For those of us tracking insurance industry trends, one of the most curious and unexpected in recent times has been the reshaping of auto injury treatment patterns. The duration, complexity, and distribution of treatment looks notably different now than it did four years ago, with no indication of returning to what was typical pre-pandemic. It’s worth taking a deeper dive into both the outcomes and possible root causes of this trend.
From a cost perspective, medical treatment has increased year over year as expected, but that's where the "expected" ends.
Typically, when costs go up, we look at two key contributing factors to help explain the increase: treatment cycle time which we measure as the average amount of time a person treats from the first date of service to the final date of service, and the number of procedures per injured party. While cycle time initially increased post-lockdown in 2020 and 2021 when claim frequency was at its lowest but accident severity was highest, the average has now dropped below the pre-pandemic baseline (Figure 1). The average number of procedures per injured party has followed a very similar pattern (Figure 2) initially rising during post-lockdown but now tracking below the 2019 baseline.
The distribution of dollars across different types of procedures has also shifted. There is now a larger concentration of dollars on the front end of the treatment cycle for procedures such as CAT scans, X-rays, and Evaluation and Management (E&M), with less concentration placed on extended therapeutic care such as Chiropractic or Physical Therapy. In addition, cycle times for those front-end, interventional procedures – such as MRI’s, epidural steroid injections, and outpatient surgery – have decreased across the board but their costs have soared (Figure 3).
But why have treatment patterns changed so much if vehicle miles traveled have essentially returned to the same levels as pre-pandemic? Evidence suggests no singular cause. There are, however, a few key trends which help to explain the shift. For one, impact severity in terms of "collision energy" has remained elevated well beyond pre-pandemic levels with a persistence of risky driving behaviors such as speeding and distracted driving (Figure 4). This troubling trend has resulted in increased diagnoses of head injuries (Figure 5), which has, in turn, prompted more frequent CAT Scans and inpatient hospital charges, the latter occurring with more severe injuries.
Another key trend contributing to shorter cycle times and decreased procedure counts concerns recent challenges faced by medical providers: Medical providers have been forced to contend with significant inflation of supplies and labor costs, both of which were driven by pandemic-related disruption. At the same time, contracted reimbursement rates from their main payers such as Medicare and private health insurance remained largely static, meaning they were locked in before recent historic cost inflation.
Lastly, another key trend contributing to shifts in U.S. auto injury treatments is the prevalence of our aging population. This, coupled with still-rising obesity rates and lingering symptoms of "long COVID" have contributed to a larger percentage of pre-existing conditions, including, but not limited to chest pain, arthritis, nerve impingement, and herniated discs, which in turn contribute to more billing for outpatient surgeries and injections.
Time will tell if these new treatment patterns hold firm in the long-term. Newly emerging vehicle safety technology and increasing use of telematics may turn the tide of risky driving at some point in the near future, but the key takeaway here is that while U.S. drivers are logging a similar number of miles as compared to pre-COVID times, driving faster and with more distractions seems persist. As well, our population continues to age, resulting in unique medical treatment dynamics for auto-related injuries.
