PPACA: The End of Workers\' Compensation?

$Page 1: PPACA: The End of Workers\' Compensation?$
Running Head: PPACA: The End of Workers’ Compensation?

PPACA: The End of Workers’ Compensation?

Richard Krasner

Florida Atlantic University

HSA 6930

The 2010 Patient Protection and Affordable Care Act

Dr. Mahle

August 1, 2011

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Table of Contents

Introduction.................................................................................................................................................3

Impact of PPACA on Workers’ Compensation.............................................................................................4

Conclusion.................................................................................................................................................10

References.................................................................................................................................................11

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Introduction

On March, 25, 2011, a memorial service was held on a New York City street corner near

Washington Square Park, now the site of one of NYU’s main campus buildings. The memorial

service was held by family members and thousands of people who had marched to the site

through Greenwich Village. They were commemorating the famous fire that occurred there one

hundred years earlier and took the lives of 146 young women, mostly Italian and Jewish

immigrants, (Wikipedia, 2011). The acquittal of the owners of the Triangle Shirtwaist Company

and the tremendous loss of life began a reform movement both in New York State and

nationwide to improve working conditions, fire safety and access to medical and other benefits

for workers injured on the job through state workers’ compensation laws.

The workers’ compensation industry began that day one hundred years ago, and the

question as to whether or not workers’ compensation will continue to be a remedy for those

killed or injured while working, under the PPACA, is the topic of this paper. While the law is

only a year old, and was signed within days of the ninety-ninth anniversary of the Triangle fire,

how it will impact workers’ compensation remains unknown, but we can look at some possible

areas of concern to those in the workers’ compensation industry.

Historical Background

In 1972, the National Commission on State Workmen’s Compensation Laws issued a

report that took the position that it would be unwise and unnecessary for any national health

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insurance program to assume medical costs of workers’ compensation. The Commission stated

that to fold workers’ compensation medical costs into a national health insurance program would

be inconsistent with the central tenet of workers’ compensation and that the costs of work-related

injuries and diseases should be allocated to the responsible source. In the 1990’s, the Clinton

Administration’s health reform proposals favored the merging of the medical component of

workers’ compensation into a federal health care system. The Administration backed off of this

proposal after strong opposition from business owners who said it would not produce any real

savings, would have pre-empted state “choice of provider” laws and empower employees to

select providers from any federally approved health plan, (Eaton, 2010).

Impact of PPACA on Workers’ Compensation

My perusal of the available research, post enactment, on the impact PPACA will have on

workers’ compensation led me to five online articles or commentaries from individuals and

organizations heavily connected to or involved with the workers’ compensation industry. While

each of them said it was too early to know the full effect of the law on workers’ compensation,

all of the authors stated that there were two impacts that PPACA might have on workers’

compensation: direct and indirect. One author even said there might also be speculative impacts

as well, (Krohm, 2011). However, there was no consensus on which aspects of the law were

direct impacts and which were indirect impacts, as will become apparent.

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Direct Impacts

Much of the research showed that there are very few direct impacts on workers’

compensation, (Eaton, 2010). The obvious reason for this is that workers’ compensation was not

a minor focus of the legislation, (Eaton, 2010; Krohm, 2011). Krohm stated that, “there is no

language in the law that would directly and explicitly affect workers’ compensation. From the

beginning of bill-drafting in both the House and Senate, it was clear that workers’ compensation

was not an area that should get mixed into the reform process”.

Three direct impacts cited by two other authors included revisions to the Black Lung

program that will make it easier for coal miners and their survivors to obtain black lung benefits,

(Harrison, 2010; National Council on Compensation Insurance [NCCI], 2010), new taxes on

pharmaceutical and medical device manufacturers that might be passed on to policyholders,

causing higher workers’ compensation premiums, (Harrison, 2010), and changes in Medicare

reimbursement levels that may have a cost impact for those states that utilize Medicare as a basis

for reimbursements in their workers’ compensation fee schedules for physicians and hospitals

(inpatient, outpatient and ambulatory surgical centers), (NCCI, 2010).

