Back in April of this year, I wrote about a study by the Workers’ Compensation Research Institute (WCRI) in which it was found that fee schedules may increase the number of workers’ comp claims.
Today, the WCRI released a new study that said that “hospital outpatient payments per surgical episode varied significantly across states, ranging from 69 percent below the study-state median in New York to 142 percent above the study-state median in Alabama in 2014,” according to Dr. Olesya Fomenko, co-author of the study and economist at WCRI, and who also is mentioned in my previous post.
The report also stated that “variation in the difference between average workers’ compensation payments and Medicare rates for a common group of procedures across states was even greater—reaching as low as 27 percent (or $631) below Medicare in New York and as much as 430 percent (or $8,244) above Medicare in Louisiana.”
Here are the major findings:
- States with no workers’ compensation fee schedules for hospital outpatient reimbursement had higher hospital outpatient payments per episode compared with states with fixed-amount fee schedules—63 to 150 percent higher than the median of the study states with fixed-amount fee schedules. Also, in non-fee schedule states, workers’ compensation paid between $4,262 (or 166 percent) and $8,107 (or 378 percent) more than Medicare for similar hospital outpatient services.
- States with percent-of-charge-based fee regulations had substantially higher hospital outpatient payments per surgical episode than states with fixed-amount fee schedules—32 to 211 percent higher than the median of the study states with fixed-amount fee schedules. Similar to non-fee schedule states, workers’ compensation payments in states with percent-of-change based fee regulations for common surgical procedures were at least $3,792 (or 190 percent) and as much as $8,244 (or 430 percent) higher than Medicare hospital outpatient rates.
- Most states with fixed-amount fee schedules and states with cost-to-charge ratio fee regulations had relatively lower payments per episode among the study states. In particular, for states with fixed-amount fee schedules, the difference between workers’ compensation payments and Medicare rates ranged between negative 27 percent (or -$631) and 144 percent (or $2,916).
Still think that workers’ comp is doing okay? Still think that keeping the status quo is the best option for injured workers? Still think that thinking outside the box, and considering alternatives to the ever increasing cost of medical care for workers’ comp is stupid, ridiculous and a non-starter?
Or do you believe, as Joe Paduda wrote about today in his blog, that workers’ comp is no longer needed for 90% of America’s employees, as the workplace has become safer than the non-occ environment.
The idea brought forth, and as Joe said, it is an intriguing, but wrong one, is that the medical care can be provided under health insurance, and the disability coverage can be added to long-term or short-term disability insurance.
Whichever way you look at the issue, workers’ comp is not going away, but it is getting more expensive to pay for medical care. The problem here is, too many Americans are slavishly wedded to outmoded ways of thinking, outmoded economic policies and models, as well as an outmoded economic ideology, to think rationally and seriously about alternatives.
Lastly, there are too many cooks (or should that be crooks) with their hands in the pot who have a vested interest in keeping things the way they are. If that is so, then the WCRI is only telling us what we should already know…injured workers are screwed and so are the carriers and employers. As long as outside interests have a hand in the system, and those who profit from higher costs block real change, this situation will only get worse.
I am sure glad it is not my money being wasted like this.
As always, to purchase the study click this link:
Once again, we have to look at the issue of opt-out. This time in the land of Lincoln.
“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”
Yet, it seems that Capital is still trying to stick it to Labor by dismantling the workers’ comp state systems.
Stephanie Goldberg, writing yesterday in Business Insurance, reported that the Illinois Policy Institute, an organization the Republican Governor, Bruce Rauner, has previously donated to, issued a report last month calling for “updates” [Emphasis added] to the state’s more than 100-year-old system.
The author of the report and the director of the institute’s regulatory reform, Mark Adams, said in an phone interview that, “the system that is in place isn’t serving workers effectively.”
He acknowledged that it is difficult to reform the system because there are so many stakeholders (a point made by myself and others).
Yet, the report goes on to say that, “the most effective way for government to protect workers is not by a restrictive one-size-fits-all system, by by creating broad rules of the game that give workers more freedom to contract with employers for a deal that is better suited to their own situation.”
On the one hand, what the report is stating makes sense, and seems to agree with the idea of opening up the system to new ways of providing care to injured workers, but if we look deeper at the alleged success of opt-out in Texas, Oklahoma, and the failure to get it passed in Tennessee and South Carolina, we find that the proponents of opt-out have not been very up front and honest on the subject.
What they really want is to blow up the entire workers’ comp system nationwide, and take us back to before Triangle, a point they seem to be making quite successfully in some quarters of the work comp industry because of the apolitical and ahistorical atmosphere in which this issue is often discussed.
We recently lost one brave soul who fought the temptation to drink the kool-aid on opt-out, and we cannot let his memory pass without remembering that he was not fully convinced that opt-out had proved itself.
