Category Archives: Direct costs

Large Variations in Payments for Hospital Outpatient Care to Injured Workers

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:

http://www.wcrinet.org/studies/public/books/hci_5_book.html

 

“Florida, We Have a Problem”

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: richard_krasner@hotmail.com.

Will accept invitations to speak or attend conferences.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com.

Transforming Workers’ Blog is now viewed all over the world in 250 countries and political entities. I have published nearly 300 articles, many of them re-published in newsletters and other blogs.

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WCRI – Day One, Part One

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

Top 10 Causes of Workplace Injuries: How Medical Tourism Can Save Employers Money

Merrell: “…Can you see a role of medical tourism in workers’ compensation injury?”
Ludwick: “I could, if it were a long-term issue. Many workers’ comp issues are emergent,
so that would take out the medical tourism aspect. However, if it was a long-range issue, I
could see us involving workmen’s comp issues into that, or problems.”
Lazzaro: “I would support that. I don’t know the incidence, for example, of some of the
orthopedic procedures that are non-emergent, such as knee or hip replacement, which would
fall under workmen’s comp. But theoretically, a case could be made for that…”
Merrell: “I was thinking about it in terms of the chronic back injury and the repetitive action
injuries and hernia that are in the workers’ compensation area. An acute injury on the job
would probably not be at issue but a work-associated problem with a potentially surgical
solution might be a matter for medical tourism.”

You may recognize the above quoted dialogue from my white paper on medical tourism and workers’ comp. I am reprinting it here because I came across a report from the Liberty Mutual Research Institute for Safety that highlighted the top ten causes and direct costs of the most disabling workplace injuries in 2012. My thanks goes to Jim Mecham, Continuing Education Director and Return-to-Work Software Developer at OCCUPRO, for bringing this to my attention through his post on LinkedIn.

The report, the 2014 Liberty Mutual Workplace Safety Index is based on information from Liberty Mutual, the US Bureau of Labor Statistics (BLS), and the National Academy of Social Insurance. The Index provides statistics for injuries that occurred in 2012, which is the most recent year for which data was available.

The Index showed that the most disabling injuries and illnesses had a direct workers’ comp cost of $59.58 billion, which translates to over a billion dollars a week spent by business on the most disabling injuries.

The following chart indicates what those ten injuries are, the percentage of each type of injury, and the direct cost.

safe_image

Source: Bing Images

The top five causes were:

  • Overexertion involving outside source
  • Falls on same level
  • Struck by object or equipment
  • Falls to lower level
  • Other exertions or bodily reactions

Overexertion accounted for 25.3% of injuries, and is further identified as being caused by lifting, pushing, pulling, holding, carrying, or throwing, and cost businesses $15.1 billion in direct costs.

Falls to same level accounted for 15.4% of injuries, costing $9.19 billion.

Struck by object or equipment injuries accounted for 8.9% of injuries and cost $5.3 billion.

Falls to lower level accounted for 8.6% and cost $5.12 billion.

Other exertions and bodily reactions accounted for 7.2% of injuries and cost $4.27 billion. This includes injuries resulting from bending, crawling, reaching, twisting, climbing, stepping, kneeling, sitting, standing, or walking.

The second group of five injury causes accounted for 18.4% of the direct total cost of injuries. These were:

  • Roadway incidents involving motorized land vehicles — 5.3%, $3.18 billion;
  • Slip or trip without fall — 3.6%, $2.17 billion;
  • Caught in/compressed by equipment — 5%, $2.1 billion;
  • Repetitive motions involving micro-tasks — 3.1%, $1.84 billion;
  • Struck against object or equipment — 2.9%, $1.76 billion

These ten injuries comprised 83.8% of the total cost burden for disabling work-related injuries in 2012.

What does this all mean?

For the employer, it means a lot, especially in terms of dollars and cents that can be avoided if there are proper safety programs in place to lessen the frequency and severity of these injuries. However, accidents do occur, and while safety programs do work, they don’t always live up to the promise; nor do workers ever follow safety rules, so when these injuries occur, it would be wise for an employer to find a less expensive way to deal with the injury than expensive surgeries at home.

For the workers’ comp industry, it means that you are not doing a very good job of saving your client’s money, or you are doing a great job making money for yourselves and other workers’ comp service providers.

And finally, for the medical tourism industry, it means you have some work to do to go out and get this business and prove to the American employers, insurance companies and injured workers that when any of these types of injuries occur, you can provide them with the best care and the lowest cost. As I said in my presentation in Reynosa, Mexico last November, “[the] Medical Tourism industry must take [the] lead and go after the market; the market will not come to you”.

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I am willing to work with any broker, carrier, or employer willing 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.