Indirect Impacts

The authors compiled an extensive list of indirect impacts of the PPACA on workers’

compensation, and there is considerable overlap between them. Black Lung claims was cited by

Eaton as an indirect impact, contradicting what Harrison and NCCI had stated. Another indirect

impact cited by Eaton had to do with the requirement of the Secretary of Health and Human

Services to determine whether the reporting of health services delivered through workers’

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compensation medical services should be a part of the new national reporting standards, which

will result in changes to state record keeping and reporting practices.

Standards for the coordination and subrogation of benefits would have been established if

the language in an earlier version of the legislation had been passed, but this portion was

removed during reconciliation, (Eaton, 2010; NCCI, 2010). Revision of Medicare reimbursement

levels was also cited by Eaton as an indirect impact on workers’ compensation. Expansion of

Medicaid coverage, which will add between 15 and 20 million people to Medicaid, will place a

stress on state budgets that pay most of the Medicaid benefits. This will make it difficult for

workers’ compensation systems to get additional revenue to increase benefits or improve

administrative services, (Eaton, 2010; Krohm, 2011).

On the other hand, new excise taxes on pharmaceuticals and medical devices were cited

by Eaton and NCCI as an indirect impact that would result in rising costs for devices used in

workers’ compensation cases. Related to that was the indirect impact of an expanded Medicare

Part D that would cause pharmacy costs to rise due to extra demand, and the absence of price

controls or re-importation options, (Krohm, 2011). Pilot projects that will explore ways to reduce

or contain costs may involve evidence-based protocols to be used in workers’ compensation,

(Eaton, 2010).

Access to providers, especially with the increase in the number of Americans having

health insurance, will impact workers’ compensation because with the decline in the number of

physicians choosing primary care as their specialty, those that do choose to work as primary care

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physicians will do so if reimbursement rates are higher under private plans than under workers’

compensation, (Eaton, 2010). Lastly, the elimination of the donut hole through the legislation

may lead to increases in prices, especially those drugs prescribed for workers’ compensation

claimants, (Eaton, 2010).

Additionally, the short supply and patient backlog of primary care providers in rural and

poverty stricken areas may get worse after 2014 due to penalties for those who remain uninsured,

and when tax credits to subsidize purchase of insurance kick in, which may impact injured

workers as well, (Krohm, 2011). Other indirect impacts mentioned as being far-reaching was that

the frequency and importance of “medical use” review will increase because health insurers and

workers’ compensation insurers battle over responsibility for medical expenses; there is also a

question as to whether or not health reform will increase or decrease the number of workers’

comp claims, (Krohm, 2011).

This is due to a provision in the law that allows health insurers to charge smokers 50%

more for coverage and another provision provides that if employees are enrolled in a company

wellness program or meet certain health standards, they can get a 30% reduction in premiums,

(Harrison, 2010). This in turn would lead to improved national health, which would help to

reduce workers’ compensation claims, (Eaton, 2010; Harrison, 2010; NCCI, 2010).

Still others believe that because more employees will have health insurance, they will be

less likely to file questionable or hard-to-prove claims, if they can get health insurance to pay for

it. On the other hand, there are some who believe that PPACA will result in increased workers’

compensation claims because if they have health insurance they will take advantage of medical

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services such as surgeries. More treatment and surgeries means they will miss time from work,

which will increase workers’ compensation claims to receive indemnity (wages and other

income) benefits while not working, (Harrison, 2010).

On the heels of improving the overall national health, debate exists among those in the

industry and the nation at large as to whether the legislation will improve or damage the national

economy, with those in favor of the legislation believing it will make a positive impact, and

those against who focus on the immediate costs and believe it will stifle job creation and drag the

recovery, (Eaton, 2010). One final indirect impact is that health reform would be seen as a

stepping stone to the federalization of workers’ compensation. A bill introduced to the House of

Representatives in 2009 would create a National Commission on State Workers’ Compensation

Laws to examine state workers’ compensation programs. It was believe that this would be a

precursor to federalization, but Harrison does not agree with this idea because the bill has been

stalled in committee.

Speculative Impacts

Another area of overlap between the authors is in what Krohm considered speculative

impacts on workers’ compensation. He suggested that there would be a slight reduction in claims

frequency rates because more workers will have access to health insurance. This is highly

speculative because the connection between general health coverage and the propensity to file

workers’ compensation claims is scant. He believes that more workers will be healthier because

they have greater access to care, especially if they can lessen or reduce the impact on their health

from such problems as obesity, smoking, depression and substance abuse.

