Aging America: A Looming Catastrophe?

May 27th, 2009 by Julie Ferguson

Take 78 million Baby Boomers and their retirement plans, mix with a woebegone social security system and the global economic meltdown of 2008/2009. Add in rising health care costs and the insurance industry’s natural propensity to avoid troubling issues, and you have a recipe for a looming catastrophe of the first order. That’s the premise that Lynch Ryan CEO Tom Lynch puts forth in his article in the current issue of the IAIABC Journal, Aging America: The Iceberg Dead Ahead, which IAIABC has given us permission to make available to our readers.
Tom describes the massive problems that the aging workforce presents to workers compensation systems – problems that are compounded by funding problems with other social insurance programs. He makes the case that neither states, the federal government, or insurers are prepared for the claims and cost problems that will develop over the next decade, and offers recommendations to address these problems, including the creation of a special federal commission.
Admittedly, we are partial to the author, but we think the article is worth a read.
In addition to putting in a plug for the article, we’d like to call your attention to the publication that it appears in. The IAIABC Journal is published two times per year by the International Association of Industrial Accident Boards and Commissions (IAIABC), an association of government agencies that administer and regulate their jurisdiction’s workers’ compensation acts. It’s a peer-reviewed Journal, and one of a few remaining venues that publishes original research papers and in-depth treatment of workers compensation issues and opinions. Issues are substantial – the current issue weighs in at 158 pages. It is edited by Robert Aurbach. For a sampling of content, we’ve taken the liberty of printing this issue’s article abstracts to give you a flavor – click to continue.

Waiting for the Crisis – Peter Rousmaniere
Predicting the future of workers compensation involves specifying the scope of changes that may occur. The workers compensation system changes radically only when provoked by a major crisis. In the future, Federal concern over the growth of federal disability benefit spending (SSDI) may provoke a crisis in the workers compensation system, because it is an important feeder of SSDI claimants. The term “crisis” is not appropriate to two other developments that still deserve notice. These trends are the growth of medical costs and the deepening of investment by insurers and other parties in information technology.
The Evolution of Workers’ Compensation: Work Injury Insurance – David J. DePaolo
A national universal health care model would make medical care in workers’ compensation irrelevant. Without the medical component, workers’ compensation will evolve to work injury protection plans where the incentives are designed to reward productivity.
Aging America: The Iceberg Dead Ahead – Tom Lynch
The aging of the workforce presents massive problems to workers compensation systems. The problem is compounded by funding problems with other social insurance programs. Neither states, the federal government, or insurers are prepared for the claims and cost problems identified here. Recommendations are offered to address these problems, including the creation of a special federal commission.
New Administration and Congress and the Economic Downturn May Provide Opportunity to Fix Bankruptcy Code Flaw Adversely Affecting Workers’ Compensation Claims – Eric Oxfeld
This article discusses the problems associated with workers’ compensation claims when a self-insured or illegally uninsured employer files for bankruptcy. It also describes the benefit of mending the Bankruptcy Code to add protections for workers injured on the job, comparable to protections now provided for wages and other types of employee benefits.
Musculoskeletal Impairments – A Comparison of Evaluations Using the AMA Guides 4th, 5th and 6th Editions – Mark Melhorn
This paper illustrates the development of various editions of the AMA Guides to the Rating of Impairments, along with criticisms of the AMA Guides. It focuses on the axioms and other novel features of the 6th Edition of the AMA Guides. It offers the author’s reflections on the limitations of the new AMA methods and his suggestions for improvement.
Introducing Identity Resolution A New Approach to Workers’ Compensation Fraud – Charles Clendenen
Workers’ compensation fraud is a serious problem for the various workers’ compensation systems administered by states nationwide. The Ohio Bureau of Workers’ Compensation, for example, estimates that they pay as much as $320 million annually in fraudulent claims (2008). This paper briefly reviews the three major classes of workers’ compensation fraud, i.e., fraud committed by medical providers, by employees making claims, and by employers who avoid paying premiums. The article then introduces a new technology, called “identity resolution,” that is being applied to the workers’ compensation employer fraud problem. Next, the software and how it works is described, followed by a discussion of the return on investment (ROI) that agencies may expect to derive through better detection of employer fraud.
Preventing Further Harm to the Harmed – Towards a Therapeutic Approach to Workers’ Compensation – Robert Guthrie and Stephen Monterosso
Workers who contract disease or who are injured in the course of their employment not only suffer the consequences of a work injury or disease in terms of disability and impairment. In addition some workers are subjected to a myriad of claims procedures, medico-legal investigations, dispute processes and surveillance which retards recovery and produces further assault on the workers’ physiology and psychology. The delay in recovery for these workers has economic consequences for
them, the employer and the economy as a whole. The consequences of this double harm frequently arise out a deep scepticism directed towards claimants. Often inexperienced claimant litigants seek workers’ compensation income support from government and corporate agencies who are frequent players in a complex legal and medical system. This paper sets out to develop guiding principles by which a workers’ compensation system should operate. Based on the principles of therapeutic
justice and adopting a principle of Above all, Do no Harm, the paper posits that systems of income support for disability and impairment should be premised not only on the provision of adequate income support for workers who are harmed through work, but also on the prevention of further harm to the worker through bureaucratic claims processes, over zealous claims management and lack of good faith in claims handling. It asserts that having such guiding principles provides a sound economic, medical and ethical basis for income support.
An Evaluation of the Effectiveness of Using a Prospective Peer Review Process to Control Excessive Physical Therapy Visits – Janet Jamieson
This study analyzed the effectiveness of using a prospective peer review process to control excessive physical therapy visits for workers’ compensation injuries. The study was based on a national data base of physical therapy claims. The claims included those that were processed through a bill review process and claims that were provided a prospective peer-review. The top five cost driver diagnoses were identified and the average number of visits and most frequent treatments provided were identified for both the peer-reviewed and non peer-reviewed claims. The results showed the peer-review claims had a slightly higher average number of visits for all five diagnoses than those without peer-review. This appeared to be due to the increased severity of the claims that were pre-identified for the peer-review process. Both peer-reviewed claims and non peer-reviewed claims had a number of claims with excessive physical therapy visits. A nested study was conducted on a subset of the peer- review claim data that represented a “monitored” peer-review process An Evaluation of the Effectiveness of Using a Prospective Peer Review where the payer was provided monthly reports on the status of all physical therapy claims in terms of the number of recommended visits. This information was used by the payer to monitor the case management process and ensure that the peer review recommendations were integrated into the medical management of the claim. Monitoring the review recommendations resulted in a reduction in the average number of visits from 13 to 8.5 visits per claim. The study results indicated that simply providing prospective peer- review may not control excessive physical therapy visits unless the information is integrated into the medical management of the claim.

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