As the healthcare industry continues to adjust to the effects of the COVID-19 pandemic, a decrease in workers’ comp claims has been offset by increases in refunds and reduced premiums.

Over the past six months, providers rushed to transition from in-person visits to telemedicine, payors worried about the costs of states passing new workers’ comp regulations to protect frontline workers and employers debated to what extent COVID-19 related workers’ comp claims would be covered.  

Now that the healthcare industry has more of a grasp on the scope of the COVID-19 pandemic, all sides involved in workers’ compensation are starting to look ahead to what the financial ramifications will be. With an economic recession looming, falling premiums and job losses are among the highest concerns for workers’ compensation executives.

Fewer Claims, But More Requirements and Limitations

A recent survey by Health Strategy Associates captures the perspectives of 35 payors and service providers on how COVID-19 has affected the workers’ compensation industry. Respondents included large state funds and insurers, national third-party administrators, large self-insured and self-administered employers.

Decreased total claim counts were almost universal across all respondents, with the exception of large self-administered grocers that stayed open throughout the pandemic. Respondents estimated new (non-COVID-19) injury claims had dropped by 25-to-50 percent since early March. Meanwhile, insurers expected total claims to decrease by about 20 percent for the entire year.1

To date, private insurers have accepted a notably lower percentage of COVID-19 claims filed compared to self-insured, self-administered employers1. But differences in how employers account for these claims may skew the numbers, as many only accept them as workers’ comp if the worker showed symptoms or received medical treatment for COVID-19. Likewise, insurers have generally accepted a lower percentage of COVID-19 claims than non-COVID claims primarily for reasons such as lack of a positive test or documented work-related exposure.

For payors, premium reductions are perhaps the most worrisome potential outcome. The economic devastation resulting from COVID-19 containment efforts and ongoing public concern about exposure to the virus continue to affect businesses across the board, and may lead to significant cuts in premium income well into 2021. Service providers have also voiced concerns over low claims counts due to a lower number of injuries resulting from furloughs, business closures and work-from-home.

Increased duration for occupational injury claims presents another major concern. With layoffs, furloughs, government shutdowns and other business interruptions reducing employment, workers out on injury leave no longer have the guarantee of jobs to which they can return. Additionally, many injured workers have had limited access to care, due to provider office closures and fear of exposure to the virus.

Who’s the Authority When it Comes to Presumptions and Occupational Disease Claims?

In addition to claim and premium reductions, COVID-19 presumption laws and occupational disease claims have become major concerns for all involved in the administration of workers’ compensation healthcare. But now many are left asking whether the greatest responsibility for handling these shifts in premiums, refunds, presumptions and claims lies with states, insurers, employers or service providers.

Many insurers have moved coronavirus claims to a special handling unit of adjusters with increased training to handle COVID-19 claims. Meanwhile, states enacted workers’ comp presumption orders to make sure frontline workers were covered. While states have expanded which workers are covered if they contract COVID-19, workers’ compensation already had standards and rules in place for dealing with occupational disease claims.

Governors, insurance commissioners and the Workers’ Compensation Commission have all tried to protect citizens – especially frontline workers – in case they contracted COVID-19 from their jobs. But in many cases, the workers’ comp systems already allowed for adjustment and compensability determination without needing to have presumption orders in place.

New presumption-related laws and executive orders are often broad in scope and are still evolving, leaving the potential for confusion and concerns by some insurers that the changes could significantly increase loss costs.  This is somewhat surprising, given the relatively low number and cost of most COVID-19 claims to date and the generally limited expansion of liability contemplated in presumption changes to date.

Presumptions may not have been the cost burden payors initially expected, but workers’ comp professionals should still be on guard for COVID-19’s financial effects on the industry. Are states mandating carriers to provide refunds? No. But most insurance commissions have asked for, or required, insurers to be flexible during these unprecedented times. Notably, there has been little consensus on which states have done the best- or worst- job addressing COVID-19 and workers’ compensation.

Necessity Drives Innovation

As some injuries come from exposures or the contraction of a disease, an “accident” or “incident” is not required for workers’ compensation claim compensability. The main requirement for an occupational disease claim originates with a treating physician relating the disease to exposures in the workplace. The statute of limitations becomes critical in these claims. If the treating physician diagnoses a condition as work-related, then the injured employee’s time clock for filing a claim starts then– not from the date of first exposure. 

With a proven vaccine still some months away, many have voiced grave concern over the impact of low consumer demand on business in general, but particularly small businesses, retail, hospitality, travel and tourism- leaving insurers with significant exposure in those sectors particularly worried.

COVID-19 is forcing workers’ compensation to adapt to a different world quickly. Innovations are being driven by major changes to employment, especially in retail, bars and restaurants, hospitality, travel, and healthcare. Premiums will likely continue to drop, especially in states that fail to effectively manage the crisis. 

As businesses layoff and furlough their staff, fewer people are covered by workers’ compensation benefits. As premiums drop, payors will be forced to reduce their frontline staff, leaving adjusters and other claims professionals out of jobs. In order for the industry to survive, it will need to adapt and adopt new innovations quickly. For insurers and service providers, this is a completely new situation, and one that will favor organizations that are open, flexible, and collaborative. Those who demonstrate a willingness to drastically change procedures and policies will be the ones that will look back on this time of transition as a positive milestone in their long-term growth.