International directions in compensation scheme

management

Dr Cameron Mustard
President, Senior Scientist, Institute for Work & Health
2nd Australasian Compensation Health Research Forum
November 8-9, 2012, Auckland New Zealand

Institute for Work & Health

Who we are and what we do

Independent, non-profit research institute
in a Canadian province of 6 million workers
Multi-partite Board of Directors: labour, employer, research, and
government insurance agency
Established in 1990

Research on the effectiveness of prevention, treatment and return-to-work

in work-related disorders
Commitment to knowledge transfer and exchange

Outline
1. Overview of some trends in the burden of work disability
2. The impact of the global financial crisis
3. Directions in compensation scheme management

Common Challenges
Demographics

Aging workforce, linguistic plurality

Nature of Work

Globalization, Industrial restructuring

Disability Type

Slow onset, non-traumatic injury and disease

Emerging multi-cause conditions (cancer, stress, soft tissue)
Challenges in prevention, recognition, attribution and treatment

Provision of Care

Timely access to care, cost of medical innovations

Integrating prevention and disability management of soft-tissue injuries
Developing evidence-based approaches to return to work

Customer Service

Developing service culture, retaining skilled staff

Internal change management
Meeting needs of small business

Technology

Technology and data solutions to simplify claims processing, track

trends, access information and services

Accountability

Development and tracking of performance measures

Work disability prevention & return to work:

the past ten years
Increasing adoption of disability management return-to-work
programs in medium and large employers, generally supported by
organized labour
Active case management services amongst insurers of
employment-based long-term disability plans
Adoption of case management by workers compensation boards:
coordination of workplace accommodation
resolution of delays and obstacles in clinical care
Significant information technology investments to support case
management services

What keeps people out of work?

A portrait from the United Kingdom

Black C. Working for

a healthier tomorrow.
Secretary of State for
Health, Secretary of
State for Work &
Pensions. The
Stationary Office.
March 2008.

Number of workers on sick leave

Total days of sick leave (millions)

Work disability due to back pain, Netherlands, 2002-2007

Lambeek LC, Van Tulder MW, Swinkels ICS, Koppes LLJ, Anema JR, Van Mechelen W. The trend in
total cost of back pain in the Netherland in the period 2002 to 2007. Spine; 2011;36 (13): 1050-1058.

Trend in total cost of back pain in the Netherlands, 2002-2007

Lambeek LC, Van Tulder MW, Swinkels ICS, Koppes LLJ, Anema JR, Van Mechelen W. The trend in
total cost of back pain in the Netherland in the period 2002 to 2007. Spine 2011;36 (13): 1050-1058.

Trend in total cost of back pain in the Netherlands, 2002-2007

During the period 2002-2007, sick leave among workers with back pain
decreased by 25%, and the number of people receiving a disability
pension because of back pain decreased by 26%.
Total cost of back pain in the Netherlands decreased from 4.3 billion in
2002 to 3.5 billion between in 2007. Indirect costs made up 87-89% of
total costs.
Findings from this study suggest that the decreasing indirect costs of
back pain in the Netherlands are the result of social security and healthcare system reforms:
changing the reimbursement of interventions within the Dutch public
health insurance system ,
requiring practitioners to respect evidence-based practice guidelines

Trends in sickness absence, Great Britain, 2000-2009

Linaker C et al. The burden of

sickness absence from
musculoskeletal causes in Great
Britain. Occupational Medicine. 2011
Doi:10.1093/occmed/kqr061

10

The burden of sickness absence from musculoskeletal

causes in Great Britain
Estimates based on information provided by surveillance schemes
and publicly available datasets on sickness absence due to
musculoskeletal disorders
Self-reported work-related illness survey module of the Labour Force
Survey, initiated in 1990.
Screening question: within the past 12 months, have you suffered
from any illness, disability or other physical or mental problem that
was caused or made worse by your job
Survey responses provide a (lower limit) estimate of the burden of
sickness absence attributed to MSDs
Linaker C, Harris EC, Cooper C, Coggan D, Palmer KT. The burden of sickness absence from
musculoskeletal causes in Great Britain. Occupational Medicine. 2011. doi.10.1093/occmed/kpr061

The burden of sickness absence from musculoskeletal

causes in Great Britain
9.26 million working days were lost from work-ascribed MSDs in
2008-2009; back pain contributed 3.5 million lost days, neck or
upper limb contributed 3.7 million lost days
A decline of 22% in lost work days relative to 2001-02, with greatest
reductions attributed to back pain (36%) and smallest reductions
attributed to arm or neck pain (5%)
The UK Health & Safety Executive estimates that 9.5 million lost
work days attributed to work-related MSDs represent a cost to
society of 8 billion

Linaker C, Harris EC, Cooper C, Coggan D, Palmer KT. The burden of sickness absence from
musculoskeletal causes in Great Britain. Occupational Medicine. 2011. doi.10.1093/occmed/kpr061

An increasing proportion of working-age adults

are receiving disability income security benefits
Decades of advances in medical treatments and rehabilitation care
would be expected to reduce the numbers of persons who have
impairments that prevent work participation
Less and less employment requires physically exertive work
These medical and labour market trends would be expected to
reduce the incidence of disability income security beneficiaries.

