Finishing up the second survey report on the impact of COVID19 on workers’ comp and one takeaway has me shaking my head.

There’s a lot more fear and trepidation about presumption than I think is warranted. Across the 24 payers surveyed (including very large TPAs, insurers, state funds, and employers) there were less than 7,000 COVID claims accepted to date. Yes, several have considerable business in California, Kentucky, and Illinois and more than a few have a lot of health care and public entity clients.

Relatively few of those 7,000 claims are expensive, perhaps less than 5%. And even then they aren’t nearly as costly as real cats with expenses above $1,000,000. And this in an industry that is wildly over-reserved, like $10 billion over-reserved

There’s some – but significantly less concern over plummeting premiums driven by business closures and dramatic declines in payroll. That should be a lot scarier; we are talking billions of dollars of premiums lost, and the potential that figure premiums will not return to pre-COVID levels for a long time – if ever.

This will get worse as governmental entities are forced to layoff workers when sales tax revenues aren’t sufficient to cover payroll.

This is like worrying that your cable bill is going up when your salary’s been cut 30% and your hours reduced.

What does this mean for you?

Focus on the dollars, the pennies are just pennies.

That’s one of the questions I asked 36 payers and service providers; here’s a snapshot of their responses along with some interpretation…

Service types

Briefly, those services that happen earliest in the claim and/or require face-to-face contact have seen the greatest impact as new claims volumes dropped overnight.

Initial visits to occ med clinics, transportation, imaging, PT and rehab, IMEs, Field Case Management, surgery and management thereof have taken the biggest hit to date. Network revenues are suffering as a result, as is UR.

As the shutdown and peoples’ reluctance to expose themselves to infection continue, there have been significant reductions in bill review and network business volume.

Less  – but still somewhat – affected are sectors that get most of their revenue from longer-duration claims. Think home health care and DME, Pharmacy Benefit Management.

Business models

Cash-rich companies with manageable (or no) debt are in far better position to weather the crisis than highly leveraged firms. This generally benefits founder-owned companies and those with solid cash reserves.

Networks may well weather the crisis as they are generally high-margin businesses with relatively low staffing requirements.

Companies that have kept more of their business functions on-shore are in far better shape than those that outsourced critical functions  such as turning paper into pixels (processing documents), clinical support, provider relations, and call center operations.

There’s a lot of nuance to this; thanks to the 36 respondents for their insightful and sometimes surprising views.

What does this mean for you?

Cash is king. On-shoring is critical. 

Note – A public version of the report will be available in 2 weeks; respondents will receive a detailed version. A third version with additional interpretation will be available for purchase.

COVID’s biggest impact on workers’ comp has not been from the disease, but rather from efforts to control its spread and the resulting impact on the economy.

35 workers’ comp insurers, state funds, TPAs, and service providers and large self-insured/self-administered employers took part in our second Survey of the impact of COVID-19 on Workers’ Comp. Payers have received about 33,000 COVID-19 claims to date and accepted just over 1/5th of all claims filed.

While there are major differences in claim acceptance policies across the respondents, by far the most common reason claims have not been accepted is a lack of a diagnosis, no symptoms, and/or a negative test for COVID19.

The “non-COVID” effects include:

• a drop of 25% to 50% in new injury claims since the outbreak,
• slower return to work due to an inability or unwillingness to access care and/or adjudication processes, and
• respondents’ estimate that 2020 will end with a 20% decrease in the total number of claims.

For payers with large books of small businesses, retail, hospitality, and travel the picture so far is grim, with most expecting major declines in premiums.

The good news is the cost of COVID claims remains pretty low, with most accepted claims resolving with minimal expense. A relative handful have been quite expensive (>$200,000) due to costs associated with ICU and ventilator care.

The big winner is tele-everything. The big service providers all reported massive increases in tele-rehab, tele-triage, and tele-medicine visits with most indicating they expect this to persist after we are through the COVID19 pandemic.

As I work thru the data we’ll be publishing more details; a public version of the report will be available in about 3 weeks.

What does this mean for you?

This will be a very tough six months. The big decline in new claims and drop in premiums will have knock-on effects throughout the industry and every stakeholder.

We are more than halfway thru our second Survey of COVID19’s Impact on Workers’ Compensation (details on the first survey and a link to the abstract is here).

Respondents include:

• TPAs
• Insurers
• State Funds
• Large self-insured/self-administered employers
• Service providers/managed care firms

Top takeaways from the 18 surveys completed to date:

• 83% of respondents rated COVID’s impact on workers’ comp a 4 or 5 (very or extremely significant impact)
• Across all respondents over 10,000 COVID claims have been reported
• To date about 15% have been accepted; many are still under review
• The number of new injury claims has dropped significantly, although this varies greatly by type of employer
• Disability durations are a major concern due to high unemployment and far fewer jobs to return to
• To date, the incurred cost for COVID claims has been relatively modest

Service provider takeaways:

• Field case management took a big hit early on and has yet to recover
• UR volumes plummeted as well
• Transportation got hammered early on…there’s some evidence it is recovering
• Medical bill counts are trending lower (there’s a lag)
• Pharmacy management is among the service lines least affected

I’ll finish the Surveys late tomorrow, then it’s analysis and report prep. Respondents will get a (very) detailed version of the Survey Report; an abstract will be available to the public.

And thanks VERY much to the 30+ payer executives who are sharing their experience; their reward will be knowing a lot more about the impacts of COVID, how other payers are responding, and how others are adapting.

What does this mean for you?

COVID’s impact on workers’ comp will not be COVID claims or costs.