By MARK WALLS, assistant vice president of claims for Safety National, the leading provider of excess worker's compensation coverage for self-insured employers. He is also the founder of the 9,000+ member Work Comp Analysis Group on LinkedIn.
Welcome to the first in a series of articles highlighting the busiest and most relevant discussions in the Work Comp Analysis Group (WCAG) on LinkedIn.
For those of you who may be unfamiliar with the group, it is the largest online discussion group focusing exclusively on workers' compensation issues. It currently has more than 9,000 members who represent a wide variety of industry professionals, including employers, carriers, third-party administrators (TPAs), brokers and attorneys. These articles will be an attempt to distill the collective wisdom and experience of the group members.
Over the last 100 years, workers' compensation has evolved into the complex system that it is today. In some respects, this has led to creating a more difficult process for everyone involved. As a person who has been handling workers' compensation claims for over 21 years, I know firsthand the frustrations that are associated with our business.
The 100 year anniversary of workers' compensation provides an opportunity for reflection on the past with an eye toward the future. What can we learn about past problems to improve the workers' compensation system in the future?
A couple months ago, I asked the members of the WCAG to offer their suggestions on how to improve the workers' compensation system. Not surprisingly, this discussion generated more than 115 comments.
Group members replied with many thought-provoking suggestions on this issue. The following are some highlights of topics discussed. I would like to stress that these summaries are a reflection of the views expressed in the group and do not necessarily coincide with my personal opinions. You can also view the entire discussion at the Work Comp Analysis Group site.
SUGGESTION NO. 1: Limit political influence on the workers' compensation process.
It's no secret that there is significant political influence exerted in the workers' compensation process. Political appointees range from regulators overseeing the system to hearing officers and judges reviewing claims and making case law. Often times, these appointees have very limited prior exposure to workers' compensation issues. This creates a substantial learning curve when new appointees take office, which inhibits regulators' and hearing officers' ability to improve the system.
Too often, the political nature of the workers' compensation system also leads to inconsistent application of statutes and tends to expand workers' compensation coverage well beyond its intent.
SUGGESTION NO. 2: Create a platform for true data sharing in the worker's compensation industry.
In most states, primary workers' compensation carriers report data to NCCI. Some states, including California, New York, Texas and Pennsylvania, have their own data agency. Four states have no private carriers from which to collect data. In addition, self-insureds make up a significant percentage of the total workers' compensation payroll, yet their data is not collected in any centralized location.
Without industrywide data sharing, it is impossible to accurately compare the performance of different states, carriers and TPAs. It is also more difficult to accurately indentify industry trends and cost drivers and take the steps necessary to address issues in the workers' compensation system.
This is something that can be done, but it takes a willingness on the part of the entire industry to share its data for the greater good of everyone. Right now, too many entities are protective of their data and refuse to consider any type of data-sharing pool.
SUGGESTION NO. 3:
The workers' compensation system needs to be simplified.
The basic concept of workers' compensation is to provide wage replacement and medical treatment to employees who are injured on the job. Twenty years ago, adjusters took recorded statements, scheduled medical appointments, reviewed bills and negotiated settlements. Today, an army of vendors performs many of those duties.
Is the system more efficient and less expensive than it was 20 years ago? Have we made progress, or just added complexity?
In addition, the administrative side of workers' compensation has become more complex over the years. An endless supply of forms must be filed with state agencies, and additional reporting on claims and medical data is necessary.
Another complexity that the industry is facing is the Section 111 reporting to Centers for Medicare & Medicaid Services (CMS). None of these administrative complexities contribute to the basic goal of providing benefits to injured workers, but they add significant administrative costs to the system.
SUGGESTION NO. 4:
Focus on outcomes.
The goal of the workers' compensation system is to return the injured worker to their pre-injury state and to the workforce. Yet the system consistently works against this goal. A poor outcome for the injured worker means higher fees for their attorney and more payments to the treating clinicians.
Is there a way to change this? Should medical providers be compensated at a higher rate if they consistently produce better outcomes? Should clinicians who consistently produce bad outcomes be removed from the workers' compensation system?
In addition, should permanent partial disability (PPD) be tied to the outcome? Some states provide for a reduction in PPD if the injured worker returns to their regular job. That gives financial incentive for the employer to provide post-injury employment. Returning an injured worker to long-term gainful employment is far more important than providing a lump-sum settlement. Perhaps the focus on PPD settlements should be diminished.
These are just a sample of the many suggestions made by members of the Work Comp Analysis Group for improving the workers' compensation system. Most of these suggestions could be implemented, although some more easily than others.
Over the last 100 years, workers' compensation has evolved significantly, to the point where it barely resembles its original intent. While some of this change has been positive, much of it has simply added complexity and costs to the system without improving on the basic tenets of returning the injured worker to employment and their pre-injury state. It is time for the entire industry to reflect on where we are, and to focus on how we can improve the workers' compensation system for the greater good of all involved.
WCAG and participate in this and other daily discussions with thousands of other workers' comp professionals. Please click here to reach LinkedIn.)
Read more at the WorkersComp Forum homepage.
April 26, 2011
Copyright 2011© LRP Publications