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The lesson in fixing broken workers’ compensation systems – keep trying


Fixing broken workers' compensation systems is far from easy. There are multiple agendas, complex legislation and competing needs – and often conflicting demands lead to "solutions" that seem to worsen the problem.

But still we try; and we should and must continue our efforts. Employees deserve the best possible care when injured. Employers deserve fair and predictable costs and a system that is streamlined, not burdened by inefficiency and out-of-control costs.

One state that is working to change its workers' compensation program is New York. Back in 2007, the state instituted sweeping reforms. Benefits have come from the reforms and subsequent efforts. For example, the state recently passed the Internet System for Tracking Over-Prescribing (ISTOP). It also engaged in a comprehensive "business process re-engineering" initiative to evaluate and "re-imagine" the state's workers' compensation system.

But there is a lot more to do. Costs remain high and some of the "fixes" aren't working as planned. After years of effort, many might be tempted to quit and not fight the system. Let's not do that. Now is the time to remember that often quoted saying, "if at first you don't succeed…" (we all know the rest).

The importance of trying and the benefits it can produce can be seen in the results of several states' workers' compensation reform efforts. For example, after reform efforts were instituted in California in 2004 it was discovered that, as written, the state's workers' compensation legislation was not always realizing the intended results. Injured workers had the ability to contest the denial of medical treatment requests via the utilization review process by having the matter evaluated by an administrative law judge. In 2012, a new law was passed instituting an independent medical review (IMR) panel. With trained independent physicians – rather than judges – making medical decisions, virtually overnight the majority of utilization review decisions were upheld via the IMR process.

Oklahoma had the sixth highest insurance premium rates according to a 2012 study.[1] Employers lamented that high workers' compensation costs were one of the primary reasons they were unable to hire and grow their businesses. To address the problem, several advocacy groups, including the Oklahoma Injury Benefits Coalition, began work on reform efforts. Despite setbacks, the Coalition never gave up and, on the third attempt, substantive reforms were passed in 2013. While clearly a variety of factors contributed, Oklahoma today has one of the most dynamic economies in the nation.

As a company doing business in New York and with multiple clients in the state, we want reform efforts to work. We've also seen the factors that have led to success in other states. For example, New York's ISTOP is a terrific program, but efforts also must be made to better control drug use through ODG-based formularies. Encouraging consensus when it comes to utilization review is a good concept. However, New York should consider whether it should be physicians or judges that make the final decision about what is clinically best for injured workers. Other states have moved to this approach.

One critical factor for success in many state efforts is the forming of broad-based coalitions committed to doing what is right. We are a part of those successful coalitions and want to work with employers, legislators and others in our industry to build a similar organization for New York. It will not be easy, but now is definitely the time to try, try again. To learn more about New York's and other states' efforts to improve, read our latest study.

What are your thoughts and experiences surrounding reform efforts in New York and other states? What do you think needs to be done?

Eddy Canavan, VP, Workers' Compensation Practice & Compliance

[1] 2012 Oregon Workers' Compensation Premium Rate Ranking Summary. October 2012

  • Jonas Urba

    All of us need better education to achieve the "best" health outcomes.

    As an undergrad at I.U. my left humerus and nose were fractured resulting from a terrible industrial accident. Medical experts decided to let the humerus fuse naturally - no anesthesia, no pins, no surgery. I now appreciate the risks that such a treatment plan carried but my left arm is stronger than my right, I have no residual pain, and 99% range of motion. And the medical cost savings were enormous!

    Within the past decade my fully severed big toe tendons and hernia were repaired under local anesthesia for both surgeries. Again, the potential risk of not waking up, recovery room time, and time to return to full duty were all lowered with no permanent impairment from any procedure.

    Unless we as patients ask our doctors for alternatives or seek second opinions, and understand that healing and recovery begin and end with "us", our traditional healthcare delivery train is unlikely to reach Eurostar efficiency.

  • Melanie

    I love the idea of an independent medical review panel instead of a judge making the decision on a previously denied claim. In Missouri, all of the WC judges are previous plaintiff attorneys and it's obvious the case law is changing as a result. Missouri has a problem with its second injury fund which was recently funded by increased 2014 NCCI rates for the state in combination with an increased (double) contribution by self insureds and self insured pools into the broken SIF structure. Rather than fixing the problem, we just funded it for a while but it still doesn't work. The judges are giving benefits to the claimants which were previously unheard of in WC and should be found in the health system instead. Second, Missouri is a direct care state, one of the few left. I believe all states should be direct care states - it's crazy to think about the chaos we are creating with any other type of system. How can we manage the over diagnosis, prescriptions and unnecessary treatment if we allow a free-for-all? Direct care will allow for better control. Third, all of the "networks" and "repricers" who really bring nothing to the table in the process of helping an injured worker, need to be removed from the system. They are a major source of financial leakage and an easy problem to solve. Finally, we need to watch our results and focus on the providers who bring good outcomes. Stop using those who don't. Return to work programs begin with the right providers who are willing to work with employers in providing great care, modified duty at the workplace and very clearly written job restrictions until maximum medical improvement is achieved. We need to reconsider this compensation system from all sides or the revisions we're trying to make on behalf of true injured employees will not work.

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