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Employers Struggle With Ballooning Cost Of Workers’ Comp Medical Bills

By | February 18, 2014

Employers in Alaska pay the highest workers compensation premiums in the country. And most of that cost goes toward medical claims. The Alaska State Chamber of Commerce has for several years, made reforming the system one of its legislative priorities. And this year, at least one state lawmaker is working on legislation to help control workers compensation costs. 

When a worker gets injured on the job in the Kenai Peninsula Borough and School District, Julie Cisco’s first thought is concern for the employee’s health. Her second thought, is concern for the what it will cost:

“Things have gotten so out of hand with the medical fees, that things that I know five years ago would have cost $50,000, I know right now is going to cost over $100,000. Being a steward of public money, it’s kind of hard to justify those increases.”

Cisco manages workers’ compensation claims for the borough and school district. In 2009, the average workers’ comp claim in the borough cost about $3,500. By last year, that figure had more than quadrupled to $19,000. That’s partly because employers can’t negotiate with medical providers the way private insurers can. There is a cap on what doctors can charge, but Cisco says doctors tend to bill right up to that cap:

“In some cases, I think it’s out of line, because I know what things get paid under benefits and then I see the bills we pay for injured workers for similar procedures and its substantially more, for the same procedure, done in the same facility.”

According to a 2011 report paid for by the Alaska Health Care Commission, medical providers charged 50% more for workers compensation claims than for regular health insurance in Alaska. Mike Monagle directs the state’s workers’ compensation division. He points out workers’ comp medical costs have risen dramatically, by 25%, over the last five years, despite a significant decline in worker injuries.

“It’s a profit center I think for some providers, where they’re getting squeezed in other areas, comp traditionally has become a way to maximize their profits.”

The Alaska State Medical Association and the Anchorage Orthopedic Society didn’t respond to repeated requests to comment for this story.

As part of his job, Monagle chairs the state’s workers’ compensation board. In October, the board passed a resolution calling for several reforms aimed at containing medical costs. The proposed reforms wouldn’t let employers negotiate fees, but would set a new fee schedule for providers, to try to bring rates more in line with what private insurance pays. The  resolution was approved unanimously by a board made up of both industry and labor representatives. Monagle says he’s optimistic even doctors will eventually support reform:

“Doctors are employers as well and they have to pay these same high costs. I do think you can reach consensus on these kinds of things. It’s just something in our particular state that really hasn’t happened yet. We really haven’t had a good consensus from stakeholders on how to fix this situation.”

The legislature is starting to look into the issue. Lawmakers are considering a bill right now that will close a loophole that allowed out of state hospitals and providers to charge Alaska rates for their services. That made it hard for employers to save money when employees agreed to travel out of state for expensive surgeries. And Representative Kurt Olson, a Republican from Soldotna, says he’s planning to introduce legislation this session that will address the broader medical cost issue. Rick Traini works for the Teamsters Union in Anchorage and is on the Workers Compensation Board.

“I believe there are some inflated prices. Is in the most pressing problem facing worker’s comp? I don’t think so.”

Traini signed the resolution calling for medical cost reform. But he hopes as lawmakers look to lower medical costs, they also consider increasing workers comp benefits for employees. Traini says many of those benefits- like the amount a seriously injured worker receives for retraining – haven’t changed in nearly 15 years.

“I have not seen a single resolution, regulation, put in front of the board that increases the employees’ benefit.”

Still, Traini says he doesn’t want an employer to pay more for medical care then they have to.  And employers from across the state have sent testimony to the Workers’ Compensation Board asking for help bringing down medical costs.

Julie Cisco, from the Kenai Peninsula Borough, says employers and employees have the same goal, to see injured workers get the medical care they need and return to work as quickly as possible.

Cisco: “Personally I want to see the system get back to what it was meant to do, which is benefit the employees. Somehow that has shifted, to where the system doesn’t necessarily benefit the employee.”

Reporter: “Who does it benefit?”

Cisco: “It benefits the medical providers.”

Cisco says workers comp doesn’t represent a huge chunk of her school district’s budget. But in this time of belt tightening around the state, every dollar counts. And Cisco says any money the district could save as a result of workers’ comp reform, would go right back into classrooms.

 

This story is part of a reporting partnership between APRN, NPR and Kasier Health News.

 

 

 

 

 

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