What has been the impact of workers’ compensation reform in Illinois?
The Illinois legislature enacted workers’ compensation (WC) “reform” in September 2011. I have been skeptical about these changes actually decreasing the costs of Illinois WC, and more than a year later, it appears that this skepticism was warranted. After 30-plus percent decreases in reimbursement rates for providers, a bevy of pseudo-PPP networks popping up asking for even deeper discounts, and a newfound diligence by insurance carriers to “deny, delay and don’t pay” for necessary medical services, where has this left employers? Still paying more. Why?
Preferred Provider Panels
This promised “white knight” for WC reform has been, to date, a bust. Repackaging a concept already in the WC act for years as “new and employer-friendly,” legislators touted this concept as a chance for employers to finally have some say in the care of their injured workers. However, the injured worker can still opt out of the plan with minimal penalty, or, if he stays in, seek care anywhere in the network, regardless of geographic scope.
To date, not one PPP has been approved by the state. PPOs, however, are asking providers to join their networks with requests for 10- to 25-percent off what are already near-Medicare reimbursement rates (resulting in reimbursements at or below Medicaid rates) “in preparation for” their conditional or contingent PPP approval. Some insurance carriers have threatened to “blacklist” clinics that will not join their PPOs in preparation for PPP approval. The timeline for approval is indeterminate. One has to wonder, with new federal requirements for PPACA implementation just around the corner, will these approvals be put on the back burner?
Bottom-line effect: The PPOs that claimed to have conditional approval simply mean they are waiting—like everyone else—to be approved. Subscribing to their PPO now translates into no more control for the employer than before. Moreover, if a statewide PPO is approved as a PPP, then the employer who subscribes will have even less control of an injured employee’s care than if he/she does nothing at all.
Employers should seriously consider running away from any statewide PPP, as it not only allows, but offers employees a list of providers throughout the state that can care for them. The employer will have no opportunity to suggest who the employee sees, even for an initial visit. Although it may seem absurd, a worker in Cairo could legally request care for a laceration in Galena without any ability for the employer to disapprove of the choice. Until these PPPs “nest” for a given area, it is best to steer clear.
Additionally, when the providers who have signed up for the plan realize their reimbursement levels fall below Medicaid rates, with the only benefit of possibly being paid sooner, they will either refuse to see WC patients or leave the PPPs in droves, leaving the most costly and highest per-unit reimbursement providers—emergency rooms and prompt cares—to care for injured workers, perpetuating the pattern of de-incentivizing efficient, quality care and outcomes.
Another “new savior” of WC reform was utilization review, and like physician panels, it was already being used. As I have stated before, utilization review (UR) is a “quality control” process, which under Illinois law, must use objective, evidenced-based medical standards to determine if treatment for an injury was reasonable. If care is deemed excessive or unnecessary, an insurance carrier or employer—on the advice of another qualified medical professional who has had no provider/examiner relationship with the injured worker—will deny payment.
Insurance carriers or employers can also request providers to submit medical records for review to determine if a proposed procedure is necessary. It’s important to note that under Illinois law, it is required that UR be invoked in writing on a case-by-case basis. Blanket statements from insurance carriers or employers are not enforceable under the statute. UR is powerful when used properly.
Bottom-line effect: The problem with UR is not in the theoretical concept or intended practice. In fact, it is necessary and appropriate to monitor those in the medical community who misuse/prescribe/refer medical services to pad charges. The net effect has been quite different from the intended result for too many reasons to count. Moreover, these shortcomings should have been foreseen, as they are already being experienced in California, which gets the credit as the model of our new system.
What is the net effect? Carriers have begun using the UR process in a blanket manner as a means of “deny, delay, don’t pay” for necessary medical services, to quote a local commercial. Over the past year, there has been a significant number of injured workers treated in our clinics who chose to initiate litigation due to unwarranted delays or denials for clinically evidenced, necessary surgeries and diagnostics.
September of 2011 ushered in a 30-percent reduction in primary care reimbursement rates. The rates were further reduced in many geographic areas again in January 2012. Using Medicare as its basis for comparison, the state legislature trumpeted a study stating that Illinois WC costs were the second highest in the nation in 2006. This report overtly contradicts the state’s own annual report, placing Illinois in the middle of the pack (iwcc.il.gov/annualreport06.pdf). The comparison study used Chicago metropolitan statistics as the basis for its comparison (Chicago’s WC costs are equal to the rest of the state combined).
Notwithstanding these facts, Illinois’ WC fee schedule now reimburses occupational medicine physicians at rates two to 10 percent below Medicare, while reimbursement for specialists—the fees that were most disproportionate to Medicare services—continues to be high. The irony here is that the WC fee schedule committee has only specialists representing the medical community and no primary care providers.
Some in the insurance industry will claim that general insurance carriers contract in-network reimbursement at these same rates. This is true. But what is conveniently overlooked are the patient’s responsibilities for co-pays, deductibles and other out-of-pocket expenses (approximately an additional 30 percent) under general insurance that are prohibited from collection under WC.
Bottom line effect: Primary care medical costs were only the smallest of issues contributing to the high costs of worker’s compensation insurance; thus, the changes have not led to overall reductions for the employer, but have dropped a few extra dollars into the carrier’s pocket.
According to an Illinois Workers’ Compensation Commission representative, there is a large contingency of insurance carriers still underwriting WC in Illinois, all the while bemoaning their financial losses. Does something not add up here? Only your savings.
There is no doubt that Illinois WC needs reform. Unfortunately, the stakeholders negotiating the reforms seem to be more interested in the politics of the minutia instead of sound fiscal and broad logical changes. When asked about the possibility of “directed care,” a prominent lobbyist admitted that it would have the single greatest impact on the costs of WC, but is impossible due to the strength of union opposition and plaintiff’s attorneys’ lobbying groups. He went on to say that when “directed care” was enacted in a neighboring state in 2006 with no reimbursement changes, while Illinois simultaneously enacted fee schedule reductions only, the results were 20+ percent reductions in WC costs for our neighbor, while we netted increases of more than 10 percent.
Another issue not touched was causal connection. For all practical purposes in Illinois, if work is “a” cause, it is “the” cause of an injury. In 2010, a worker was awarded more than $62,000 because he walked three to ten miles a day. The worker claimed “repetitive stress.” Did anyone in Springfield think that perhaps the loose definition of causation could bear forth a number of face-value frivolous claims that have become case law? To be fair, I’m sure that many employers, adjustors and defense attorneys would have believed this issue to be a top priority. However, like the issue of directed care, it was too “politically difficult” to deal with.
I do wonder if the employer—in this case the State of Illinois—could charge the worker for a wellness program that was not paid for… maybe a wellness program that amazingly costs $62,000?
Unfortunately, many believe that the reforms that were enacted are “just the first step” towards significant reductions in WC costs. Others have claimed that the legislature will not work to reform further if these ineffective reforms are somehow not used or successful. The problem with the first line of reasoning is that the slippery slope rarely runs towards a positive outcome. Incremental changes that have not proven to have significant positive impacts, coupled with some that are quite possibly having negative results, likely amount to little more than talking points for someone’s re-election campaign. The second part—if something that doesn’t work isn’t used, then something that will work will not be offered—has a major flaw: it is specious.
Bottom line: If any meaningful reform is going to occur, legislators will have to prioritize issues such as directed care and causation before political expediency. iBi