In my last post, I mentioned what happens to closed systems if they do not change. With opt-out, we would not be seeing an opening of the system that still offers protections to injured workers, albeit with more options and more flexibility, but rather a complete and utter destruction of the entire system, which is what ARAWC and the Illinois Policy Institute wants, so that the employer is the one who benefits, not the employee.
Mark Adams stated that the system they have looks like it deals with the 19th Century, and not with telecommuters, or people who balance caring for a child, an elderly relative, and work responsibilities. True, but going back to the 19th Century when workers had to sue for benefits, if they were lucky to get to court, is not the answer.
One reason why opt-out has not been successful outside of Texas and Oklahoma, is as Stephanie Goldberg, says, the potential for constitutional challenges to opt-out laws could give pause to states considering legislation, as what happened in February when the Oklahoma Workers’ Compensation Commission ruled that provisions of the state’s Employee Injury Benefit Act deprive workers of equal protection and access to the courts, and to unfairly allow employers to define “injury.” The Supreme Court in Oklahoma is reviewing the case.
One wonders what the old railsplitter would think about the idea to deprive Labor of its rights to equal protection and access to courts, and to benefits they deserve when injured on the job. Lincoln would be horrified to learn that Capital has become superior to Labor.
Tuesday, Judge David Langham, Deputy Chief Judge of Compensation Claims for the Florida Office of Judges of Compensation Claims and Division of Administrative Hearings, wrote a rather lengthy post about the differences between cost-shifting and case-shifting in workers’ comp.
Much of what the Judge wrote were subjects that I already discussed in a number of previous posts about cost-shifting and case-shifting, so I won’t go into it here. I am only focusing on the parts that relate to Florida workers’ comp. You can read the entire article yourselves.
But what caught my attention was what he said about Florida and what the Workers’ Compensation Research Institute (WCRI) reported in some of their studies on these issues.
As Judge Langham wrote this week, he wrote a post two years ago that asked the question “Why Does Surgery Cost Double in Workers’ Compensation?”
Judge Langham noted in that post that Florida employers have been documented paying almost double for shoulder or knee surgery that is paid for under workers’ compensation, compared to group health costs.
The implication of case-shifting in Florida, he says, could arguably be a doubling of cost.
He cited a WCRI report released earlier this year that suggests however that case-shifting is perhaps not as likely in Florida.
According to the report, Judge Langham continues, “as of July 2011, six states had workers’ comp medical fee schedules with rates within 15% of Medicare rates. They were California, Massachusetts, Florida, North Carolina, New York and Hawaii.”
However, Judge Langham pointed out that the WCRI concluded that case-shifting is more likely in states where the workers’ compensation fee schedule is 20% or more above the group health rates, and not in Florida.
Judge Langham stated that this analysis of workers’ compensation fee schedules does not appear to include analysis of the reimbursement rates for hospitals, and that It also seems contradictory to the assertions that Florida workers’ compensation costs for various surgeries have been documented as roughly double the group health rates (100% higher, not 15% higher).
Injured workers who missed work in the Florida workers’ compensation system could be compensated in 2016 at a rate as high as $862.51 per week, the “maximum compensation rate.”
So, if recovery from such a “soft-tissue” injury required ten weeks off-work, he wrote, the case-shifting to workers’ compensation might add another four to nine thousand dollars to the already doubled cost of surgical repair under workers’ compensation.
This could be directly borne by the employer if the employer is self-insured for workers’ compensation; or, if the employer has purchased workers’ compensation insurance, the effect on the employer would be indirect in the form of potentially increased premium costs for workers’ compensation following such events and payments, Judge Langham states.
According to WCRI, the Judge quotes, “policymakers have always focused on the impact (workers’ compensation) fee schedules have on access to care as well as utilization of services.”
This has been a two-part analysis, he says:
First, fee schedules have to be sufficient such that physicians are willing to provide care in the workers’ compensation system; and second, the reimbursement cannot be too high, or perhaps overutilization is encouraged.
Lastly, Judge Langham points out that the disparity between costs has also been noted in discussions of “medical tourism.”
The last question he posits is this, “might medical decision makers direct care to more efficient providers, across town, across state lines?”
What about national borders?
I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.
Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.
I am also looking for a partner who shares my vision of global health care for injured workers.
I am also willing to work with any health care provider, medical tourism facilitator or facility to help you take advantage of a market segment treating workers injured on the job. Workers’ compensation is going through dramatic changes, and may one day be folded into general health care. Injured workers needing surgery for compensable injuries will need to seek alternatives that provide quality medical care at lower cost to their employers. Caribbean and Latin America region preferred.
Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: email@example.com.
Will accept invitations to speak or attend conferences.
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Employers opting out of workers’ comp in Texas are reducing costs, but more study is needed on how non-subscription affects injured workers, according to Stephanie Goldberg of Business Insurance.
