Workers’ Comp at a Crossroads: Where Does it Go from Here?

Two roads diverged in a wood, and I— 
I took the one less traveled by, 
And that has made all the difference.

Robert Frost

Robert Frost’s poem, “The Road Less Traveled” is symbolic of where the workers’ comp industry stands today as it enters its second hundred years, as I intend to point out in this article, and especially in light of recent reports that indicate that the system is failing, and failing miserably to adapt to changes in the workforce, in technology, and to deal with an ever globalizing world.

You might say that workers’ comp is a Mac in an ever increasing Wintel world. In other words, workers’ comp has a closed architecture, whereas general health care has an open architecture, and like all modern electronic devices with an open architecture, it can change its parts and add new features with not that much difficulty.

But workers’ comp cannot, or will not open itself to other parts, and that is why it is failing.

To begin with, I wrote an article last week entitled, “Hospital Outpatient Costs Still Rising Says New Study”, in which I mentioned a study by the Workers’ Compensation Research Institute (WCRI). This report was one of the topics discussed this morning at their annual conference in Boston. The WCRI report stated that hospital outpatient costs are still rising, and that:

  • States with percent-of-charge-based fee regulations or no fee schedules had the highest payments to hospitals for outpatient surgical episodes for knee and shoulder surgeries. In particular, states with no hospital outpatient fee schedules had 60 to 141 percent higher hospital outpatient payments per episode compared with the typical state with fixed-amount fee schedules.
  • There was tremendous variation in the rates of change in hospital payments per surgical episode across states. From 2006 to 2013, South Carolina saw a reduction of 31 percent in this metric while in Alabama the average hospital payment per surgical episode grew by 81 percent. States with percent-of-charge-based fee regulations or no fee schedules had more rapid growth in hospital outpatient payments per episode than states with other regulatory approaches. In particular, most percent-of-charge-based fee regulation states that did not have updates to the reimbursable percentage of charges experienced growth in hospital payments per surgical episode that was 157–286 percent faster than the median of states with fixed-amount fee schedules.
  • States with cost-to-charge ratio fee regulations had similar levels and growth rates in hospital outpatient payments per episode to states with fixed-amount fee schedules. Hospital outpatient payments per episode in states with cost-to-charge ratio regulations grew 10–25 percent from 2006 to 2013.

The second half of that article discussed a report written by Peter Roumaniere, “Seismic Shifts: An Essential Guide for Practitioners and CEO’s in Workers’ Comp“. Peter’s report examined how technology and demographics will impact workers’ comp from the present day through 2022. One of the factors Peter identified was the shift from a manufacturing to service economy. By the 1960’s, the service sector began to eclipse manufacturing, and employment in services climbed from 55% to 85% of total employment.

He illustrated how jobs as a share of the national employment in three occupation groups from 1950 to 2005 declined. These occupations are: hand craft production; transport, construction, mining and farming; and machine operators and assemblers. He also said that manufacturing employment was much safer, and as an example, stated that in 1994, for every ten work injuries in manufacturing requiring one day’s lost time, there were eight such injuries in the service sector. In 2012, for every two manufacturing lost-time injuries, there were ten service sector injuries

Peter provides four most likely reason for the decline in injuries and claims in workers’ comp:

  1. Workers may be reporting and claiming less out of intimidation or unhappiness with the benefit package which has shrunk in past decades.
  2. Employment sector shifts
  3. Employers are devoting more attention to work safety
  4. Employers are pushing down lost-time claims by stay-at-work arrangements, or expediting return-to work.

The report goes on to discuss how the workers’ comp industry is shrinking and the opportunities for growth that practitioners need to be aware of, but that are out of the scope of this discussion.

Next, a post earlier this week by David De Paolo prompted me to write another article, this one entitled, “STOP THE MADNESS”, in which I decried the disgusting way that employers, their insurance companies and third party administrators are treating injured workers, in this case, a man named Glenn Johnson, who along with his wife, was arrested for allegedly filing a fraudulent workers’ comp claim, but the charges were dropped and the case never went to trial.

Mr. Johnson is not the only aggrieved injured worker in this country. There are many thousands of men and women who are treated inhumanely and unfairly by employers, insurers, and the rest of the workers’ comp system.

As a follow-up to his first post, David wrote a second post the next day in which he suggested, and rightly so, that if employers could be allowed to opt-out of the workers’ comp system, so should employees such as Glenn Johnson and his wife, so they can get the satisfaction of justice they deserve. I heartily agree, and said so in my post, ”Let Our (Working) People Go”.

Then came another report, this time by the Association of American Medical Colleges, in an article by Healthcare Finance, that said that by 2025, there would be a shortage of doctors around 90,000, of which 12,500 to 31,000 would be primary care physicians, and between 28,000 to 63,700 would be non-primary care physicians.

But the really devastating reports, at least as far as workers’ comp is concerned, that came out this week and on the same day, was one report by ProPublica called “The Demolition of Workers’ Compensation” and another by the Occupational Health and Safety Administration (OSHA) called “Adding Inequality to Injury: THE COSTS OF FAILING TO PROTECT WORKERS ON THE JOB”.