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Another speculative impact he mentions is that the pilot programs and experimentation

called for in PPACA to create better models for managing the coordination and delivery of

medical care, and as Eaton indicated would lead to more evidence-based protocols on how to

treat certain high-cost occupational injuries and diseases. Finally, he speculates that the impact of

PPACA on the national economy and on workers’ compensation in particular, will be one of

“wait, see and respond accordingly”.

One speculative impact that none of the authors mentioned has to do with something that

has already happening even before the creation and enactment of PPACA. Some four years ago,

I learned about a company in Connecticut that was engaged in the health care claims subrogation

arena. This company had created a software system to participate in a pilot project the New York

State Workers’ Compensation Board was conducting in connection with the Health Information

Matching Program (HIMP) laws for the purpose of subrogating health care claims that are later

determined to be workers’ compensation claims, but that when the injured worker was treated,

presented his employer’s health insurance card, and therefore the health care carrier was billed

for the services provided, instead of the workers’ compensation carrier.

“New York law provides that a health insurer who makes payments for medical services on behalf

of an employee who has suffered a work-related injury is entitled to be reimbursed by the

employee’s employer or its workers’ compensation carrier, if the claim is found compensable.”

WCL §13(d)(1)

In my research of the subrogation arena, I discovered that there are many companies out

there doing the same or similar types of work. It is purely speculative on my part, but it is

possible that as more people get covered under PPACA with health insurance, the probability

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that more workers will present their health insurance card instead of telling the provider that they

suffered an on the job injury and should be covered under the workers’ compensation insurance

of their employers. What impact this will have on the number of workers’ compensation claims

filed in the future is anyone’s guess. But the potential exists for a substantial increase in workers’

compensation claims not only in New York, but nationwide if the situations in which this occurs

happens elsewhere. Again, we will have to wait, see and respond accordingly.

Conclusion

The consensus of opinion regarding the impact of PPACA on workers’ compensation can be

summed up by Eaton as follows: “the PPACA will have little direct or immediate effect on state workers’

compensation systems. However, there is potential for considerable indirect affects, especially with

regard to record keeping, coordination of benefits, and other details of administration. The actual impact

of the recent federal legislation is difficult to predict. Some of the potential indirect effects may increase

costs while others may moderate or even decrease costs.” So to answer the question as to whether

PPACA is the end of workers’ compensation, we will have to wait, see and respond accordingly when the

time comes.

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References

Eaton, T.A., The Impact of the Patient Protection and Affordable Care Act of 2010 On State

Workers’ Compensation Systems. Presentations and Speeches. Paper 28. Retrieved from

http://digitalcommons.law.uga.edu/fac_presp/28

Harrison, D.M., (2010). Health Care Reform and Workers’ Compensation, Alabama Employment

Law Letter. Retrieved from http://www.hrhero.com/hl/articles/2010/04/22/health-care-

reform-and-workers-compensation

Krohm, G., (2011). What Will Federal Health Care Reform Mean For Workers’ Compensation

in the U.S.? Retrieved from http://www.iaiabc.org/i4a/headlines/headlinedetails.cfm?

id=156

National Council on Compensation Insurance, Inc., (2010). National Health Care Law:

Implications for Workers’ Compensation Insurance. Retrieved from

https://www.ncci.com/documents/NationalHealthandWC.pdf

New York State Workers’ Compensation Law, Article 2, Section 13 (d) (1).

Wikipedia, Retrieved from http://en.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_fire

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http://en.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_fire

https://www.ncci.com/documents/NationalHealthandWC.pdf

http://www.iaiabc.org/i4a/headlines/headlinedetails.cfm?id=156

http://www.iaiabc.org/i4a/headlines/headlinedetails.cfm?id=156

http://www.hrhero.com/hl/articles/2010/04/22/health-care-reform-and-workers-compensation

http://www.hrhero.com/hl/articles/2010/04/22/health-care-reform-and-workers-compensation

http://digitalcommons.law.uga.edu/fac_presp/28

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PPACA: The End of Workers\' Compensation?