Over the last twenty years, the average medical costs associated with lost-time workers’ compensation claims have gone up dramatically. As of last year, the average medical claim cost per lost-time claim is $28,000. This figure does not take into account workers’ compensation policies with high deductibles, nor does it give us any detail about what sort of medical care was provided, or whether any surgery was performed, and if so, what each surgery cost employers and their insurers.
As shown in Figure 1, the last twenty years has seen a steady climb in medical claim costs for workers compensation. In 2008, medical losses represented 58% of all total losses. The annual percentage change per lost-time claim from 1991 – 1993 was +1.9%; from 1994 – 2001, it was +8.9%, and from 2002 – 2010, it was +6.0%. Despite attempts to bring down costs, the costs are now closer to $30,000 per lost-time claim, and may continue to rise in the very near future.
2011p: Preliminary data as of 12/31/2011
Source: National Council on Compensation Insurance, 2012
Given these facts, it appears that the U.S. workers’ compensation system is in need of some outside influence on costs that will provide both employers and insurers of high quality medical care at lower cost for workers who sustain injuries on the job. Much of what the workers’ compensation industry is already doing to bring down costs, only treats symptoms, and not the disease or the cause of the disease itself.
Implementing safety procedures and insuring the proper use of safety equipment, implementing return to work programs and better case management, eliminating the re-packaging of drugs by physicians and cracking down on opioid use, which are some of the current issues facing workers’ compensation, in the short-term may be beneficial, but as we have seen above, have not made a dent in the overall rise in medical costs for lost-time claims.
Medical tourism would present an opportunity to bring down claim costs by offering high quality health care at lower cost, and to open the system to competition. Both the employer and insurer will need to be pro-active in order to realize savings for their workers’ compensation claims. Medical tourism will also provide an opportunity for foreign-born employees to get treatment in their home country, and in familiar surroundings, since many American workers today have emigrated to the U.S., mainly from Central and Latin America, as well as allow those workers not born abroad to see a part of the world they otherwise would not see.
While many of the medical tourism destinations previously receiving medical tourists are in Asia, “rising stars” in Central and Latin America, and the Caribbean, are areas that would satisfy the workers’ compensation industry because of its closeness to the U.S. mainland, and because the climate is more temperate in most of these countries compared with those in Asia. Medical tourism would not be a panacea for everyone, and would not be needed in every case, but in the long run, it can be an option that employers and insurance companies can utilize that will benefit all parties.
However, there are barriers to implementing medical tourism into the U.S. workers’ compensation system. Some of these barriers are minor issues that can be resolved by working around them, should an employer or insurance company wish to pursue medical tourism for their workers’ compensation claims, as some are now doing on the group health care side. It is the purpose of this article to outline some of the most important barriers, and to offer some ideas as to how medical tourism can overcome these barriers, so that injured workers can receive the best medical care available, no matter where it is located.
Among one of the minor barriers that prevent medical tourism from being implemented, are the laws about the distance from a claimant’s home a provider can be in order for the claimant to reasonably get to the doctor’s office. This would not be a problem for medical tourism, as the best way it could be utilized would be on a secondary care level. If a treating physician recommended surgery to the injured employee, it would be up to his employer or the insurance company, to have the patient go abroad for medical treatment, or if the employee so wished. The likelihood of this happening would be negligible because most injured workers would not be concerned about how much their treatment would cost, but his employer or their insurance company certainly would, and therefore, if given an option, they might suggest to the employee that this was the best course of action.
Another minor barrier is the result of entrenched interest groups, such as physicians, lawyers, pain management centers, and other parties in the workers’ compensation industry that wish to avoid competition with low-cost providers. Outdated federal and state laws that were intended to protect consumers, instead increase costs and reduce convenience also impact medical tourism. State and federal regulations that restrict public providers from outsourcing certain expensive medical procedures; federal laws that inhibit collaboration, and state licensing laws that prevent certain medical tasks from being performed by providers in other countries are a hindrance to health care medical tourism, as well as to workers’ compensation. Also, foreign physicians lack the authority to order tests, initiate therapies and to prescribe drugs that pharmacies in the U.S. are able to dispense.
