Workers' Compensation has been around for more than a century. It was developed as a grand bargain between labor and employers to ensure that injured workers received appropriate medical care and wage loss benefits while employers received protections against tort lawsuits arising from workplace injuries.
Yet the workplace is vastly different now than it was when Workers' Compensation was conceived. Workers' Compensation has also evolved in some ways, but in other ways it has not kept pace with changing workplace demographics and injury exposures.
There are discussions in our industry around whether Workers' Compensation is still meeting the needs of both employers and injured workers. Even the U.S. Department of Labor and the Occupational Health and Safety Administration have recently questioned the adequacy of Workers' Compensation benefits. Some employers are pushing for an alternative option to Workers' Compensation because they feel it no longer provides suitable protection for employers and injured workers.
As a person who has been engaged in the Workers' Compensation industry, I see a variety of issues within the current system and I hear complaints from a variety of stakeholders about it. Industry groups are starting to engage in discussion about the future of Workers' Compensation.
With that as a backdrop, here are my thoughts around how Workers' Compensation needs to evolve:
(Photo: iStock)
|1. Change the medical delivery model
The single biggest flaw in Workers' Compensation is the current medical delivery model. Medical costs keep rising and outcomes are often poor. This is because, historically, the medical delivery model in Workers' Compensation has been focused on two things: discounts and conflict.
Too often, medical treatment in Workers' Compensation claims is used as a weapon for secondary gain. Certain attorneys consistently refer injured workers to certain physicians who extend disability, perform unnecessary treatment and ultimately produce poor medical outcomes for the injured workers. These physicians producing poor outcomes are well known by the payers, yet they are allowed to continue to ruin the lives of injured workers so that the settlement will be larger and the attorney fee higher. This is just wrong.
The reimbursement model has prominently focused on who will deliver the cheapest care — not necessarily the best care. In fact, sometimes the best physicians refuse to treat Workers' Compensation patients because of the low reimbursement rates.
In addition, unnecessary utilization review delays workers from receiving care. Bills are not submitted at fee schedule rates, which necessitates spending money on bill review services to ensure the appropriate amount is paid. There is a lot of money wasted on the bill churn that would be better spent on medical care.
We need to start over completely on the medical delivery model and look at what is happening in group health and Medicare for guidance. Under those models, insureds are not free to treat with any provider they choose; they must treat with someone “in network.” Certain treatments must be pre-authorized, and prescription drugs must be on an approved formulary to be covered.
Both group health and Medicare are now scoring medical providers to see which of them produce the best outcomes. Those that consistently produce poor outcomes are excluded from coverage. Everyone with medical insurance, including Medicare, has operated under these rules for years. Yet, when the same rules are proposed under Workers' Compensation, there is outrage that the injured worker would be denied their right to treat as they wish.
The industry and regulators needs to focus on identifying which medical providers produce the best outcomes for injured workers and also which providers follow established treatment guidelines. These physicians, and only these physicians, need to be treating workers' compensation patients. Let's eliminate the “plaintiff and defense” doctor mentality and just have good doctors treating our injured workers. Once we have identified those physicians, we need to get out of their way and let them treat the patient. There is no need for utilization review when an approved physician is following treatment guidelines and dispensing off the pharmacy formulary.
Let's change the focus from conflict and discounts to better outcomes and expedited treatment. These won't be easy changes to make, but the end result will be better outcomes for injured workers and lower costs for employers. Win-Win!
(Photo: iStock)
|2. Reduce bureaucracy
The administrative bureaucracy around Workers' Compensation is complex, time consuming and extremely costly. It also does little to enhance the underlying purpose of the Workers' Compensation system, which is to deliver benefits to injured workers and return them to the workplace in a timely manner. States create a never-ending mountain of forms that must be filed and data that must be reported. These requirements vary by state, forcing carriers and third-party administrators to comply with more than 50 different sets of rules and regulations.
Also, why are penalties for compliance errors not based on a pattern of conduct instead of being issued with every violation? If a payer is 99% compliant across thousands of claims, they are making every effort to comply. But mistakes happen when humans are involved, so perfection is not obtainable. The focus of compliance efforts should be ensuring that every effort is being made to comply, not simply generating revenue from every error.
State regulators need to take a critical look at their administrative requirements with a focus on increasing efficiency, reducing redundancy and lowering the costs to both payers and the states themselves.
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