Report showing med care exceeding cash benefits is a wake-up call
"Generally, insurance companies and third-party administrators put their least experienced people on medical-only claims," said Jim Pocius, a shareholder in the Philadelphia office of Marshall, Dennehey, Warner, Coleman & Goggin. "This is a wake-up call. It's not a job for rookies anymore."
The study, Workers' Compensation Payments for Medical Care Exceed Cash Benefits for The First Time, from the National Academy of Social Insurance showed workers' comp payments for medical care and cash benefits for injured workers increased 4.4 percent to $57.6 billion in 2008. Of that, $29.1 billion was spent on medical care while $28.6 went for wage replacement benefits to injured workers.
Medical care spending rose nearly 9 percent while wage replacement benefits increased by 0.3 percent. The authors speculated that both higher prices and higher utilization of medical care drove up medical care spending.
"The increase is the continuation of a long-term trend since 1980," said John F. Burton Jr., chair of the panel that oversees the report, "but this is the first year that payments for medical care were more than half of all workers' comp benefits."
For a system focused on best practices and cost-cutting measures, the report should drive changes in methodology, Pocius said. That means looking seriously at every claim, no matter how small it initially appears.
"We need to do full investigations," Pocius said. "We must limit our payments to whatever the medical condition is."
For example, a back injury claim should specify that there's a soft tissue injury rather than a sprain or strain. "Soft tissue is easier to defend and leads to a full recovery," he said.
Pocius also suggests insurers reconsider if and when they subcontract out to vendors the payments of pharmacy bills and provider services since that means giving up control of the medical payment. That requires adjusters who have more experience than typical medical claims handlers.
"We must really rethink where we're putting our least experienced people," he said. "We used to worry about indemnity. Now, indemnity is becoming a smaller part of the claim. This is now hard evidence for what we've been feeling for the past several years."
Read more at the WorkersComp Forum homepage.
October 25, 2010
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