Christopher Flatt and Christine Williams are leader and managing director, respectively, for the Workers’ Compensation Center of Excellence at Marsh, a global leader in insurance broking and risk management and a sister company to Mercer. Their guest commentary highlights a few of the key insights presented in the recently published risk management research brief, “Health Care Reform and Workers’ Compensation Programs.”
Employers are cautiously waiting to understand the full impact of the ACA on workers’ compensation — the effects of which could put either upward or downward pressure on costs and claim trends in the near and far term. Although it’s hoped that the ACA’s efforts to transform standards of care and achieve better outcomes (and thereby lower costs) will eventually come to fruition and be enforced under workers’ compensation, changing the way providers deliver and get reimbursed for care will be a long process, and any resulting benefits won’t be realized until well into the future.
The current and more pressing reality for workers’ compensation is the increased demand for physician access and potentially greater cost-shifting resulting from the 8 million additional people who now have health insurance — and are personally carrying more of the financial responsibility along with it.
Employers can and should take the following steps today to increase the value of the positives and mitigate any negatives while waiting for the health care reform dust to fully settle.
Identify the best medical providers and ensure access
Given the shortage of physicians in the US, wait times for diagnostic tests, elective surgeries, and other procedures may increase as more people gain coverage under the ACA. This, in turn, can result in longer periods of disability and related complications, and ultimately drive up workers’ compensation costs.
Employers should increase efforts to identify and ensure access to providers that focus on quality of care and outcomes. Those that pay providers fairly and quickly will likely have more timely access for their injured workers and ultimately lower workers' compensation costs.
Employers will want to make sure providers understand their company’s unique workplace and goals, and the modified work available for injured employees, as well as consider new care-delivery approaches, such as telemedicine.
Manage premium rebates so they don't increase program costs
The ACA allows insurers to rebate premiums to employers that have better-than-expected performance with their health care programs; however, this could actually increase an employer’s workers’ compensation program costs. According to the National Council on Compensation Insurance, if premiums are returned to employees, these rebates are considered payroll under workers’ compensation premium calculations. Employers should keep this in mind when deciding whether to refund premiums back to workers or use the rebates to offset future premiums instead.
Monitor shifts in injury claims
Although more Americans are now insured under the ACA, and the number is expected to grow, there is no evidence that suggests employees are less likely to file workers’ compensation claims as a result and, in particular, that fewer will seek workers’ compensation for non-work-related injuries.
The higher reimbursement rates for medical providers and lower cost-sharing for employees available under workers’ compensation will continue to pose a financial incentive to shift treatment for non-work-related injuries in that direction. In fact, as employers are required to expand coverage to greater numbers of employees, many are using higher deductibles and co-payments to offset cost increases, which could create new incentives for employees to shift treatment to workers’ compensation. According to Mercer’s National Survey of Employer-Sponsored Health Plans, deductibles, for example, have increased nearly 20% in the last three years.
To address the potential for increases in injury claims, employers should be diligent about monitoring losses and, in particular, frequency trends for possible correlation with ACA changes and related cost shifting.
Remain committed to loss-control efforts
Employers shouldn’t let concerns over the uncertainty of the ACA sidetrack them from the important, ongoing focus on loss control. The emphasis of any workers’ compensation program should be on providing the best possible treatment to help employees return to full health and productivity as quickly as possible.
A key element of a successful return-to-work program is integration with an employee health management program. Although typically workers’ compensation and employee wellness are addressed in separate silos, forward-thinking employers are already connecting the dots, establishing greater coordination between the two and benefitting from synergies that can translate into safer work environments, a quicker return to full duty among disabled workers, and overall healthier employee populations.
The extent of the ACA’s effects on workers’ compensation will no doubt become clearer in the months and years to come. In the meantime, employers who stay abreast of developments and take advantage of opportunities to begin addressing near-term issues are likely to fare much better as the impact of health care reform becomes more fully defined in the long term.