Hundreds of millions of dollars of claims could shift from group health to workers' compensation as accountable care organizations (ACO) expand under the Affordable Care Act (ACA), according to our new study: Will the Affordable Care Act Shift Claims to Workers' Compensation Payors?
Although pundits have written about "cost shifting" to workers' compensation, a significant and underappreciated effect of the ACA is "case-shifting" from group health to workers' compensation.
The ACA seeks to greatly expand the use of ACOs-where providers are rewarded for meeting cost and quality goals. This effort will expand the use of "capitated" health insurance plans. Under these plans, providers are paid a fixed insurance premium per insured regardless of the amount of care provided to a given patient during the year. Under traditional fee-for-service insurance plans, providers are paid for each individual service rendered.
The question addressed in the study is to what extent do the financial incentives facing providers and their healthcare organizations influence whether a case is deemed to be work-related. In other words, how many cases will get moved to workers' comp, which covers fees for each additional service, from group health, where the fixed fee under capitation means providers wouldn't get any additional payment.
The study found that a back injury was as much as 30% more likely to be called "work-related" (and paid by workers' compensation) if the patient's group health insurance was capitated rather than fee for service. The study can be extrapolated to different states-for example, the study predicts about a $100 million increase in workers' compensation costs in a state like Illinois if the share of capitated patients rises from 12% to 42%.
Case-shifting was more likely in states where a higher percentage of workers were covered by capitated group health plans. In a state where at least 22% of workers had capitated group health plans, the odds of a soft tissue case being called work-related were 31% higher for patients covered by capitated plans than for similar workers covered by fee-for-service group health plans. By contrast, in states where capitation was less common, there was no case-shifting seen. This is more than just the result of having fewer capitated patients seeking care. It also appears that, when capitation was infrequent, the providers were less aware of the financial incentives.
This study relies on workers' compensation and group health medical data coming from a large commercial database. This database is based on a large sample of health insurers and self-insured employers. It includes individuals employed by mostly large employers and insured or administered by a variety of health plans. The database is unique in that, for a given employee, it contains information on both the group health services used and the workers' compensation services used.
For more information about this study, visit http://www.wcrinet.org/result/will_aca_shift_wc_result.html.