A look at the 2011 workers’ comp reforms
Monday, Jan 4, 2016 - Posted by Rich Miller
* There are two basic ways (with many variations within them) of controlling health care costs: 1) Cut the money paid to medical providers; or 2) increase costs/reduce services/access for patients. The health care aspects of Illinois’ 2011 workers’ compensation reforms focused a lot on providers, which is why the House Republicans (historically staunch allies of the Illinois Medical Society) were so opposed to it while the Senate Republicans (not staunch Med Society allies) were for it. The Illinois Policy Institute takes a look at how that’s working…
30% reduction in fee schedules
In most states, the fees that a medical provider can charge through workers’ compensation are capped by a state-mandated fee schedule. A study by the nonprofit Workers’ Compensation Research Institute, or WCRI, found that prior to the reforms, the fees awarded in Illinois were among the highest in the nation. The 2011 reforms reduced those fees by 30 percent, although actual prices fell by only 24 percent, in part because some providers had already negotiated fees below those set by the state. Savings were also partially offset by doctors billing for more complex office visits, although the effect appears to be small.
While changes to the fee schedule did reduce costs, in many instances Illinois’ costs exceeded those in other states by significantly more than 30 percent, and as such remain higher post-reform. This is not true of all fees: Prior to reform, visiting a doctor’s office cost 14 percent more in Illinois than the average of a representative sample of states. Since the reforms came into effect, those costs are now lower than in surrounding states with an as-yet undetermined effect on quality of care. For other procedures, however, Illinois prior to its 2011 reform was substantially more expensive than other states. According to WCRI, the price paid for major surgeries in Illinois in 2010 exceeded the price in Minnesota by 200 percent and in Michigan by 340 percent.
While it is likely that there would be some variation in costs across states, the magnitude of the difference implies further potential for cost savings. WCRI found that costs for many treatments under workers’ compensation were 200 to 300 percent higher than the cost of the same procedure under Medicare in Illinois, adding weight to the case for further potential cost savings.
* And if the Institute is correct, this loophole definitely needs to be closed…
Capping fees on drug dispensing
Within the workers’ compensation system, doctors are permitted to resell drugs directly to patients – commonly at mark-ups of 60 to 300 percent – and pass the cost on to employers. To limit this practice, the General Assembly imposed price controls that linked the maximum fee to the average wholesale price. Despite this measure, doctors have been able to circumvent the rules by prescribing existing drugs in slightly modified doses. Patients get the same drug, but doctors can call it a new drug and assign a new average wholesale price with the same mark-ups as before.
Ugh.
More here.
- Albany Park Patriot - Monday, Jan 4, 16 @ 9:29 am:
The “Institute” is an institute the way the Hair Club for Men is a “club.”
- Ghost - Monday, Jan 4, 16 @ 10:04 am:
starting point, adopt the medicare fee schedules for drugs and treatment
- Educ - Monday, Jan 4, 16 @ 10:17 am:
Can’t doctors lose their licenses for selling medical devices or medicines that they prescribe at a profit? I though they had to sell them essentially at cost if they were prescribing them and wanted to provide them in-house.
- walker - Monday, Jan 4, 16 @ 10:23 am:
Well good.
There was some real world improvement in the “business environment” for workers’ comp costs due to previous reforms. Rauner Team should openly acknowledge that.
There seem to be specific holes that might be closed to further reduce costs. GA should agree to those, and put this issue to bed.
The question would remain, if actually agreeing on the numbers will be “enough,” or will there be additional pills to swallow not related to Workers’ comp, for even this potential agreement to be signed.
- Louis G. Atsaves - Monday, Jan 4, 16 @ 10:31 am:
Medical bills for treatment are being pressured downwards from a variety of sources, including Medicare/Medicaid and Obamacare provisions. The expenses of administering physician offices, clinics and hospitals must also be increasing from those sources.
i’ve written on this topic in the past and Rich highlighted one of my proposals which included medical bills which sounds pretty similar. A 30% reduction across the board punishes those treated harshly under the current medical fee schedule of the WC Act than those who are barely being dinged by that same fee schedule. I would be reluctant to adopt their proposal under those circumstances.
Now if all providers were treated equally under the Act, that would be a different story.
In my practice, the primary issues raised concern medical treatment, from type to who will provide it. Even out the medical fee schedule and those squabbles will become more minimized.
- walker - Monday, Jan 4, 16 @ 10:48 am:
Louis A: Thanks. Will happily defer to your expertise on the substance.
Question on the politics: have thought WC would be the first logjam to break, because they just are not that far apart. Your read?
- Louis G. Atsaves - Monday, Jan 4, 16 @ 11:07 am:
@walker, it seems they really are not that far apart. What remains are a few stubborn types talking past each other.
- Matt Belcher - Monday, Jan 4, 16 @ 11:28 am:
Louis G. Atsaves — tell the readers what percentage of employers and their insurance carriers have effectively implemented Preferred Provider Plans (”PPPs”). as permitted by the 2011 amendments, to control these exact medical costs.
My notes indicate: Zero Point Zero
http://www.iwcc.il.gov/faqmed.htm#ppp
- mokenavince - Monday, Jan 4, 16 @ 11:46 am:
Louis A. What are thy doing about causation?
- Just Me - Monday, Jan 4, 16 @ 11:47 am:
For anybody paying attention, the “loophole” that is being referred to was already “closed” by Workers’ Compensation Commission rule which limits what doctors can charge for re-packaged drugs. For the Institute and those on this blog not to know this (or not be willing to say this) is deplorable. Nobody is “talking past each other.” The people who know what they’re talking about have not been invited to talk to each other.
- Louis G. Atsaves - Monday, Jan 4, 16 @ 12:11 pm:
“The people who know what they’re talking about have not been invited to talk to each other.”
Amen to that comment.
@Matt, no disagreement there. The PPP provision in my humble opinion was always designed more as a “feel good” provision that few employers could really comply with.
- Hurt - Monday, Jan 4, 16 @ 12:43 pm:
My Doc just sees patient every month to charge system more instead of every 3 months like it was. Always a way around it.
- Up sound - Monday, Jan 4, 16 @ 1:28 pm:
Just me, the IP article says new doses popped up to avoid regulation of the regular dosage levels. Do you know the WCC rule that regulated the price of novel doses?
- Let'sMovetoNorthDakota - Monday, Jan 4, 16 @ 1:36 pm:
Why not just let the marketplace determine payments to Doctors for services tendered?
- 4 percent - Monday, Jan 4, 16 @ 1:48 pm:
@ Just me…
The WC rule on “repackaged” drugs does NOT address compounding and other scams developed by doctors that both prescribe AND then also dispense the medicine. Many states prohibit these types of arrangements and Illinois would be wise to follow suit.
The business community testified in the House and Senate about using a Medicaid-based fee schedule similar to other states. The average state is about 150 percent of Medicaid. As the article notes, Illinois is all over the board with some below and many well above.
There are many changes that need to be made
- thechampaignlife - Monday, Jan 4, 16 @ 2:06 pm:
Do most states run worker’s comp themselves? As essentially a health insurance plan for work-related injuries, it seems like the regular insurance industry could handle it.
Why not use the worker’s regular health insurance and make the employer pay the worker’s costs for deductibles, copays, etc? Wouldn’t that eliminate the need for State involvement entirely, let alone the State regulating fee schedules?
- Just Me - Tuesday, Jan 5, 16 @ 9:16 am:
So,it is compounding not repackaging that is the problem? Don’t Walgreens, Wal-Mart and other retail merchant pharmacies do compounding? The ONLY unregulated area of WC medical expenses is pharmacy dispensed medication. Just saying.