Medical Inflation in Workers’ Compensation

For many corporations, improved risk management and back-to-work programs have resulted in a reduction in claim frequency. This in turn can mitigate adverse severity trends.

However, we are witnessing a continued rise in the medical component of workers’ compensation, with such trends being greater than indemnity. A significant driver of medical inflation seems to be prescrpiton costs; particularly scripts for opioids which can be perscribed for back pain. These drugs were originally designed to be used for individuals experiencing end-stage cancer pain but are now being prescribed for more common ailments. Excessive opioid use can be addictive, has side effects, and can actually diminish the injured worker’s abillity to recover from an injury and return to work.

For those companies with a significant workers’ compensation exposure, we suggest drilling down to the detail for their medical claims to analyze the cost components. Action steps, including employee education, may need to be taken with claims personnel, insurers and third party providers.

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