Ms. Goldberg reports that a study released last week by Alison D. Morantz of Stanford Law School, found that the overall cost per claim is about 49% lower in the non-subscription environment, which is largely due to declines in medical and wage replacement costs.
The study also found, she writes, that despite no significant decline in frequency of claims, that more serious claims involving replacement of lost wages are about 33% less common among non-subscribing employers.
For the study, Ms. Goldberg adds, Ms. Morantz recruited 15 large multistate companies that operate homogenous facilities nationwide, and compared outcomes in traditional workers’ comp versus opt-out for each company from 1998 to 2010.
The study found also that the frequency of nontraumatic injuries declined about 47% with opt-out coverage.
“It could be that nonsubscribers are better at screening out nontraumatic claims under one of the many exclusions that private plans typically contain,” said Ms. Morantz.
Meanwhile, Ms. Goldberg wrote, a nontraumatic injury that is covered may be denied if it is not reported by the end of the employee’s shift, or within 24 hours.
Thirteen of the fifteen employers in the study have “good cause” provisions that allow a claims administrator to determine if there was a good reason the claim was made late.
Finally, Ms. Morantz said that, “the biggest unanswered question is how these plans affect the welfare of workers.”
As I reported yesterday in two posts, “Texas State House Seeks to Change Rules for Workers’ Comp” and “Workers’ Comp Opt-Out Goes Under US Microscope“, there are a lot of unanswered questions surrounding the effect opt-out will have on the injured worker.
Those who support opt-out expansion really don’t care about injured workers; they care about saving money for employers (i.e., profits that go back to the investors or to the top executives). They are also diametrically opposed to giving workers any benefits, and would prefer that workers’ comp had never existed, along with unemployment insurance and health insurance.
Those who see through the smoke and mirrors of opt-out know what the world was like before workers’ comp laws, and they don’t want to go back to those days, and whether or not they really are concerned with the welfare of workers, or just say they do, I am afraid that they may not be able to stop this move on the part of opt-out proponents.
But federal oversight would be welcomed to prevent going back to the bad old days before Triangle, which happened 105 years ago tomorrow. Marty McFly went back to the future, these guys in opt-out want to go back to the past.
Day One of the WCRI’s annual conference began with WCRI’s Chairman, Vincent Armentano, of The Travelers Companies, introducing new President and CEO John Ruser. He presented the first s…
Source: WCRI – Day One, Part One
When I started this blog three years ago, one of the first topics I covered was the issue of employee/employer choice of treating physician (see “Employee vs Employer Choice of Physician: How best to Incorporate Medical Tourism into Workers’ Compensation” and “Employee vs. Employer Choice of Physician Revisited: Additional Commentary on How Best to Incorporate Medical Tourism into Workers’ Compensation“).
Then in March of this year, ProPublica’s Michael Grabell and NPR’s Howard Berkes, wrote an article called, “The Demolition of Workers’ Compensation“, which was a first in of a series about the workers’ compensation system.
In the article, Grabell said that in 37 states, the worker cannot choose his doctor, or they are restricted to a list provided by their employer. This statement generated some concern from the industry.
My fellow blogger, Joe Paduda tried to get them to see both sides, but gave up the effort when it did not result in any discussion between them, as he wrote about the following day, calling the reporting a “public disservice”.
The next day, I wrote to Mr. Grabell, and told him that his facts were wrong. He told me in his response that he relied on data from the US Chamber of Commerce.
I told him that the WCRI and the state statutes were a more accurate source of information. My email thread covered eight messages that day. I provided him with the data I used in the articles cited above, and in the presentation I gave the previous November in Mexico.
Lower Costs When Doctor is Chosen By Employer
Business Insurance’s Stephanie Goldberg today reported on a study published in the latest issue of the Journal of Occupational and Environmental Medicine, that found that the average medical cost per work comp claim is lower in states where the employer chooses the worker’s initial treating physician.
Average medical costs were $308 lower in those states where the employer can choose the treating doctor for employees with low back pain, than in states where the workers were allowed to choose, Goldberg reported.
The study, sponsored by the Liberty Mutual Research Institute for Safety, said that states limiting treating provider change had higher medical costs than states that allow a one-time change.
There was however, the study found, no significant difference in average medical costs between cases in states that limit initial change and states that don’t, according to Goldberg.
Employers participating in a managed care organization, preferred provider organization or coordinated care organization in states like California and Florida, are allowed to to direct care. States like Arizona and Massachusetts allow workers to chose their providers.
The study also found, that the average medical costs ranges from $1211 in New York to $4514 in Texas, and length of disability ranged from 19 days in Missouri to 69 days in Texas.
The study was compiled using more that 59,000 low back pain claims between 2002 and 2009 from 49 jurisdictions, including Washington, DC, and did not include North Dakota and Wyoming.