Workers' Comp Reforms

Impact of NY Reforms Looks Promising

Sweeping changes to New York's workers' compensation system are creating gains for payers on a variety of levels.
By: | September 28, 2014

Reforms seem to be impacting New York’s workers’ comp system, according to a new report. In its seventh annual assessment since reforms were adopted, the Workers Compensation Research Institute notes recent developments.

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Caps on permanent partial disability benefits, the adoption of medical treatment guidelines and a pharmacy fee schedule, and the creation of networks for diagnostic services and thresholds for pre-authorization may be responsible for recent changes cited in the report. However, more data is needed.

“It will be several more years before the full impact of the reforms will be realized,” according to WCRI. “This is especially true regarding the impact of the duration limits on PPD benefits.”

Among the reforms was a provision that limited the number of weeks of non-scheduled PPD benefits to a maximum of 10 years. Previously, lifetime benefits were allowed.

“We did observe some change in PPD/lump-sum claims in both frequency and average payments for cases after 2007, although this may or may not be associated with the PPD caps or other reform provisions,” the report said.

The report noted there was a decrease in the percentage of cases that received PPD payments only, and a “nearly corresponding increase” in the percentage of cases that had only lump-sum payments.

That change may also be due to a new requirement for carriers to pay into a special fund. For all non-scheduled PPD accepted claims on or after July 1, 2007 — regardless of the date of injury or disability — private insurers must make a lump-sum payment of the present value of any PPD benefits into the Aggregate Trust Fund, which then disperses payments to workers.

The number of visits to chiropractors per indemnity claim has “decreased notably” since the reforms, possibly due to the imposition of medical treatment guidelines. The average number of visits dropped from 32.1 per claim in 2010/11 to 24.3 in 2011/12.

For nonhospital providers, however, the number of visits per claim for physical medicine services decreased, but the number of services per visit increased. With 16 months of experience, the authors say more years of data are needed to determine the cause.

The average price per pill dropped by 10 to 20 percent, according to the report. The adoption of a pharmacy fee schedule and authorized use of pharmacy networks and/or pharmacy benefit managers is likely the cause of that change.

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A provision that increased the dollar threshold for prior authorization of physician ordered diagnostic medical tests — from $500 to $1,000 — may be responsible for increasing the number of visits for major radiology services by nonhospital providers. The percentage of indemnity claims with these services also grew between 2007/08 and 2011/12 from 45 percent to 52 percent. However, the authors noted that such increases had begun before the reforms were implemented.

Meanwhile, changes included in the reform legislation are still being enacted. Guidelines for the treatment of carpal tunnel syndrome were finalized just last year. Treatment guidelines for non-acute pain were proposed in April of 2013 but have not yet become final.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

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