2023 NCCI AIS 2nd Morning Part 2- Medical Costs Breakdown and Mega Claims
The 2023 NCCI AIS 2nd morning (part 2) provided some startling unexpected medical cost statistics. The breakdown of the mega claims into two totally different categories was a very unique analysis. Following Dr. Hartwigs’s presentation is a challenge in itself.
To see these two presentations, check out the NCCI web page covering the 2023 NCCI AIS 2nd Morning Part 2, click here
for the medical analysis, and go here for a breakdown of the mega claims.
Medical Costs Analysis – Key Insights
- NCCI introduces an analytic method to deconstruct changes in medical utilization over time into contributions from changes in injury mix and medical treatment.
- NCCI’s analysis shows that the mix of worker injuries has changed in the past 10 years. The shares of shoulder, leg, and foot claims have increased while the shares of back and neck claims have decreased. <I found this info startling. Back injuries have always been the most common claims both in dollars and number of claims.>
- During the past decade, increased utilization of physician services per claim is largely driven by increased utilization of physical therapy, more than offsetting a reduction in surgery rates. <This came as no surprise as I have written analysis reports for physical therapy investors that showed heavy increases in physical therapy since 2000.>
- The overall utilization of physician services per claim increased by 8% during the past decade, making up about half of the 17% increase in paid cost for physician services in worker’s compensation.
Mega Claims – Key Insights
- New research from NCCI sorts large claims—those of more than $1 million—into two groups: fast-emerging claims and slow-emerging claims. Fast-emerging claims reach $1 million within two years and are typically the result of severe traumatic injuries. Slow-emerging large claims are often soft tissue, degenerative-type injuries that escalate over time due to multiple medical conditions. <I think this was genius to break these claims into two groups. Adjusters should pay attention to this presentation when setting reserves on mega claims.>
- Since 2002, the relative frequency of claims exceeding $1 million has decreased at an annual rate of 3%. <Safety and risk management come into play here>
- The relative frequency of burns, spinal cord injuries, and traumatic brain injuries with claims of more than $1 million has grown by nearly 7% per year since 2012. By contrast, large claims for degenerative disc disorders and pain have decreased by 11% per year.
- Claims from the construction sector make up nearly a third of fast-emerging large claims.<This area has always been the bane of risk managers and safety professionals.>
- The factors driving inflation in large claims can be vastly different from the trends affecting more typical worker’s compensation claims.
Bottom Line 2023 NCCI AIS 2nd Morning Part 2
These two sessions contained some surprises for me. I totally missed the move away from lower back claims to leg and shoulder claims over the last five to ten years. The mega claims breakdown into fast-emerging and slow-emerging was a stroke of genius. I had never seen mega claims analyzed this way previously as in this session of the NCCI AIS @nd morning session. I think actuaries and adjusters can use this split to better analyze mega claims.