Costs shifting from group health plans to workers’ compensation

Medical services continue to drive workers’ compensation costs. These studies examine cost shifting from group health plans to workers’ compensation, perception and reality of opioid usage, and compound drugs and physician dispensing…

Costs shifting from group health plans to workers’ compensation

According to current research from Workers’ Compensation Research Institute (WCRI), a significant number of workers in capitated health plans (such as health maintenance organizations), are likely to see medical costs shifting from group health plans to workers’ compensation insurance. Under capitated group health plans, medical providers are paid a set annual fee per plan member, regardless of visits. Workers’ comp plans pay providers for services received; therefore, there is an incentive for providers to prefer workers’ comp payments. Capitated health plans, once declining, are now increasing under the Affordable Care Act (ACA). Accountable care organizations (ACO), networks of doctors and hospitals that share financial and medical responsibility for providing care for patients that ties outcomes to reimbursements, are a central part of the ACA.

Typically, the treating physician makes decisions about the work-relatedness of a condition. Reimbursement rates set under the ACA and specifically under ACOs tend to be significantly lower than reimbursement rates under workers’ compensation systems. In addition, cases that are workers’ comp and their outcomes are not factored into the ACO performance evaluation.

The study found that states with higher percentages of insured workers in capitated health care systems saw a significant (30%) shift in coverage to workers’ compensation for employees claiming soft tissue injuries. Such injuries often require longer, more costly treatment and it’s difficult to pin down an exact cause, so providers can easily make a case for a workplace injury. States with more than 25% of workers under capitated health plans include California, New York, Pennsylvania, Michigan and Massachusetts.

The study revealed this increase in cost shifting also occurs when the employee is covered under a large deductible plan for their group health. Another factor contributing to the costs shifting is health plans with high deductibles; workers trying to avoid paying the high deductible prefer a workers’ comp deductible-free claim.

Employer takeaway: WCRI’s study suggests that the ACA’s focus on ACOs could accelerate the trend to recover more claims under workers’ compensation systems. By their nature, capitated plans discourage physicians from long lasting treatment options. Therefore, it is important for employers to implement and monitor injury reporting guidelines meticulously, to have established relationships with physicians, and to report suspected cases of cost shifting to the claims adjusters.

Education lacking in opioid use by workers

Almost 9 out of 10 people who use opioid painkillers are not concerned about becoming addicted to the drugs, according to a recent survey from the National Safety Council. This is a stark contrast between public perception and the known potential dangers of opioid medication. The survey found people do not understand what drugs are opioids and also underestimate the dangers related to the use of opioid painkillers.

Employer takeaway: While strides are being made in controlling the use of opioids in workers’ comp cases, much remains to be done. Employers should be proactive and educate workers on opioids, the dangers of addiction, and alternative approaches to pain management. Working with physicians who take a conservative approach to the prescribing of opioids, training supervisors to understand the potential signs of abuse and impairment, and providing assistance to at risk employees are also critical.

Employers should lead scrutiny on compounded drugs, physician dispensing

Employers should work with brokers, claims administrators and pharmacy benefit managers (PBM) to control workers’ compensation medical costs related to compounded drugs and physician dispensing, according to a report, “Targeting Prescription Drugs to Decrease Workers Compensation Costs” by Marsh L.L.C.’s Workers’ Compensation Center of Excellence. Typically, compounding pharmacies raise the price of each ingredient included in a solution resulting in excessively high costs. The cost per compounded prescription in 2013 was nearly $1,300 – far higher than the cost per prescription for other top therapy classes. Moreover, without consistent protocols to prepare each drug, compounded drugs can have a greater batch-to-batch variability, posing significant safety concerns.

Drugs commonly dispensed by physicians cost 60% to 300% more than drugs dispensed at retail pharmacies, according to the report. While more states have taken steps to curb abuse through legislation, it remains a serious problem.

Employer takeaway: A strong relationship with occupational health care providers focused on outcomes is key. The report urges employers to ensure that their claims administrators, in concert with PBMs, have specific policies in place to limit both physician dispensing and prescriptions involving compounded drugs.

  For Cutting-Edge Strategies on slashing Workers’ Compensation Costs visit www.PremiumReductionCenter.com

David Leng, CPCU, CIC, CBWA, CWCA, CRM

Author | Speaker | Certified Risk Manager | Certified Work Comp Advisor

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