Thursday, August 29, 2013

Cost Shifting vs. Cost Fixing

There have always been allegations of cost shifting either to or from workers' compensation and general health. Now Massachusetts is going to study just whether or not this is true, and if so, by how much.

The Massachusetts Department of Public Health is expected to release a report to the state Workers' Compensation Advisory Council in October or November on practices that regulators warned last May may be shifting costs from workers' compensation carriers primarily to MassHealth and to some private health care providers.

The alleged problem seems to be three-fold:

  • Employers pressure workers not to report injuries as job-related.
  • Employees use private insurance because of fears they will lose their jobs or suffer some form of retaliation for filing a workers' compensation claim.
  • Some doctors check for secondary insurance and send out bills to all carriers to ensure they get paid.

  • At a meeting of the Advisory Council last May, Massachusetts Department of Industrial Accidents Deputy Director George Noel said the regulatory agency had indications that some workplace injuries are being processed through MassHealth and that community health centers reluctant to accept workers' compensation claims are shifting cases to "other places."

    Mickey Long, a member of the advisory council and an attorney for the Massachusetts AFL-CIO, said "There are an increasing number of anecdotes going back a decade involving contractors, where a worker is told by the owner of a company to handle the claim through their health insurance," Long said. "If the contractor can avoid workers' compensation claim, then the contractor is going to have a lower mod rate."

    I know we've been down this road before: universal care, 24 hour care, one-stop care. Whatever you want to call it, concerns of cost shifting would not occur if there were a single source for medical benefits, regardless of causation of injury or incurrence of disease.

    There are many, legitimate, arguments against universal care - probably the most compelling argument is that our federal laws are prohibitively complex and full of traps discouraging development of such plans.

    California under the leadership of then Insurance Commissioner John Garamendi studied the issue, but plans ran out of steam before he moved on to other political positions.

    Massachusetts is a compelling study because that state's general health plan was essentially the model for the Affordable Care Act, aka derisively ObamaCare. But there was no integration between workers' compensation and general health care.

    Some Texas non-subscribers provide for universal care in ERISA sponsor plans, but then again, that's not workers' compensation. And while single-source, universal care is expensive, the successful Texas employers get better medical and claim control while employees enjoy largely hassle-free care for themselves and their families.

    It just seems to me that cost shifting is a distraction to the real problem that we just can't seem to get a handle on: who is paying takes precedence over the care that needs to be provided.

    Listen, I understand that - I don't like paying for something that isn't my problem any more than anyone else. At some point in time, though, in the national debate about health care, we have to come to terms with the reality that there are areas where our inefficiency costs more than just paying the damned bill.

    But this is a hugely emotional topic, which means there are no easy answers and there is always going to be someone dissatisfied.


    1. David,

      Single source medical treatment would cure a multitude of ills, pun intended. The hassle factor for both patients and providers would be reduced and the employer would have the benefits of paying at single rate, more timely treatment and return to work and maybe even a boost in employee morale.

      So why don't we just do it?

      A wise person once told me "If the question starts with 'Why do they' or 'Why don't they' the answer is usually money."

      Workers' comp medical benefits are covered at no cost to the employee. That is not the case with group benefits. Even when the employee doesn't have a monthly deduction for health benefits there are still deductibles and copays.

      The only way we will ever avoid cost shifting in medical care is when the benefits and hassles are the same. The counterbalancing forces of potential indemnity benefits and potential employer retaliation will still be in play, but to get rid of those, benefits for time away from work would have to be the same as well.

      Self-Insured employers know they are going to pay for medical treatment one way or another. One employer I know of has a formal procedure in place to cover medical on disputed comp claims through their group plan. It is not hard to do and accounts can be trued up when the comp case is finally adjudicated.

      So all we really need to do is to get medical benefits on the non-workers' comp side to equal workers' comp medical benefits.

      So easy to say, so hard to do.

    2. Sam - your statement, "The only way we will ever avoid cost shifting in medical care is when the benefits and hassles are the same."

      I AGREE! And, as you state, "so easy to say, so hard to do."