Delaware: Multiyear reform effort nets major improvement in comp ranking

A few years ago, Delaware was third highest in a national ranking of workers' comp rates. Its rates now are almost in the bottom third, according to a biennial report issued by the Oregon Department of Consumer and Business Services.

The latest study puts Delaware 34th out of 51 jurisdictions. The study shows Delaware's index rate -- a benchmark for rates nationally -- was $1.85 compared to the overall median index rate of $2.04. The changes came about through a concerted effort.

"We realized we had an issue as far as losing business to other states because of our workers' comp rates," said John Kirk, deputy director of workers' compensation in Delaware. "After a whole lot of discussion by the special interest groups, we drafted what became the Workers' Comp Reform of 2007."

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Paramount to the reform was getting a handle on medical costs. "We didn't want a push down system to gut the benefits to injured workers, but we realized we needed cost containment," Kirk said. "We had no fee schedule or other medical guidelines."

The reform instituted a fee schedule, practice guidelines, utilization review, and required physicians to become certified for workers' comp in the state.

Because of pushback from physicians, the regulators did not use Medicare as a basis for a fee schedule. Instead, they took across-the-board medical data, divided it into Current Procedural Terminology groups, and created a fee schedule. Kirk said it's similar to the system used in Illinois.

"For the practice guidelines, we looked to Colorado," he said. "We didn't reinvent the wheel. We tried to take the best of what was working in other states."

Additionally, the employers and medical providers are required to talk to each other to get the injured worker back to work as quickly as possible, he said.

On the indemnity side, there was only minor tweaking. However, regulators did focus on underinsured employers as well as contractors in the construction trade that did not have workers' comp coverage.

"We did some major overhauling requiring that general contractors be responsible for any subcontractors," Kirk said. "The requirements now hold them liable."

The reforms had bipartisan support from the medical, legal, labor, and business community.

"There is a 17-member Healthcare Advisory Panel created by statute," Kirk said. "They're looking at creating more utilization reviews or more practice guidelines."

Kirk said the latest rankings illustrate the success of the reforms. "The last five rate filings were approved for decreases," he said. "The sixth is pending before the commissioner."

Read more at the WorkersComp Forum homepage.

December 16, 2010

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