Workers' Comp Industry: Benefited From Reform

From keeping costs increases in check to issues of affordability to cracking down on fraud, reform has helped the industry.

By CYRIL TUOHY, managing editor of Risk & Insurance®

Workers' compensation reform has generally had a positive effect on the industry, regulators from four states said on Wednesday.

Ohio: Bureau issues amendments on provider certification (03/25/13)
Oregon: Division seeks input on common funds claim balance (04/29/13)
California: Division addresses good-faith negotiations (04/15/13)
Washington: Emergency rule focuses on medical provider network (04/01/13)
Rhode Island: Division spells out information on cost-of-living increase (04/18/13)

From cost control to accessibility to cracking down on fraud to improving provider networks, injured workers are better served today than five or even 10 years ago, the regulators also said.

"Today, we're the least costly of 14 states," said Rod Bordelon, commissioner of the workers' compensation division of the Texas Department of Insurance.

He spoke Wednesday at the 19th Annual National Workers' Compensation and Disability Conference® & Expo during the opening session titled "Needle-Moving States: Developments That Drive the Nation."

The Lone Star State, he also said, was moving to a fee-based model and implementing treatment guidelines for carriers and providers.

As a result premiums have dropped 45 percent since 2005, Bordelon said, more doctors want to treat workers' comp patients and more carriers are coming into the state creating more competition.

In Pennsylvania, where carrier insolvencies nearly a decade ago led to calls for change, reforms have had a more "subtle" effect on the workers' comp system, said Elizabeth Crum, deputy secretary for compensation and insurance in the Pennsylvania Department of Labor & Industry.

Christine Baker, executive officer for the California Commission on Health and Safety and Workers' Comp, said reforms in that state in 2005 had ushered in a turnaround.

Employers have seen premiums plummet by 62 percent over the five-year period, she said. Self-insured employers fared even better.

"We've gone from a $30 billion system to a $15 billion system," she said.

Robin Ippolito, chief of the bureau of monitoring and audit, with the Florida's division of workers' compensation, said reforms have changed eligibility requirements for disability and reduced hospital outpatient fees.

Reforms had reduced insurance fraud, either through better law enforcement or by increasing penalties, Crum and Ippolito also said.

Regulators, however, will still need to be vigilant as costs in some areas of the workers' comp system in some states are beginning to creep upward.

The medical portion of workers' comp claims peaked in 2003 and dropped in 2007, said Baker. "It's going back up again, but it's far below where it would have been without the reforms." California will try and curb those increases through regulation or legislation, Baker also said.

In Pennsylvania, the workers' comp dollar has done up due to utilization review, Crum also said.

November 10, 2010

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