Thursday, November 19, 2015

Cost Shifting, the ACA, and Workers' Comp

In September, the Workers’ Compensation Research Institute (WCRI) issued an intriguing report titled Will the Affordable Care Act Shift Claims to Workers’ Compensation Payors? As most WCRI reports, this one is dense, packed with data and conclusions; more tables and charts than one could hope. After reading it, I concluded that the report is misnamed, and should perhaps have been How Much Will the Affordable Care Act Shift Claims to Workers’ Compensation Payors?

I find the study compelling. As I read the Introduction and Summary of Findings, I began to think of Captain Renault in Casablanca. In a classic scene, he sits at a table gambling. A raid occurs and as the other officials enter, he exclaims “I am shocked, shocked to find gambling is going on in here." Perhaps the WCRI report is not telling us something we did not know, but is merely making it more widely known?

The report supports that there will be cost shifting in the delivery of medical care. This will be an inevitable outcome of a few simple truths carefully laid out in the Introduction and Summary of Findings. First, health insurers exist to make money. Pause here and catch your breath while you wrap your head around that one. Before you get too distracted by that, let me just assure you that all car producers, software companies, dating apps, sports teams, and purveyors of fine or fast foods likewise exist to make money. It is capitalism, which in the near term may remain a driving force in this country's economy.

The next truth is that human beings react in ways that further their own self-interest. "Shocked, shocked I am!” People will actually take actions that work to their own personal advantage. Who would have thought it? Certainly, there are those who preach the common good, and there are even some who work toward the common good. But in the end many an environmentalist will elect the less expensive or higher quality or more comfortable car over the one that is the most environmentally friendly. 

Personal wealth, comfort, or happiness may trump the big picture aspirations. Think of the allegations that Hollywood elite fly about in private jets to give speeches and attend conferences on carbon emissions. While we would all like to believe in commonality and community, there is a pull toward selfishness sometimes. 

The WCRI report notes that group health is evolving to “capitated” care. This is a model in which your doctor gets a sum-certain each year to provide your medical care. If she spends all of her time with you, she loses money because that sum-certain runs out and care thereafter she is providing free. If she spends none of her time with you she makes lots of money because she receives the sum-certain nonetheless. 

Imagine that you convince a bunch of people to each give you $20 per year to answer all of their questions about “the price of tea in China.” If they all send in the money but none call with questions, you end up with their money and very little to do. A great gig if you can get it. But with no price disincentive to calling, what if all of your customers call every five minutes with a tea question? See, this illustrates one of the classic conundrums of insurance, which we will save for another day, the disconnect between the person seeking service and the entity paying the bill. If someone else is paying, might an individual demand more of a product than she or he would if personal expense were involved?

What is pushing capitated care? Well, as mentioned above, health insurance companies exist to make money. Recent federal legislation has changed the way health insurance must work. For example insurance companies cannot refuse to cover conditions that you had when you bought the insurance policy. This is the "no exclusion of pre-existing conditions."

This sounds wonderful, but like many things in life it will cost money. Cost who money? Some insist that it will cost the big insurance company, not “real” (our) money. Strange thing about people and companies alike, if you find a way to make their expenses rise, they will likely find some way to make their income rise or their other expenses decline. They will all act in their best interest. Count on it, we all do (though we hate to admit it and I will likely get emails and comments telling me how altruistic  and selfless certain people are).

Next, the report notes that there are some workers’ compensation injuries in which causation is reasonably simple. It notes ”a patient presents with a fractured tibia – the cause of the fracture is usually identified with a specific event, and determining whether or not that event was work-related is also relatively straightforward.” Just imagine an employee whose arm is caught in a machine and broken, or whose vehicle is struck by another and suffers a broken leg, or who twists to tighten something and falls from a ladder resulting in a broken wrist, all at work, all witnessed, and all pretty simple causation issues. 

But other injuries and their causation are perhaps not as apparent. The report notes as an example “a patient presenting with a soft-tissue condition (e.g., non-specific back pain or strain/sprain of knee or shoulder).” The report seems to conclude that the injury from a specific event will be deemed compensable or not factually, was the patient at work and doing work when the tibia fractured, wrist broken, etc.?

The causation of the soft-tissue injury, however, is ”often uncertain," according to the report. For determining causation, or “responsibility” regarding these, it claims that “the professional judgement of the treating physician is heavily relied on.” The authors suggest that when this judgement is required, the physician’s self-interest could direct the outcome in a direction that provides financial reward to the doctor. 

In other words, for a certain population of injuries, causation is up to the opinion of the physician. This has some other interesting implications. If this is true, does that mean that there has been cost shifting away from workers' compensation during a non-capitated group health model, when that benefited doctors? That is a question worth pondering. So, says WCRI, there is a population of injuries that present upon physical examination that could be workers’ compensation or not.

