Will the ACA drive up your clients workers’ comp rates?

Will the ACA drive up your clients workers’ comp rates?

Will the ACA drive up your clients workers’ comp rates? Insurance agents involved in the individual and group health markets are not the only ones feeling the effects of the Affordable Care Act. According to a new study from the Workers Compensation Research Institute, the law’s creation of accountable care organizations (ACOs)—a network of doctors and hospitals—creates a powerful financial incentive to shift cases to workers’ comp.

In a webinar Thursday, WCRI President and CEO Richard Victor suggested that several of these ACOs are looking at incorporating workers’ compensation into their care. Because classifying an injury as work-related typically pays higher rates to physicians, and because workers’ comp outcomes are not part of an ACO’s mandated evaluation, providers would have a powerful financial incentive to shift cases to the workers’ comp umbrella.

This is most likely to affect soft tissue injuries such as back, knee or shoulder strains, whose causes may be less clear. In this case, the WCRI suggests that physicians may be more inclined to treat these injuries as work-related.

“We found that the growing use of capitation alternatives to fee-for-service is likely to increase the number of soft tissue cases seeking payment under workers’ comp,” Victor said. “The data suggest the largest amount [of claims shifting] will occur in states where capitation is most common.”

According to WCRI data, 12 states had more than 25% of insured workers in capitated plans, including California, New York, Pennsylvania, Michigan and Massachusetts. In these states, there was an observable 30% increase in soft tissue workers’ comp claims.

Comparatively, in states with less than 10% capitated plan enrollment, there was not a significant increase in soft issue workers’ comp injuries.

What this means for workers’ comp insurers and agents is less certain. Because the WCRI cannot estimate how popular ACOs will become, researchers were unable to gauge potential financial impact.

However, as an example, Victor said that ACOs could increase the percentage of workers in capitated plans by 25 percentage points, which would allow such plans to regain the market share they experienced in 2000.

In this scenario, claims shifting in Illinois would push $90 million of claims into workers’ comp, and $55 million in Pennsylvania.

Not all workers’ comp professionals are convinced of this eventuality, however. Joseph Paduda, principal with Health Strategy Associates, responded to the WCRI study during the webinar and suggested that physicians do not necessarily “know how to and purposely benefit financially” from shifting claims to workers’ comp.

For one thing, a RAND study Paduda cited suggests that physician dislike of the forms associated with workers’ comp is so great, that it would counteract any financial incentives associated with claims shifting.

Second, he believes there are some cases in which physicians may actually shift claims from workers’ comp to group health.

Finally, enrollment in capitation has remained static and may have decreased since the implementation of the Affordable Care Act, suggesting that any connection between the healthcare law and claims shifting is negligible.
  • David Langham 12/12/2015 8:25:45 AM
    It seems a question of how much, not if.

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  • Chris 1/29/2016 10:17:43 AM
    Cost shifting will continue to occur. As someone who works with frequently works with physicians I beg to differ with the comments from the gentleman from Health Strategy Associates, physicians don't work in a vacuum, they employ financial advisors, practice managers, and their own business staff who do pay attention payments, rates and to cash flow. What a lot of people forget is that many practices are just small businesses, 'cash is king' and whatever improves cash is a good thing for everyone. If workers comp pays more then its a no brainer that more treatment will be comp related.

    With regard to the dislike of forms related to workers comp, that is true. However, the extra paper work is not a disincentive to improved cash flow. In addition, the ACA has placed a very large burden on the physicians with regard to reporting, so the comp related paper work argument is further blunted. Now on top of the ACA, initiatives to move to value based care or population management (aka capitation) will make that comp paper work seem a minor annoyance.
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