Prepare for impact of health care reform, changing medical landscape

Workers' compensation insurers need to prepare for changes that may arise from proposed health care reform legislation, according to Joseph Paduda, principal of Health Strategy Associates. However, even if a reform bill does not pass, the shifting medical landscape will have a major impact on the industry, he warned.

Paduda told attendees of the Casualty Actuarial Society's annual meeting that a number of pre-reform measures are already impacting workers' comp.

"The stimulus bill, the American Recovery and Reinvestment Act of 2009, included funding for development and implementation of electronic health records," he said. "Electronic health records support clinical decision-making, physician order entry for scripts or for imaging, and clinical data capture and sharing. Providers will all have access to the same amount of information instantly."

Washington: DLI looks to establish medical provider network (09/10/12)
New York: Temporary insurance rule in effect (11/07/11)
Washington: Safety and health grants program rules allow for funding (03/05/12)
Oregon: Division sets claims processing administrative cost factor (01/30/12)
Alaska: Amendments would tweak medical benefits rules (09/29/11)

Paduda believes the funding will improve the quality and depth of the data available and pointed out that the use of electronic health records would be ultimately beneficial for actuaries practicing in the workers' comp field.

The stimulus bill, he said, also calls for an estimated $1.3 billion to evaluate the effectiveness of specific procedures and the impact of medical care on functionality, outcomes, and quality of life. Paduda said this is likely to directly affect Medicare reimbursement policies and over time may impact private pay and workers' comp.

"In my view this is a strong positive for workers' comp," he said. "A lot of medicine is more of an art than a science, so adding more science to medicine will dramatically improve outcomes and potentially reduce costs."

Drug pricing changes. Paduda said drug pricing was one potential change where the likely impact on workers' comp will not be so positive. The United States, he said, is the only developed country where the government does not negotiate drug prices with pharmaceutical manufacturers. However, this could change under several bills that are being considered.

"The impact on workers' comp, if the Department of Health and Human Services negotiates for drug prices, is uncertain but not positive," Paduda said. "Cost shifting is a distinct possibility. If one of the biggest payers of pharmaceuticals is suddenly paying them less, they're going to want to make up their revenues from somewhere else, like workers' comp."

Read more at the WORKERSCOMP Forum^TM homepage.

January 11, 2010

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