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Changes made to the nation's health care system likely will affect workers compensation, even though legislation under debate makes no mention of occupational medicine, industry experts say.
Because workers comp medical costs comprise just 3% of overall U.S. health care spending, according to the National Council of Compensation Insurance Inc., experts say it is unlikely Congress will address it as part of health reform legislation.
In addition, the workers comp industry has been fighting to make sure occupational medicine stays out of legislation to reform health care to prevent a repeat the 1990s Clinton administration effort to include it.
“If you're trying to figure out how to reform the U.S. health care system, you're probably going to focus on the big things first,” said Harry Shuford, chief economist at the Boca Raton, Fla.-based NCCI. “Work comp and bodily injury, liability, etc. are all very small. So they would be tertiary issues to address.”
“The big issues that policymakers are wrestling with don't have much relevance to workers comp. Whether to have a public option, change the tax treatment of premiums paid by employers, I don't see either of those having a significant role in workers comp,” Mr. Shuford said.
“Many people have made the comparison between this legislation and that which was proposed in the 1990s,” said Paul Mattera, chief public affairs officer at Liberty Mutual Insurance Co. in Boston. The Clinton administration plan “would have taken the 40% of the work comp dollar that went to pay medical benefits and folded it into nonoccupational medical care. As a result, work comp carriers would only be responsible for the disability portion and wouldn't have been able to control any of the medical.”
But “this time around, there's no explicit reference to work comp,” which has brought the industry some relief, Mr. Mattera said. “We don't feel the same sense of panic this time, although there's deep concern, partly because it's unclear how it will play out as far as workers compensation is concerned.”
Regardless of the form that health care legislation takes, it likely will have an indirect effect on workers comp costs, industry experts say.
“You can't fundamentally alter the national health care system and not affect workers comp,” said Dave North, president and chief executive officer of Sedgwick Claims Management Services Inc. in Memphis, Tenn.
“If you look back at the national dialogue that occurred at the start of the Clinton era, we saw in this country significant changes in health care in the years following, and there was no legislation passed. The heightened dialogue and awareness alone caused significantly positive health care reform for employers,” Mr. North said.
Any efforts that improve the overall health of the population also could affect workers comp costs.
“An area we don't have an ability to touch from the occupational side is prevention and wellness,” Mr. North said. “And we know that comorbidities—specifically obesity, diabetes, mental health and substance abuse—affect workers compensation. Comorbidities affect both the likelihood that a worker will have an injury as well as their recovery period.”
“We see this in California,” said Mark Webb, vp-governmental relations at Employers Direct Insurance Co. in Thousand Oaks, Calif. “In many cases, these conditions need to be brought under control before the work comp system” can treat an occupational injury, he said.
Obesity also is driving up the cost of occupational injuries, with comp carriers in some cases paying for bariatric surgery in addition to the workplace injury suffered to enable a claimant to return to work sooner and less likely to suffer re-injury because of his or her lower weight, Mr. Webb said.
Should health care reform efforts reduce medical errors, that also could positively affect workers comp costs, said Rita Nowak, vp, commercial lines and workers comp, at the Property Casualty Insurers Assn. of America in Des Plaines, Ill. Insurers must pick up the tab for such errors if they occur in the treatment of an injured claimant, she said. Medical errors also can lead to longer disability periods while claimants recover, she said.
Because many doctors treat occupational and nonoccupational illnesses and injuries, pay-for-performance revisions could compensate them based on outcomes and using evidence-based medicine, NCCI's Mr. Shuford said.
“If you start seeing a move from fee-for-service to some sort of pay-for-performance compensation structure” for health care, “you will see workers comp starting to adopt those as well,” Mr. Shuford said.
But if health reform includes price controls on provider reimbursements, “we would be concerned about potential cost-shifting” by providers to work comp insurers “to recoup lost revenue,” Ms. Nowak said.
“To the extent that this health reform creates a public plan, which seeks to reimburse providers at or below what they're being reimbursed today, they are going to look to other payers to recapture some of those costs,” Liberty Mutual's Mr. Mattera said. “So cost-shifting could potentially be exacerbated with reform.”
Likewise, any change in Medicare reimbursement rates would affect states that base their occupational health fee schedules on Medicare rates, leading to greater cost-shifting, Mr. Mattera said.
Workers comp pharmacy costs also are driven by state fee schedules that are linked indirectly to Medicare reimbursement rates, said Jay Krueger, chief strategy officer at Tampa, Fla.-based PMSI, a provider of pharmacy, medical services and equipment to the workers compensation and liability markets.
Mr. Krueger said health reform that requires providers to adopt technology also could increase costs in the workers comp system.
“Workers comp is not quite as technologically advanced as the group health side. To the extent that the federal government either mandates or provides stimulus money to adopt electronic solutions, that will represent wholesale change for the workers comp industry,” he said.
“Long term, this is good for the industry,” Mr. Krueger said, but “many companies have rather arcane (information technology) systems and the cost to upgrade them to meet health IT requirements is very significant.”
But adoption of electronic medical records, which would provide claimants' full medical histories, could lead to quicker determinations of whether an injury is work-related, Mr. Webb said.