The opposite has occurred.

Larkin F, Sheikh MA. Brighter prospects: transforming social assistance in Ontario. Commission for the
review of social assistance in Ontario. Report to the Minister of Community and Social Services,
October 2012. http://www.socialassistancereview.ca/final-report

Disability Benefit Expenditures in Canada: $28.2 B

Employment-based
Long-term Disability Plans
Long-Term Disability
$8.1B
Plans, 5.9

Canada Pension Plan

Disability

$4.1B
Employment Insurance
Sickness Benefit

$1B
Veterans' Benefits Disability

$2B
Tax Measures

$2B
Social Assistance

$8.1B
Workers' Compensation

$5.4B

An increasing proportion of working-age adults

are receiving disability income security benefits

Working-age disability policy today

is one of the biggest social
and labour market challenges
for policy makers

OECD. (2010a). Sickness, disability and work: breaking the barriers. A synthesis of findings across
OECD countries. Paris, OECD publishing.

2. The impact of the global financial crisis

16

British
Columbia
2004-2010

2,200,000

16,000

15,000
2,000,000

14,000

15% reduction
in registered claims
Feb 2009 to
Feb 2010

1,800,000

13,000

1,600,000

12,000

11,000

1,400,000

2% reduction in
insured payroll

10,000

1,200,000
9,000

1,000,000

8,000

Claims Registered (Monthly)

Claims Registered (12-Month Rolling Average)

12-Month Rolling Person Years

17

There is good evidence that the

frequency of workers compensation
claims per hour worked declines in
recessions and increase in times of
economic recovery. Some possible
explanations are that during recessions:
there are fewer inexperienced workers
the least safe equipment
is taken out of use
the pace of work is slower
workers fearing job loss
may defer filing claims
hazardous industries experience
the largest decline in employment

18

Trend in compensation claims, Ontario, 2000-2011

Impact of the global financial crisis

2008-09

- 18%

19

Trend in compensation claims, Ontario, 2000-2011

Impact of the global financial crisis
Construction

2008-09
Claims

-22%

Health Care

2008-09
Claims

-5%
Hours

+1%

Hours

-11%

20

3. Directions in compensation scheme management

Investments in prevention
Accommodation of disability at work
The challenge of long-duration claims
Measuring scheme performance: case study of benefit adequacy

21

Total prevention expenditures per 100 employed, 2007-2008

and prevention expenditures as a percent of premium revenue
Total prevention expenditures per 100 employed

$4,500
$4,000
$3,500
Prevention
expenditures as a
percent of premium
revenue

$3,000
$2,500
$2,000
$1,500

$1,000
$500

6.0%

7.1%

4.8%

NA

4.5%

7.8%

3.3%

$0
Ontario

Germany

Quebec

UK

BC

NZ

Vic

22

Expenditures on economic incentives

Per 100 employed, 2007-2008, NA: Not available

Accommodation of disability at work

24

Overall, the beneficial effects of work outweigh the

risk of work to health, and are greater than the
harmful effects of long-term unemployment, or
prolonged sickness absence. Work is generally good
for health and well-being. This is true for healthy
people of working age, for many disabled people, for
most people with common health problems and for
social security beneficiaries. Work is generally
therapeutic and can reverse the adverse effects of
unemployment.
Waddell G, Burton AK. Is work good for your health and well-being? September 2006. London,
The Stationery Office [ISBN 0 11 7036943]

25

Accommodation of disability at work, Ontario

In a sample of 1,500 workers disabled by a musculoskeletal
injury in 1994, 25% of workers reported receiving an offer of
work accommodation from their employer in the first 30
days following injury
In a sample of 600 workers disabled by a musculoskeletal
injury in 2005, 60% of workers reported receiving an offer of
work accommodation from their employer in the first 30
days following injury

26

Trends in lost-time and no-lost-time claims,

Ontario, 1991-2006
250,000

Lost-time claims
No-lost-time claims
200,000

150,000

Annual
change

0.03

100,000

50,000

Annual
change

-3.7

Smith P, Chen C, Hogg-Johnson S,

Mustard CA, Tompa E. Trends in the
health care use and expenditures
associated with no-lost-time claims in
Ontario: 1991 to 2006. Journal of
Occupational and Environmental
Medicine 2010; 53:211-217.

