Magazine article Risk Management

National Trends in Workers Compensation

Magazine article Risk Management

National Trends in Workers Compensation

Article excerpt

As workers compensation costs continue to rise, it is crucial to understand the national issues currently impacting the market to determine how these costs can be controlled. Some of the most compelling issues involve the Affordable Care Act, war veterans returning to the workforce and mediation of claims. These issues affect how all companies do business, and it is important to understand how they will influence the workers compensation market.

Impact of the Affordable Care Act

The Patient Protection and Affordable Care Act was enacted into law in 2010 with the aim of making health care accessible to all Americans while simultaneously containing costs. Although recent delays will prevent its full implementation, the act is scheduled to take effect on Jan. 1, 2014. While public opinion is divided on whether the legislation goes too far or not far enough, there is no doubt that the ACA has changed the health care industry in the United States. This is significant because, in recent years, medical costs have become the greatest expense of a workers compensation case.

While it is difficult to gauge what the exact impact of the ACA will be on the workers compensation system, initial indications are that it will result in some savings to the business community. One aspect that already took place when it was first implemented--the elimination of lifetime caps on medical insurance coverage--has already helped to reduce costs. Prior to the enactment of this legislation, anyone with health insurance had a lifetime maximum--typically $1 million--that a health insurance company would pay for health care coverage. Because of this cap, those who sustained work injuries went out of their way to make certain that any medical treatment received as the result of a work injury was apportioned to the workers compensation carrier so that it would not impact their personal lifetime maximum. The removal of this maximum means that individuals are less concerned about cost-shifting than they once were, which should result in savings to the workers compensation system.

Under the ACA, a health care insurer can no longer refuse to insure someone with a pre-existing condition, which should also reduce costs. In the past, if an individual sustained a work injury that created the necessity for ongoing medical treatment, that treatment would almost always have been directed to the workers compensation carrier. This would have been done not only to avoid reaching the lifetime maximum, but also because the individual's health insurance carrier would not pay for that treatment. From a claims perspective, this meant that many cases remained open because treatment would not otherwise be covered. The ACA may work to shift some treatment costs away from the workers compensation carrier to a private health care insurer.

Another driver of workers compensation medical costs lies in the number of comorbid factors--diseases or disorders that exist simultaneously, but independently, with another disorder--that injured workers may have that make it more difficult to recover from work injuries. These conditions include systemic problems, such as hypertension, obesity or diabetes. Often, injured workers who have been out of work for a long period of time have lost their medical insurance because their employers can no longer carry them on the books as employees. This lack of insurance makes it difficult for them to afford prescriptions for any of these underlying systemic conditions. These untreated medical conditions then slow recovery from the work injury, which leads to higher costs for the workers compensation carrier.

In one such case, a claimant sustained serious orthopedic injuries while on the job. After conservative treatment failed, it was determined that surgery was necessary. During the preoperative process, however, it was discovered that the claimant had hypertension, which had to be treated before surgery, but he could not afford the medication since he no longer had health insurance. …

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