There have been complaints in the past that some population of claims presented as workers’ compensation because that medical coverage was the only medical coverage this particular person had. If there is no group health coverage available for a patient, then the choice in that setting might be between workers’ compensation pays, the patient pays, or no one pays. Any provider of services will not be enamored with the concept of “no one pays.” 

Of course the provider or facility can afford some instances of “no one pays,” they simply charge more for services to those who do pay. Trust me, this explains why a single Tylenol in the hospital might cost $35.00 when a bottle of 500 generic acetaminophen costs $10.00 at the store. There is a markup on some things.

There is therefore a history (at least the perception) of shifting to workers’ compensation. Given the choice of a corporate payor responsible for the bill and an individual, there might be some inclination on the part of the “professional judgement” to lean toward the path of least resistance to reimbursement/payment. Some have suggested that this is a truth, others claim it is a possibility and still others deny it occurs. 

By the same token, there have been anecdotal complaints of cost-shifting to group health from workers’ compensation. This highlights one of the other interesting implications. Workers’ compensation is statutory. Rights and responsibilities are defined, regulations describe the processes and the application is generally state-wide. One key point upon which states are compared is “physician choice,” that is, who picks the workers’ compensation doctor? There are “employer choice” states and “worker choice” states.

In either type of state, ancillary services may likewise be under the control of the employer (or its carrier). Even if the worker picked the doctor, s/he may nonetheless be limited to a specific facility for obtaining an MRI, a surgery, therapy or other services.

In either type of state, there may be statutory punishment for illegal drug use. A group health system is unlikely to check for such substances in evaluating an injury, but many workers’ compensation systems do so. The implications of a positive drug test might affect the care and treatment under workers’ compensation. But, in a far broader context, a positive test might mean the end of the employment relationship. In other words, if I report this as comp, knowing I smoked some pot last week, I might lose my job in seeking treatment.

Indemnity is a great benefit. I know only a few people who pay for personal disability insurance. I had a friend years ago whose son found great joy in experiments. I have lost track, but suspect that young man is in a lab somewhere today doing really interesting stuff. One night, years ago he lit the garage on fire with one of his experiments. My friend, hearing the cries, ran to his aid and tried to extinguish the flames (by stomping with his feet). This was not a good idea as the material on fire was a polymer, which stuck (still burning) to his feet. The result was serious burns to both feet.

He was at work the next day, on pain medication, using a wheelchair. When I asked why he did not take a few days off, he explained that his leave was exhausted, and he had no disability coverage. For him, not working meant no income for his family. Thus, he worked in circumstances that were not ideal.

So, a patient might pick workers’ compensation or not because of the perceived benefit of indemnity, to choose their own doctor, to have easier access to medical testing, and many more reasons. Likewise, a patient might pick group health or not for better choice of a variety of doctors, greater access to testing, or avoiding the “stigma” of workers compensation (there are some employers who donot like to hire people with a history of workers’ compensation claims).  

So the concept of “shifting” is nothing new. “I am shocked, shocked to find cost-shifting is going on in here."  There have been anecdotal examples of it explained to me for as long as I can remember. As group health becomes less and less "generous," there may be some inclination for the close calls to be shifted to workers’ compensation. Instead of the captitation limit of group health, a provider may instead elect pay for services in the workers' compensation system.

How much? The question will be fluid. The first elements of cost containment are hitting group health in America now with these capitation plans under the "affordable" Care Act. Elements of society are frankly tired of people being allowed to buy the coverage that they want at the price they or their employer is willing to pay. The “Cadillac tax” is phasing in, which will cost employers money, perhaps significant money, and the health plans may become less generous. Some argue that health insurance will become more egalitarian not by bringing everyone up to the highest level, but by bringing everyone together at the lowest. Time will tell.  

Will health care be sustainable in America? Will those who pay little to nothing for group health under Affordable Care, or those  who pay a great deal in order to subsidize it, be good consumers in the system? Will medical care costs decrease as we experience the great savings that have been promised? How tight will the capitation become in group health? These questions will have to play out in coming years. 

The suggestion is that the tighter the group health reimbursement, the more attractive workers’ compensation may seem in some “professional judgement.” The higher the price of beef, the more chicken we might consume as we look for alternatives. The cost shifting is perhaps no different, except perhaps on the grandness of scale. 

I cannot claim to be shocked that cost-shifting exists. Economics are real for people, companies, and countries. Incentives drive people (I bought two cans of pumpkin for Thanksgiving, though I needed one; there was a price break on that second can I could not resist). I think we will see cost-shifting continue in both directions depending on the comparative advantages people and doctors perceive in each depending on circumstances and specifics of plans and laws. The WCRI report is dense and full of information. It is well worth the time to read. 

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