WC Cost Trends

ACA Could Drive Claims to Workers’ Comp

Accountable care organizations have financial incentives to classify injuries as work-related.
By: | March 16, 2015 • 3 min read

The WCRI found that ACOs are increasingly classifying soft tissue injuries like strains and sprains of the back, knee and shoulder as workers’ comp cases. Because it’s difficult to pin down an exact cause for these types of injuries, providers can easily make a case that the patient’s workplace was the culprit.  That would be a significant worry for payers.

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In the opening session of WCRI’s annual conference, held this year in Boston from Mar. 5-6, president and CEO Richard Victor presented findings on increased case shifting from group health plans to workers’ comp as a consequence of the Affordable Care Act.

The ACA provides for the creation of accountable care organizations, or ACOs, which have been considering rolling workers’ comp care into their networks. The Centers for Medicare and Medicaid Services defines ACOs as “groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.” The goal of coordinated care is to prevent medical errors and duplication of services, improving care while saving costs. Successful ACOs share in the savings achieved for the Medicare program.

Providers in an ACO receive much higher reimbursements rates from workers’ comp insurers than they do from group health plans, especially capitated plans that pay a flat rate per patient per unit of time, regardless of the volume of services provided. ACOs also do not have to include workers’ comp outcomes in their mandated evaluations.

Attending physicians therefore have incentive to classify an injury as work-related.

And with growing use of capitation health plans, encouraged by the ACO mission to contain costs, it’s likely that cost-shifting to worker’s comp will only increase. States with a minimum 22 percent enrollment in capitated health plans are likely to see a large shift to workers’ comp claims, while states with less than 10 percent enrollment may see no effect.

To support this claim, Dr. Victor presented findings from a study of workers’ comp costs incurred by several groups of shipyard workers. The study, published in the Journal of Occupational Medicine, found that when more workers were covered by a capitated HMO, there were much higher workers’ comp costs per worker.

Fewer workers have been enrolled in capitated health plans since 2004, but Victor said he expects the ACA to reverse that trend and ACOs to proliferate. That growth could lead to a 25 percent increase in the number of workers enrolled in capitated health plans, restoring their market share to levels not seen since 2000. As that percentage rises, expect to see more soft tissue claims shift over to workers’ comp.

By Victor’s projection, that shift could result in as much as $90 million in claims moved from group health to workers’ comp in Illinois, and $55 million in Pennsylvania. These, of course, are preliminary estimations that could change pending how well ACOs perform and whether the reimbursement format changes. WCRI also plans to reexamine the issue with a focus on how fee schedules affect workers’ comp outcomes and rates.

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As far as policy implications, Victor said adjudicators may consider an employer’s capitated group health coverage — and any built-in financial incentives for healthcare providers — when determining the validity of a work-related claim.

These findings were just a sampling of the data presented at the annual WCRI conference, but much if it centered on costs: expenses associated with medical management tools, litigation, regulatory compliance; prices set by fee schedules and impacted by physician dispensing; savings generated by various state reforms. The persistent perch of workers’ comp costs above group health and Medicare services, however, was a theme running throughout.

Katie Dwyer is a freelance editor and writer based out of Philadelphia. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]