Some laws, which should have been removed with the invention of the telephone, let alone the Internet, make it illegal for a physician to consult with a patient online without an initial face-to-face meeting. It is illegal for a physician who is outside the state and who has examined the patient in person to continue treating via the Internet after the patient goes home. Lastly, it is illegal, in most states, for a physician outside that state to consult by phone with the patient residing in that state if the physician is not licensed to practice there.
This brings our discussion to the major barriers to implementing medical tourism into workers’ compensation. In four of the largest workers’ compensation states, California, Florida, New York and Texas, medical providers must be licensed by the state to practice medicine. Florida statutes contain a provision to allow certain foreign-trained physicians to practice in the state, but do not mention doing so outside of the state.
Two states, Washington State and Oregon, both have statutes or rules that allow workers to choose an attending doctor or physician in another country. Washington State’s Department of Labor and Industries has a page on their website that allows workers to find an attending physician in the U.S., Canada, Mexico, as well as countries outside of North America such as England, Germany, Honduras, New Zealand, the Philippines, Spain, Thailand and Ukraine. Oregon’s statutes recognize the right of the worker to choose an attending doctor in another country with the prior approval of the insurer or self-insured employer. For this to be realized in other states, insurance companies, employers, business groups, unions and even workers’ rights organizations must get involved and lobby their state legislatures to change or amend their laws.
It would seem that medical tourism has already made some inroads into the U.S. workers’ compensation system. Issues of licensing and other barriers mentioned above are not insurmountable, and can be overcome with reasonable ease if medical tourism is conducted through medical tourism facilitators working in conjunction with employers and insurers. One more likely scenario would involve self-insured employers who may or may not be currently utilizing medical tourism for their group health care plan, and wish to realize savings for both their health care and workers’ compensation costs.
The last major barrier to incorporating medical tourism into workers’ compensation is the issue of Employee vs. Employer choice of treating physician. State Workers’ Compensation laws recognize four different categories of choice of physicians: Employer Only, Employer/Insurer, Employee/Employer and Employee Only.
Employer Only is self-explanatory; Employer/Insurer means that either the employer or his insurance carrier can choose the treating physician for the claimant. Employee/Employer means that the employee has the choice to choose the treating physician, or failing to do so, gives that right to his employer. Employee Only means that the employee can choose his physician.
Among the fifty states and the District of Columbia, a slim majority of states allow some form of employer choice as described above, and as indicated in Figure 2. As seen in Table 1, choice of physician is marked by an ‘X’ under each category, for all fifty states and the District of Columbia.
The percentage of states for each category is shown below in Figure 3. The 50% of states recognize Employee choice, but if you add together the Employer Only, Employer/Insurer and Employee/Employer categories, the majority of states, 52%, would favor employer choice in whole or in part.
What this all means for medical tourism is this, the best approach to take in implementing medical tourism into the US workers’ compensation system is to get employers to choose it as an option for their injured employees who will need secondary treatment, i.e., surgery that would be more expensive in the U.S., but at a much lower and more reasonable cost and better quality in fully accredited hospitals in medical tourism destinations.
For self-funded employers, especially those already using medical tourism as an option for their employees’ health care plan, doing the same with their workers’ compensation claims will allow them to realize considerable savings in workers’ compensation costs, as they are ready realizing in their health care costs. Employers, who are getting coverage on health care for their employees through the commercial market, will want to approach their workers’ compensation carriers to get them on board with a medical tourism option. Some commercial insurance companies that provide both health care coverage and workers’ compensation coverage would be the best companies to work with in this regard.
If there is some resistance on the part of employers and their insurers because of state workers’ compensation laws, then a concerted effort to amend, remove or change these laws will need to be considered, not just by a few companies, but across the board in the business world. To do anything less would be to allow the status quo to continue and to see medical costs for workers’ compensation claims to rise even higher when there is a viable and reasonable alternative available, within a relatively short distance from the US mainland in Central and Latin America, and the Caribbean, the so-called “rising stars” of medical tourism. Only time will tell if U.S. employers and insurance companies will be open to implementing medical tourism into workers’ compensation. Conservative solutions, already tried and not yielding much success in bringing down medical claim costs, will have to give way to more “radical” solutions such as medical tourism, which when thoughtfully considered, is not that radical after all.
To read my White Paper on Implementing International Medical Providers into Medical Provider Networks for Workers’ Compensation, go to the following link: https://www.box.com/s/77inqpo9pa91y6rxt133