Workers’ compensation rates for your commercial clients could potentially rise if they live in states with one thing in common, a new report from the Workers Compensation Research Institute suggests.
According to WCRI researchers, injuries with an uncertain origin are more likely to be classified as workers’ compensation cases in states where fee schedules are higher. In fact, increasing workers’ comp reimbursement rates by just 20% for physician services caused soft tissue injuries to be filed as work-related 6% more often.
Michael Gavin, president of medical cost management company Prium, said filing a case as work-related frees the patient from deductibles and co-pays as pays the doctor more than traditional insurance rates. In the absence of a clear-cut cause of injury, then, there is a strong financial incentive for physicians to file the case under the workers’ comp system.
“The doctor gets paid more, and the patient doesn’t take out his wallet, so everyone wins,” Gavin said.
Soft tissue injuries – such as a sore back – were used in the study as their cause is typically the most difficult to ascertain. More obvious cases, like broken bones, did not show the same correlation.
Fee schedules vary among the 43 states that use them, with some paying two to four times higher than group health prices. In Oregon, Delaware, Idaho, Illinois and Arkansas, workers’ comp pays more than twice what Medicare rates do.
The implications for workers’ comp policyholders are large. In states with high populations, like California, if just 1% of group health cases involving soft tissue injuries are diverted to workers’ comp, costs could increase by more than $80 million. In smaller states like Iowa, the number shifts to a still significant $9 million.
And of course, those costs will be passed on to policyholders in the form of premium increases.
Not all workers’ comp professionals are convinced of this eventuality, however. Joseph Paduda, principal with Health Strategy Associates, has previously suggested that physicians do not necessarily “know how to and purposely benefit financially” form shifting claims to workers’ comp.
For one thing, a RAND study Paduda cited suggests that physician dislike of the forms associated with workers’ comp is so great, that it would counteract any financial incentives associated with claims shifting.
