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This is the third of four articles on the Oklahoma Option, an alternative to the state's workers' compensation act, which is under consideration in the 2013 Oklahoma Legislature.

The Oklahoma Option leverages the best of the Texas nonsubscriber experience:

Employee Accountability: The injured employee will be held to a high degree of accountability under the Oklahoma Option. For example, the injury benefit plan can require, as a condition of benefit payments:

* Immediate accidental injury reporting.

* Care from approved medical providers, focused on getting care from the best physicians and facilities that have appropriate credentials, training and equipment, rather than seeking the deepest network fee discounts or leaving employees to select providers based on television ads or similar referrals.

* Following the treatment plan of the approved providers to achieve the best medical outcomes.

* Return to work upon release to full or modified duty. No more doctor shopping for a medical opinion that removes the employee from work.

Employees may also participate in the savings of an Oklahoma Option program (for example, through a safety incentive program) and thereby require more accountability from their peers to file only legitimate claims and encourage each other to return to work when able.

True Medical Management: Like Texas nonsubscription, the Oklahoma Option provides an environment that can significantly impact medical outcomes. This is not "Workers' Comp Light". Specific techniques may include, but are not limited to:

* Immediate medical treatment by approved providers and pre-approval of subsequent treatments and referrals to specialists.

* Medical Director -- A specific physician can be designated as the Oklahoma Option plan's medical director and assigned to each significant claim from a particular employer to achieve accountability, continuity and consistency. The medical director is charged with providing access to timely, appropriate medical care with the most appropriate physicians and facilities. The medical director can ensure that an accurate assessment of the extent of injury is made, and manage claims with adherence to evidence-based diagnostics and treatment, coordinate all peer reviews, specialist referrals, medical case management and other utilization review activities. The medical director can also provide ongoing assessment of outcomes, such as the number of office visits incurred, the amount of physical therapy ordered (pre- and post-op), prescribing patterns, surgical re-do rates and employee/patient satisfaction. Free-market, competitive forces allow top performing medical providers to rise to the top.

* Referral Criteria -- Claims that satisfy specific criteria (defined by the employer or insurance carrier in the injury benefit plan's claim procedures) must be referred by the claims adjuster to the medical director. Referral criteria support early intervention in difficult claims and help ensure that timely claim analysis and medical care are provided in cases that might be otherwise put on the claims adjuster's diary for another 30 day follow-up.

* Causation Analysis -- First-line medical providers are often focused more on making a diagnosis and providing the appropriate treatment for a specific condition, not on establishing the causal or contributory factors to the employee's presentation. The Oklahoma Option allows for development of medical management procedures that require such a causation analysis (relying, for example, on the American Medical Association's Causation Guides), which may eliminate fraudulent injury claims and help ensure the right treatment is provided to the body parts actually injured on the job.

* Emphasis on Return to Work -- The treating provider needs to see the injured employee's job description and the requirements of any available modified duty work. Work can then be used as a treatment modality.

* Use of the "Official Disability Guidelines" as a Guide, Not a Blank Check -- Just because the official disability guidelines (from the Work Loss Data Institute) says a treatment is acceptable does not mean it is appropriate to authorize or will be effective. To effect material change with the adoption of any guideline, or with the use of an evidence-based approach to medical practice, concurrent, strong utilization review protocols must be in place.

Free-Market Solution: Workers' compensation claims are adjudicated through workers' compensation statutes and case law; whereas, Oklahoma Option claims will be adjudicated through the procedures and rules outlined by employers in the injury benefit plan.

* The success of nonsubscription in Texas over the past 23 years is convincing proof that most employers are fully willing and able to provide outstanding care for injured workers without any legislative mandate to do so. Nevertheless, the Oklahoma Option provides a safety net through mandating the forms of benefits and dollar, percentage, and duration limits that must be satisfied in the injury benefit plan, along with mandatory insurance coverage or bonding. Insurance carriers will then compete against each other to offer higher levels of benefits for injured employees at a lower cost to the employer.

* Employers and insurance carriers will also have some flexibility to specify coverage exclusions and limitations that are similar to provisions found in workers' compensation laws, but that can adapt to constant changes in medical technology and practice (without the need to wait for further prescriptive medical management rules to be legislated).

* Insurance carriers will also be involved in regulating the quality of injury benefit plan provisions by requiring employers to adopt their standardized injury benefit plan documents (or for certain larger employers, approving customized documents that meet minimum statutory and carrier criteria). Mandatory injury benefit plan approval will be required by all Oklahoma Option insurance carriers to ensure consistency of claims handling, conform to underwriting assumptions, and avoid claim disputes. This is a free-market lesson learned over many years by insurance carriers in the Texas nonsubscriber environment.

Key Differences from Texas Nonsubscription

Oklahoma employers recognize the many advantages of Texas nonsubscription over a traditional workers' compensation system. They view the Oklahoma Option as an opportunity to build an even better process to protect employee rights and manage occupational injury claims, drawing upon the best of both Texas nonsubscription and a newly reformed Oklahoma workers' compensation system. Consider these key differences from the Texas nonsubscription model:

* Benefit Protection for ALL Injured Employees -- Texas law allows an employer to opt out of workers' compensation and provide no benefits to injured workers. Under the Oklahoma Option, there will be no such ability for employers to "go bare" and refuse to provide any benefits for occupational injuries.

* More Generous Benefits -- Texas nonsubscriber benefit payments are entirely voluntary on the part of the employer. The Oklahoma Option requires (by statute) high, mandatory benefit levels that mirror the same forms of benefit and dollar/duration/percentage limits equal to or greater than those set in the reformed workers' compensation system.

* Mandatory Insurance Coverage or Bonding -- Texas nonsubscribers have the option of purchasing insurance to fund injury benefits; but there are no other insurance or financial security requirements. However, the Oklahoma Option mandates (by statute) that the employer must purchase a high level of insurance coverage or satisfy other strict bonding or financial security requirements.

* Guaranty Fund Protection -- Funds are established for covered claims that are due and unpaid or interrupted due to the inability of the insurer or employer to meet its compensation obligations. No such protections exist for most Texas nonsubscription plans.

* More Limited Liability for Employers -- Texas nonsubscribers have complete discretion on whether to establish an injury benefit plan for employees. As a result, they have unlimited liability for negligence claims brought by injured employees. Due to the high level of mandatory benefit commitment (which generally mirrors workers' compensation benefits), Oklahoma Option employers will not be subject to negligence liability claims by injured employees. The "Exclusive Remedy Rule" will apply.

* More State Regulatory Oversight -- Rather than evolve over a period of 100 years (as has occurred with Texas nonsubscription), the Option will promote transparency and better data from inception of this legislative alternative on who is in workers' compensation and who elects the Option. Notices required by the statute and prescribed by the Oklahoma Insurance Department will also support confirmation of minimum benefit levels and claims administrator contact info, and employee communication. Unlike Texas nonsubscription, Oklahoma employers, regulators and legislative policy makers will be able to build and access this information from the first day the Option legislation becomes effective.

Bill Minick is president of PartnerSource, an employee benefits and risk management consulting firm. Next week, parts of this series will address why Option employers are entitled to exclusive remedy protection. Click here for more information on the Oklahoma Option.

March 12, 2013

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