Risk Insider: Bill Minick

Cost Shifting: Candy Stores and Scapegoats

By: | June 15, 2016

Bill Minick is president of PartnerSource, a risk management consulting firm specializing in workers’ compensation alternatives. He can be reached at [email protected]

Listening to a workers’ compensation insurance company trade group at a conference these days is like watching a kid in a candy store. They are so very happy and excited about the opportunity to deflect their own industry’s shortcomings to the evil “Option” to workers’ compensation.

Carefully avoiding any discussion of comparative data, they cast allegations of Option program operations and results that often have no factual or legal support.

A favored treat says that Option injury benefit plans shift costs to government programs more than workers’ compensation systems. Professor John Burton and others continue to point to fiscal challenges for the Social Security Disability Insurance (SSDI) Trust Fund due to (1) the shifting of responsibilities (i.e., “coordination of benefits”) from workers’ compensation, and (2) inadequate workers’ comp cash benefits.

However, this wide-scale, data-proven problem of cost-shifting within workers’ compensation systems has not been demonstrated within Option injury benefit programs.

In fact:

As confirmed by an independent, former NCCI actuary in the review of more than 160,000 claims over a 10-year period, Option programs have a shorter average duration of disability, and both the initial and sustained return to work rates are much higher.

Until these fundamental, systemic failures to reasonably cooperate and practice evidence-based medicine are addressed, meaningful progress on cost-shifting by workers’ compensation to SSDI will not occur.

Also relevant is the fact that many (including almost all large) Option employer programs pay wage replacement benefits from the first day of disability, at a higher percentage of pay, and with no weekly dollar cap. This is far more generous than workers’ compensation systems.

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Recent trends also show the percentage of disability benefits in Option programs to be increasing, moving from 85 percent up to 90 percent or 100 percent of pre-injury pay.

Lastly, Option employers are now rallying behind injury benefit plan provisions making clear that benefits will not be reduced by or coordinated with benefits from government programs, such as social security disability or survivor benefits. Such changes are easy to make when any coordination of benefits with government programs has rarely occurred.

This ability of Option programs to bear more of the direct costs of occupational injury is the result of requiring more employee and medical provider accountability.

Workers’ compensation systems could also better address SSDI’s cost-shifting concerns if state legislatures would seriously consider the toll taken upon injured workers and the economy by:

  • Late reporting of known accidents and injuries
  • Delays and a lack of persistence in medical treatment
  • Failures to follow medical provider treatment instructions, and
  • Medical providers who do not obtain a comprehensive medical history, do not perform an adequate physical examination, do not review current and past diagnostic tests and imaging, and instead rely on speculative reasoning.

Until these fundamental, systemic failures to reasonably cooperate and practice evidence-based medicine are addressed, meaningful progress on cost-shifting by workers’ compensation to SSDI will not occur.

Instead, we will continue to see workers’ compensation insurance company trade groups (supported by some regulators and trial lawyers) search for scapegoats, while Option program sponsors emphasize the more common-sense pursuit of better medical outcomes and a higher level of social responsibility.

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