The Rising Cost of Workers’ Compensation Claims
A recent report from WCRI notes that from a national perspective that the number of claims filed is decreasing. However, it is reported that the overall cost per claim is increasing. The largest component of these increasing costs is medical payments. These payments are growing at a level of greater than 6% per year. Additionally, it is noted that the “high-cost claims” are responsible and consume more than 40% of all medical payments. Moreover, the report indicates the average disability duration for each claimant has stretched from approximately 12 weeks to more than 13.5 weeks each. An incidental finding of increased litigation costs are noted as well.
NAvigating NEW YORK Regulation realities
Add to these national statistics, it is clear that New York has layered fresh regulatory complexity for claim file management. Additional issues include expansion of hospital-based providers (residence/fellows in training) to treat injured employees under faculty supervision. This enables the 70 teaching hospitals statewide to be able to address work comp injuries. It is also allowed that any licensed provider in good standing can treat a work comp injured individual without specific board authorization. The issue for adjusters is that with this expansion in treating providers, it is not clear that these individuals understand WCB documentation standards, the medical treatment guidelines, the required forms, and the necessary clinical information (such as collateral range of motion or which edition of the guidelines are to be used) complicating the overall process. This could result in premature findings of maximum medical improvement and inflated permanent impairments. And for every month a questionable diagnosis goes unchallenged, significant increases to medical payments and indemnity costs occur and reduce later options.
New York Rules and Early Clinical Assessments
A bit of good news, an amendment to WCL § 21-a extends provisional payment without accepting liability for up to one year. This change is effective on January 1, 2027. Given that “medical-only” claims comprise more than 60% of the New York State claims filed, the provisional payment strategy becomes more viable. However, this becomes effective if there is an objective clinical basis for the decision.
New York’s continued movement toward electronic submission places greater emphasis on the accuracy and completeness of clinical documentation. Incomplete clinical support can delay treatment decisions and create avoidable disputes.
The Importance of Early Clinical Assessments
Each of these two items clearly establish the benefit for a Baseline Clinical Assessment (BCA) as a functional tool for the claim file handler to employ. This tool gives claim file handlers objective medical intelligence during the timeframe when claim direction can still be easily influenced. And, as reported in the January 2026 regulatory agenda, further updates and changes to the Medical Treatment Guidelines are pending (12 NYCRR § 324.2). Another reason is to have a clinical support system in place that is easily reachable and provides the most current clinical information.
Separating Symptoms from Objective Findings
During the first 60 days of a claim, the clinical records should answer several objective questions. Does the assigned diagnosis fit the reported mechanism of injury to a competent, objective, and independently confirmable medical standard? Do the records identify objective findings, including laboratory studies and diagnostic imaging when applicable? Do they distinguish the claimed injury from clear long-standing degenerative pathology that is not explained by the reported mechanism? Finally, does the proposed treatment plan align with appropriate guideline recommendations, and do later notes document measurable functional improvement?
Reducing high costs claims through Clinical review
There is an additional issue that BCA can positively impact. As noted in the 2018 Impairment Guidelines, establishing maximum medical improvement before six months from the date of injury, absent a fracture or surgical procedure, cannot be determined. This assessment can prevent expensive claim mistakes by identifying incorrect body part expansion, clinically unsupported request for surgery, assist with accuracy in setting claim reserves, focuses on prolonged or ineffective physical therapy, and mitigate unnecessary independent medical examinations.
Early clinical review allows the claim professional to identify diagnosis expansion, unsupported treatment recommendations, and causation questions before those issues become entrenched in the medical record.
What a Baseline Clinical Assessment Is (And Isn’t)
To be clear, a Baseline Clinical Assessment does not substitute for a utilization review. This assessment does not replace an Independent Medical Examinations. This BCA is simply an objective independent assessment of the clinical records so that the extent of the compensable injury can be outlined in a fashion easily understandable by all parties, is consistent with the reported mechanism of injury and the objective clinical findings noted. Moreover, the review identifies and assists with the exclusion of long-standing, pre-existing, ordinary disease of life degenerative processes. With this information, a treatment plan consistent with the medical treatment guidelines can be easily established. This enables an expected recovery trajectory, and a more realistic return to work timeframe. An additional consideration is a determination whether the claim is trending on an on-schedule basis. This clinical narrative is in the claim file handler hands long prior to the hardening of the treatment record and before any unfavorable fact patterns are established.
Addressing Cost Drivers and Claim Creep
As the workforce ages, there will invariably be long-standing, pre-existing, completely unrelated comorbidities, and other degenerative changes. As noted in the WCRI report, workers with degenerative changes are 30% more likely to become high-cost claims. Moreover, nearly 1 – 5 injured individuals carry a comorbid degenerative condition. The utilization of a BCA to establish diagnosis consistency with the compensable injury sustained services within the first 30-60 days and can be addressed long prior to narrative established by the treating physician. Given the expanding average disability duration and noting that claims lasting more than 12 months are 35 times more likely to become high-cost claims, the utilization of this tool clearly affects costs. Lastly, if 6% of the claims drive more than 40% of the cost, the implementation of a BCA is that early warning check that flags the potential and need for additional assessment.
With the successful utilization of a BCA, it would appear there would be fewer C-4.3 and IME-4 deficiency disputes as the file already carries a thorough assessment of the clinical records, establishment of pre-existing pathology, and a correct utilization of the guidelines as well as a more realistic permanency expectation. This clinical documentation supports the determination on a provisional-payment decision as noted in the amended WCL § 21-a.
Smarter Insights Make for Better Claim Decisions
In summary, understanding that the severity of Worker’s Compensation claims is increasing, given the expanding regulatory environment adding additional friction to the claims handling process, and the only window where the claim file handler has any real leverage is bounded by the six-month rule; the implementation of a BCA is built to be utilized within that window. The employment of this tool can turn a passive waiting period into an active clinical checkpoint. When adjusters identify unsupported diagnoses, unrelated degenerative disease, and guideline deviations before treatment patterns become established, they have better information for reserving, utilization review, IME timing, and return-to-work planning. Those earlier decisions can reduce unnecessary medical spending and limit claim duration.
The fastest file is not the one that moves fastest at the end, it is the one where the claim file handler had absolute knowledge of what they were dealing with within the first month or two of receiving a new claim as opposed to waiting beyond the six-month window.