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

27

Trends in lost-time and no-lost-time claims,

Ontario, 1991-2006
Accepted lost-time claims fell much more rapidly than no-lost-time
claims: a decrease of 46% compared to a decrease of 9%
Three potential explanations:
improved protection of workers from the risk of serious injury
better accommodation of disability arising from work injuries
changes in the injury reporting practices of firms
Manual coding of approximately 10,000 no-lost-time claims did not
identify a trend over time of increasing severity of no-lost-time claims.
More information on the use of modified duty practices in Ontario
workplaces would aid understanding of disability management
outcomes.
28

Modified duty practices:

institutional long-term care
600 facilities, 75,000 workers, Ontario 2005-2006
2006

Days of modified duty,

as a proportion of total disability days
34 long-term care facilities
Total disability days =
Days of compensated wage replacement
plus modified duty days

2005

29

The challenge of long-duration claims

30

Wage-Loss Claims off Compensation at 90 days, 180 days and 365 days
Percentage of Wage-Loss Claims off Compensation

100

British Columbia
Work-related injury

Ontario
Work-related injury

Quebec
Work-related injury

New Zealand
All Accident Schemes

95

90

85

80

75

70

365 Days
180 Days

65

90 Days

60

02 03 0 04 0 05 0 06 0 07 0 02 0 03 0 04 0 05 0 06 0 07 0 02 0 03 0 04 0 05 0 06 0 07 0 02 0 03 0 04 0 05 0 06 0 07
20 20
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2

Survey of Case Management Services for Long Term and

Complex Workers Compensation Claims
May 2009, Seven jurisdictions:
New Zealand, Switzerland, Germany, Washington State (USA),
British Columbia (Canada), Ontario (Canada), Victoria (Australia)
Survey conducted between February and April 2009, initial phone
meetings were held with key informants to clarify purpose and intent of
survey. Respondents were invited to provide additional information and
documentation to supplement survey
Draft survey results were distributed for review and comment to all
participating jurisdictions

32

Survey Results: Summary Observations

Early Identification - A strong focus on early identification of potentially long term
/ complex claims.
Broadening Criteria A majority of jurisdictions are looking at a combination of
factors when identifying long-term/complex claims that require case management
services, including medical, occupational and psycho-social factors.
Early Intervention Most jurisdictions are proactively using case management
and / or rehabilitation intervention as early as possible in the claim process.
Inter-professional Teams There is a trend towards case managers playing a
central role in inter-professional, collaborative case management teams.
Tailored support Many jurisdictions are developing tailored plans and services
to meet individual client needs and provide strong support for pre-injury
employers.
Strengthened Oversight Those jurisdictions that outsource services are
strengthening oversight of external service providers, including enhanced quality
monitoring and complementary internal skills and resources.
33

Measuring scheme performance:

Case study of benefit adequacy

34

Disability Benefit Expenditures in Canada: $28.2 B

Employment-based
Long-term Disability Plans
Long-Term Disability
$8.1B
Plans, 5.9

Canada Pension Plan

Disability

$4.1B
Employment Insurance
Sickness Benefit

$1B
Veterans' Benefits Disability

$2B
Tax Measures

$2B
Social Assistance

$8.1B
Workers' Compensation

$5.4B

From the societal vantage point

Do we have adequate metrics for the performance of disability
income security programs?
Can all programs report adequately on:
on benefit duration,
beneficiary health status and use of health services
benefit adequacy and labour market earnings
return to employment and effectiveness of re-employment
services

People with disabilities represent

11.5% of the working age population in Canada,
and the proportion is rising
2.4 million working age adults with
disabilities in 2006

Numbers of persons, 000

22.8%

15.1%

From 2001 to 2006, the proportion of

working age adults with disability rose
from 9.9% to 11.5%
Increasing rates of disability reflect:
- aging of the population
-recognition of behavioural disorders as
learning-related disabilities
-reduction in societal stigma concerning
reporting disability
Labour market participation of persons with disability. Office for
Disability Issues, Human Resources and Skills Development
Canada, June 2009.

9.6%

4.7%

6.1%

Do we have adequate information on the performance of

disability income security programs?
Canada Pension Plan
Disability

Employment-based
Long-term Disability Plans
Long-Term Disability
$8.1B
Plans, 5.9

$4.1B
Fair

Employment Insurance
Sickness Benefit

Weak

Fair $1B
Fair

Veterans' Benefits Disability

$2B
Tax Measures

Fair $2B

Weak
Social Assistance

$8.1B

Good
Workers' Compensation

$5.4B

Adequacy of workers compensation benefits in Ontario

Objective: assess the adequacy of benefits provided to disabled
workers in Ontario who were awarded a permanent impairment
benefit by the Ontario Workplace Safety & Insurance Board
Methods: comparison of the earnings of claimants for nine years
after injury with similar, but non-injured, workers (control groups).
For claimants, we estimated the earnings replacement rate: the
combination of post-injury earnings and workers compensation
benefits compared to control group labour market earnings.
Results: Average after-tax earnings replacement rates were 99%,
exceeding the study assessment target of 90%.

This is a very significant achievement in the administration of a

complex disability income replacement program.
39

Labour market earnings and earnings plus benefits as a

percent of non-injured control group earnings
Permanent impairment beneficiaries (11-20% impairment)
Percent

Examining the adequacy of workers' compensation benefits. Issue Briefing, January 2011. Institute for Work &
Health. http://www.iwh.on.ca/briefings/benefits-adequacy

40

Summary

Working-age disability policy today

is one of the biggest social and labour market
challenges for policy makers

OECD. (2010a). Sickness, disability and work: breaking the barriers. A synthesis of findings across
OECD countries. Paris, OECD publishing.

41

Thank You!

Please contact me directly for further

information
Web site: www.iwh.on.ca
E-mail: cmustard@iwh.on.ca
Dr. Cameron Mustard

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