Do Healthcare Costs Shift to Work Comp?

Yes. Higher reimbursement rates for treatment under workers' comp encourage doctors to classify injuries as work-related.

A new study―Do Higher Fee Schedules Increase the Number of Workers’ Compensation Cases?―from the Workers Compensation Research Institute (WCRI) explores to what extent workers’ compensation reimbursement rates influence the decision by the medical provider on whether to classify an injury as work-related. According to previously published WCRI research, in many states, workers’ compensation pays higher prices for treatment than group health does. For example, one study found that workers’ compensation prices were two to four times higher than group health prices in some states. And, in most states, workers’ compensation systems rely heavily on the treating physician to determine whether a patient’s injury is work-related. ”Physicians may call an injury work-related in order to receive a higher reimbursement for care he or she provides to the patient,” said Dr. Olesya Fomenko, the author of the report and an economist at WCRI. See Also: Are Your Health Cost Savings an Illusion? The study found, among other things:
  • If the cause of injury is not straightforward (e.g., soft tissue conditions), case-shifting is more common in the states with higher workers’ compensation reimbursement rates. In particular, the study estimated that a 20% increase in workers’ compensation payments for physician services provided during an office visit increases the number of soft tissue injuries being called work-related by 6%.
  • There was no evidence of case-shifting from group health to workers’ compensation for patients with conditions for which causation is more certain (e.g., fractures, lacerations, and contusions).
This analysis relies principally on workers’ compensation and group health medical data coming from a large commercial database. This database is based on a large national sample of patients where the data were provided by health insurers and self-insured employers. It includes individuals employed by mostly large employers and insured or administered by one of approximately 100 group health plans. The database is unique in that, for a given employee, it shows whether a given medical encounter (visit) was paid for by group health or workers’ compensation. For more information about this study, visit here.

Ramona Tanabe

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Ramona Tanabe

Ramona Tanabe is executive vice president and counsel at the Workers Compensation Research Institute in Cambridge, MA. Tanabe oversees the data collection and analysis efforts for numerous research projects, including the CompScope Multistate Benchmarks.


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