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* Workers’ comp reforms two years ago have succeeded in driving down some costs, but overall costs have barely moved. Oy…
Medical payments for workers’ compensation claims dropped only 4.6 percent in Illinois last year even though the General Assembly reduced the maximum fees for workers’ compensation-related office visits, surgery and other treatments by 30 percent in 2011 (see the PDF). That’s according to a study of 16 states by the Workers Compensation Research Institute, an insurance industry-funded think tank in Cambridge, Mass. The states were selected to represent the high, middle and low end of the cost spectrum.
Medical fees actually fell 24 percent last year, according to the study, as some providers already were charging less than the maximum amount allowed by law. But those savings largely were offset by greater use of medical services and increased spending on litigation over medical claims, second opinions by company doctors and other measures to control medical costs.
As a result, total payments per claim were down just 1 percent.
* And this is just depressing…
While the study addressed only costs per claim, Illinois is well below average in the number of claims per 1,000 workers, in part because of high unemployment in construction and manufacturing, which tend to have more injuries.
Sheesh.
posted by Rich Miller
Tuesday, Oct 22, 13 @ 9:57 am
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Surprise, surprise. Gov’t reform that doesn’t reform. Whodathunk that could possibly happen?
Can we expect similar results with pension reform?
Comment by dupage dan Tuesday, Oct 22, 13 @ 10:10 am
==those savings were largely offset by greater use of medical services and increased spending on litigation over medical claims, second opinions by company doctors, and other measures to control medical costs==
unbelievable!
It appears that the cost-savings provided by new legislation, are being eaten up primarily by employers’ increased efforts to discredit claims.
I hope this is a temporary phase of habitual behavior, and the true cost savings will be realized by the companies.
Comment by walkinfool Tuesday, Oct 22, 13 @ 10:13 am
walkinfool…so employers who put up a defense to bogus claims are at fault? Yes, let’s just admit every claim that comes in and see what that does to costs. Until causation is put into legislation, no meaningful savings will be achieved.
Comment by phocion Tuesday, Oct 22, 13 @ 10:16 am
The implementation of universal health care should allow medical costs to be shifted away from the workers comp carriers and that should significantly reduce premiums:
=== Hard-fought reforms enacted two years ago have brought down the fees that doctors and hospitals can charge for treating injured workers, but Illinois workers’ compensation costs remain sky high. ===
If the workers comp insurers were relieved of the burden of paying medical bills — because EVERYONE is covered by mandatory health insurance — the cost of coverage should plummet.
Comment by Bill White Tuesday, Oct 22, 13 @ 10:21 am
So, with the fall in claims due to the recession, the plaintiff’s industry tried to milk more $ out of the system with more medical services and insurers fight back with more second opinions, etc. Everyone with their fingers in the till saw to it that they all kept getting their money.
Comment by Nonplussed Tuesday, Oct 22, 13 @ 10:21 am
=the cost of coverage should plummet=
Actually the workers comp insurers profit margins will increase.
Comment by Anon Tuesday, Oct 22, 13 @ 10:29 am
Let’s remember that some members of the “plaintiff’s industry” are also members of Congress. These folks worked hard to make sure that any reform (there’s that word again) of the health care industry didn’t include any limits on payouts, etc. That contributes to tendency on the part of doctors to overuse expensive diagnostic procedures in order to limit liability and are a factor in the high cost of health care.
Comment by dupage dan Tuesday, Oct 22, 13 @ 10:48 am
phocion - With causation, there will be even more attorneys and litigation regarding that issue. Lawyers would be the ultimate winners.
Comment by Anon Tuesday, Oct 22, 13 @ 10:52 am
Anon, No. With causation injuries that were not caused by a workplace related injury would be thrown out. The lawyers fees are not as big a driver in costs as are payments to employees for time off.
Comment by phocion Tuesday, Oct 22, 13 @ 10:58 am
The medical costs have not dropped by 30% because of provisions in the “reform” Act mandating AMA standards be used. So everyone is spending extra money getting doctors to give this opinion. Included as well is an increase in spending in having doctors review medical records and files and giving their opinions. By the time all those extra costs are factored in, including constant analysis of medical bills as they are pushed through a medical fee schedule, and the savings in the “reform” bill become diminished. The IWCC has now announced the fee schedule amounts of medical bills to be awarded have been slightly increased as well. This too should be no shock as it is part of the Act.
