The construction industry and comorbidities are two areas of concern in the workers compensation industry, which is grappling with a rise in so-called mega claims, according to experts who say technology is working to help curb runaway costs.
Costs associated with catastrophic workplace injuries that cost more than $2 million represent less than 0.1% of workers compensation claims but account for up to 2% of all costs to insurers, according to a report released Dec. 5 by the National Council on Compensation Insurance.
Boca Raton, Florida-based NCCI worked with nine state rating agencies to study mega claims, examining 11,330 from accident years 2001 through 2021 that had incurred losses in excess of $2 million.
Sandra Kipust, senior practice leader and actuary with Actuarial and Economic Services for NCCI, said a significant increase came from the construction industry, which has the highest frequency of mega claims. The report also noted that head, brain, neck and spine injuries dominate claims over $10 million, making up nearly 60%.
Overall, mega claims remain a small minority of claims in workers comp, which has seen overall claim frequency decline over the past decade, Ms. Kipust said.
The report highlighted that mega claims represent only one out of every 1,295 reported indemnity claims, with most -- 53% -- costing between $2 million and $3 million. Twenty-seven percent were between $3 million and $5 million, while 15% were between $5 million and $10 million, and 4% were in excess of $10 million.
The report stated that "some drivers related to the cost of mega claims include medical advances which improve patient outcomes and provide life-saving measures."
Jason Beans, CEO of Chicago-based Rising Medical Solutions, said predictive modeling can help manage mega claims.
He described mega claims as not only those with catastrophic injuries at the onset -- such as burns or falls -- but those that "creep" up in costs due to complications or pre-existing health issues.
"That's becoming more common," he said. "It's the issues that are missed. Maybe it's a disc issue, and then they go in for surgery, and the surgery goes bad, and they get an infection, and the costs just kind of creep up."
Similarly, claims with comorbidities that can lead to complicated medical issues and increased costs are also increasingly common, Mr. Beans said. Medical documentation can be data-mined for early detection of potential issues, he said.
Max Koonce, Bentonville, Arkansas-based chief claims officer at third-party administrator Sedgwick Claims Management Services Inc., said mega claims are not "problematic as much as they are challenging."
"The challenging aspect is to ensure that you bring all of the necessary resources together as rapidly as possible to ensure the best probable outcome for the injured worker," he said. "With the technology ... we are able to utilize triggers that provide direction to our examiners."
He said resources "involve direction to the most appropriate physician or center of excellence utilizing our medical provider modeling, and inclusion of crisis care nurses who are specially trained to deploy the appropriate clinical resources."