Both David and Joe Paduda commented about these reports in their respective blogs today. David’s article is called “Cost of Being Society” and in it he said that both reports came to the same conclusion: workers’ comp… fails in its basic state mission too often, and consequently is pushing the cost of taking care of injured workers onto government benefit systems, ergo costing the general tax paying public to take up the slack.

He cites the OSHA report as saying: “Changes in state based workers’ compensation insurance programs have made it increasingly difficult for injured workers to receive full benefits (including adequate wage replacement payments and coverage for medical expenses) to which they are entitled. Employers now provide only a small percentage (about 20%) of the overall financial cost of workplace injuries and illnesses through workers’ compensation. This cost-shift has forced injured workers, their families and taxpayers to subsidize the vast majority of lost income and medical care costs generated by these conditions.”

It is David’s opinion that these reports are evidence that not only have the times changed, but that more change is necessary, and on a grander scale. Joe’s article is called “ProPublica’s demolition of workers’ comp”, and offers a critique of the report.

David De Paolo’s posts this week, and the two reports about the demolition of workers’ comp and the cost of failing to protect workers, are not mere coincidences of publication. They are a warning sign that something terrible is happening in this country.

As I mentioned in a comment in response to the ProPublica report, we are witnessing the recrudescence of 19th century capitalism, where if a worker got hurt, he lost his job, had to rely on charity from friends, neighbors, family, the church, while the owner of the business went right on making a profit. Too many Americans have been duped by slick politicians and ideologues to believe that workers have no rights, so why should they get benefits when they get hurt through no fault of their own.

So that brings us back to Robert Frost and the poem, “The Road Less Traveled”.

For that is exactly where workers’ comp, and coincidently, my writing about workers’ comp and medical tourism are, on a road less traveled. In the case of workers’ comp, it is at a crossroads as to which road to take, and I have already decided, as Frost points out, to travel the road less traveled, because I wanted to blaze a trail where no one else had been.

Workers’ comp, on the other hand, wants to go down the same old road it have been going down now for nearly a century, and expecting that the woods would be different. So while much of the industry is bundled up in snowy, cold Boston, trudging down that same old road, I am choosing another path, and that has made all the difference, because my mind is open to new possibilities, while theirs is closed, xenophobic, and rife with American Exceptionalism.

I am sure they are learning a lot about the state of workers comp while they are talking among themselves and fiddling while Rome burns, but if they were smart, they would admit that the road more traveled on is fraught with serious problems that only gets more and more serious each and every day.

All is not lost, however. There is still time for them to see a better way, to choose the road less traveled on, and one way to do that is to open the system’s architecture and let in new ideas and new possibilities, especially with medical travel.

In the nearly two and a half years that I have been writing this blog, and in the four years since I first wrote my paper on implementing medical tourism into workers’ comp, I have met dozens of men and women, highly educated and highly intelligent from all over the world, Europe, Africa, Asia, the Caribbean, Central America, South America and other parts of North America, and none of those outside of Europe or the Americas are witch doctors with bones in their noses. These people are ready, willing and able to provide high quality health care to anyone who needs it, and at a reasonable cost. They want our business, and are not concerned about whether it comes from general health care or workers’ comp.

And yet, the very idea of globalizing workers’ compensation is dismissed, is ridiculed, and shunted to the sideline. Well, I am not about to be shunted to the sideline or dismissed, or told to stop writing, as one Okie said earlier this week. I am going to keep on writing and advocating for change, not because I want to, but because I have to. The stakes for all workers, injured or not, is too great. Globalization is a two-way street. Jobs can go abroad, and so should the workers, injured or not.

It’s up to you…take the road less traveled on, or take the road that isn’t less traveled. And that makes all the difference.


I am willing to work with any broker, carrier, or employer who is looking to save money, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies. Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp. Connect with and follow me on LinkedIn and my blog. Share this article, or leave a comment below.

This entry was posted in Claims, Conferences, Employees, Employers, Globalization, Medical Tourism, Medical Travel, Workers' Comp, Workers' Compensation and tagged , , , , , , , on by .

About Transforming Workers' Comp

Have worked in the Insurance and Risk Management industry for more than thirty years in New York, Florida and Texas in the Claims and Risk Management spheres, primarily in Workers’ Compensation Claims, Auto No-Fault and Property & Casualty Claims Administration and Claims Management. Have experience in Risk and Insurance Business Analysis, Risk Management Information Systems, and Insurance Data Processing and Data Management. Received my Master’s in Health Administration (MHA) degree from Florida Atlantic University in Boca Raton, Florida in December 2011. Received my Master of Arts (MA) degree in American History from New York University, and received my Bachelor of Arts (BA) degree in Liberal Arts (Political Science/History/Social Sciences) from SUNY Brockport. I have studied World History, Global Politics, and have a strong interest in the future of human civilization in all aspects; economic, political and social. I am looking for new opportunities that will utilize my previous experience and MHA degree. I am available for speaking engagements and am willing to travel. LinkedIn Profile: Resume:

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