I popped off and complained loudly that this “reform” bill didn’t reform much of anything, other than scapegoating a bunch of Arbitrators who were forced to follow the law in issuing decisions. Maybe it is time to ask those hearing officers what the problems are in the Act and how to fix them?
Comment by Louis G. Atsaves Tuesday, Oct 22, 13 @ 11:12 am
This report is highly suspect, in that it essentially demands more “reform”. The think tank mission statement smells of the Koch bros.
http://www.wcrinet.org/about.html
I would expect the 1% strategy includes significant further “reform”, ie cuts, of workers comp insurance. After pensions are slashed by $138b, and health insurance is cut, the next logical step is to do away with workers comp.
The 1% strategy, a sort of informal conspiracy of self-interest, is incremental, slashing benefits bit by bit. Brutal and pitiless, yes, but effective in destroying the need for the dreaded progressive tax that would primarily hit up the super-wealthy.
Comment by cod Tuesday, Oct 22, 13 @ 11:38 am
“The implementation of universal health care should allow medical costs to be shifted away from the workers comp carriers and that should significantly reduce premiums..”
Unless I missed a change in the laws, I don’t see how that helps. A Work Comp claim will be rejected by your main insurer and turned back to the employer’s WC insurer.
Comment by Shark Sandwich Tuesday, Oct 22, 13 @ 12:05 pm
Fees fell 24%- and this is coming from a study funded by insurance companies. You can’t blame the law, or the worker, for an increase in litigation costs or second opinions sought by the employer. Sure, the employer has every right to make sure a claim is legitimate. But it’s their cost/benefit analysis that sends someone to get a second opinion by a company doctor. Can’t have your cake and eat it too.
Comment by Chi Tuesday, Oct 22, 13 @ 12:15 pm
==- phocion - Tuesday, Oct 22, 13 @ 10:16 am:==
You have no idea what the statistics for “bogus” versus legitimate claims are. No one is arguing that companies should not go after “bogus” claims. However, there was nothing preventing them from litigating “bogus” claims before.
Comment by Precinct Captain Tuesday, Oct 22, 13 @ 12:53 pm
“The implementation of universal health care should allow medical costs to be shifted away from the workers comp carriers and that should significantly reduce premiums..”
Unless I missed a change in the laws, I don’t see how that helps. A Work Comp claim will be rejected by your main insurer and turned back to the employer’s WC insurer.
===
My point is that the law could and should be changed. If medical bills are covered via universal healthcare (i.e. Medicare for everyone) there is no need for the WC insurer to have any responsibility for paying those medical bills.
A state level single payer health care system would relieve WC insurers of the obligation to pay medical bills.
Comment by Bill White Tuesday, Oct 22, 13 @ 1:37 pm
It’s not going to work until they address Causation. Also, Indiana (which is already 2 - 3 times lower than us on workers comp costs) is trying to reduce there’s another 10%. This might not affect Chicago as much, but it really hurts “downstate” and the Rockford area as far as jobs competitiveness.
Comment by Ahoy! Tuesday, Oct 22, 13 @ 4:42 pm
If you look at the report, the biggest cost drivers are chiropractors and physical therapists
Comment by 4 percent Tuesday, Oct 22, 13 @ 4:43 pm
Not true, Ahoy.
If Illinois workers were paid as poorly as workers in Indiana, it would also reduce worker’s comp costs, since lost wages are the biggest driver of work comp costs.
Comment by Juvenal Tuesday, Oct 22, 13 @ 9:08 pm
Please keep in mind that Defense Legal Costs are allocated expenses and are not generally part of the formula for evaluating premium and this is generally absorbed by the insurance carriers and cuts into their profit. In addition, there are few states at this time even track the allocated loss on files.
Medical cost containment/management is needed. Why should a chiropractor be able to treat somebody with a fracture or a person with a serious disc herniation that needs surgery? It is interesting that the same injury in a non-workers compensation venue has less overall treatment, lost time from work, and recovery.
Comment by carriergirl Thursday, Oct 24, 13 @ 9:18 am