until the case is closed. In many situations, a case can go on for years--and sometimes even longer. And the employer pays and pays more.

The bad news for employers is that the percentage of total claims for "late-term" costs - those that will be incurred 20 to 30 years in the future - has been growing and could continue to do so, according to the latest research from the National Council on Workers' Compensation Insurance (NCCI). As the study indicates, more than 10% of the Workers' Compensation medical benefit costs for injuries occurring this year will be paid for services provided more than two decades from now.

The new NCCI study, "Medical Services for Claims 20 or More Years Old," looks at Workers' Compensation medical services provided beyond 20 years after the injury, to project what medical service categories will account for the largest shares of costs and the future treatment and utilization that will drive those costs.

The report contains a wealth of information that can be helpful to those with legacy claims and those working to avoid the problem. Some key findings concerning services provided from 20 to 30 years following the date of injury include:

These findings should help make it clear that proactive claims management is essential to controlling Workers' Comp costs over the long term. When it comes to employee injury claims, it's the tail that wags Workers' Comp costs. How new claims are handled will have a significant impact on long-term costs. Failing to assign adequate resources to a newly reported claim, or assuming such claims will be appropriately handled is a major reason why otherwise typical employee injury cases spiral into legacy claims. Processes thwarting poor medical care, unnecessary complications, opioid prescriptions and excessive hospitalization will help to shorten the tail.