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When claims counts drop, these folks yawn

This has been a work-comp intensive week, for mostly the wrong reasons (little good news to report, little innovation, you know, typical WC…)
I’ll close this overly long trip down WC way with good news – about which vendors will flourish in the coming tough times for WC managed care.
With the number of claims likely to drop precipitously in 2009, the folks least at risk are those least dependent on a continuous flow of new claims. As claims age, the need for hospitalizations, surgeries, MRIs, and frequent and extensive physician visits and procedures drops off. Physical therapy also declines, or at least should if it is managed appropriately (PT should be focused on return to functionality and not palliative services). What’s left is the type of services needed to keep long term claimants, with what have become chronic conditions, as comfortable as possible. Realistically, these folks are not returning to work, so the need for functionality-improving treatment has been replaced with symptom mitigation.
That would be the purview of home health and pharmacy companies, as well as the non-commodity DME (durable medical equipment).
NCCI has published a study documenting the change in medical services over time. Notably, the study, Relative Cost of Medical Services By Age of Claim and Accident Year, shows that pharmacy, supplies, home health, and DME costs go from a relatively small part of the medical dollar in the initial year after the claim is incurred to almost 50% of medical expense for claims more than four years old.
There’s another positive indicator for the purveyors of chronic condition services – there’s some evidence that during recessions, severity increases as claimants stay out on disability longer. Some may not have jobs to return to, others may not be able to find new jobs, but regardless of the cause, claims appear to persist.
These two factors, coupled with the rule-of-thumb that a third of medical dollars are spent more than three years after the date of accident, means there will be lots of dollars spent for ‘chronic care purveyors’ services for years to come.

Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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