Workers’ Compensation Revisited
Workers’ compensation is a near-crisis issue in Illinois. Fraud and abuse cost employers and taxpayers and damage our economy. The Chicago Sun-Times published a series recently exposing workers’ compensation fraud and abuse. Reporters pursued employment records of people with clout who worked for the City of Chicago, revealing widespread abuse that surely offends every honorable worker and taxpayer.
Government a Target for WC Benefits
When excessive fraud and abuse are tolerated by government officials and rewarded by the Workers’ Compensation Commission, taxpayers shoulder the costs of this multi-million dollar scandal. Government may be overly vulnerable for abuse because its managers are elected, its funds are unlimited, the true owners (taxpayers) are dispersed and anonymous, contentious labor relations are avoided and politics is often influential.
Progress could occur if elected officials take responsibility to protect taxpayers from improper and excessive costs. Government leaders should bond with private employers to confront unacceptably high workers’ compensation costs.
Fraud Finally Acknowledged in Statute
Illinois law recognized workers’ compensation fraud initially in 2005 when the Division of Insurance received authority and funds to investigate fraud. Little has happened since. Despite lauding the fraud unit when signing the legislation, the current administration failed to fund and aggressively implement the law.
The Illinois Chamber recently wrote every county state’s attorney to encourage more fraud investigations and prosecutions. The new fraud statute is meaningless until vigorously applied. Our state’s attorneys are sanctioned to deter fraud and provide employers relief.
Disability Payments Ripe for Abuse
It is appropriate to provide long-term benefits for employees who truly are “permanently and totally disabled.” Such benefits were intended to apply only to the limited cases where employees can no longer work.
The Sun-Times series reveals the folly of defending “permanent and total disability” tax-free benefits to injured individuals who are engaged in other gainful activity. Similar examples demonstrate problems in “temporary total disability” payments and in calculating the nature and extent of any permanent disability.
To restore credibility for the system we must focus on coverage for medical expenses and fair compensation for lost wages, actual and future. The employer’s goal is to restore an employee’s health and see them return to productive work.
2005 Brought Changes, Not Reform
Well-intentioned legislation last year increased benefits to injured workers. It was expected to curb abuse and hold down rising costs for employers. While benefit increases have taken full effect, cost controls for medical fees have not been fully implemented.
In fact, employers face higher costs under 2005 changes. The National Council on Compensation Insurance established their 2006 advisory rate with a 9.2% increase, and a proposed 2% increase for 2007. NCCI indicated the fee schedule implemented February 1, 2006 only produced a 0.1 percent savings. Employers are far from achieving savings necessary to offset benefit increases.
Fee Schedule Insufficient & Incomplete
A medical fee schedule adopted this year by the Workers’ Compensation Commission failed to appropriately cover common services. Higher reimbursements are paid for ambulatory treatment centers, emergency facilities, dental and outpatient hospital services than employers expected.
In particular, it is stunning that outpatient services, a major component of workers’ compensation expense, would be ignored.
For employers to benefit from medical fee schedules, the Commission’s “default” schedule of 76 percent of providers’ charges must be revisited to reflect the spirit of the 2005 legislative agreement. The Commission must bring these services under the medical fee structure as soon as possible.
The Commission exceeded its authority by allowing generous reimbursements for “pass-through charges” where pricing is left to providers. The Commission chose to provide no restraint on costs of prosthetics/orthotics, pacemakers, lens implants, implants, ambulance fees, investigational devices, and drugs requiring detailed coding.
The Commission’s newly created Medical Fee Advisory Board hasn’t addressed “cost outliers”. Instead of using Advisory Board guidance, the Commission applied a blanket approach measured by dollars rather than injuries requiring extraordinary treatment. Reimbursements to specialized rehabilitative hospitals to treat severe and unusual injuries are undermined by this approach. The Workers’ Compensation Commission is obligated to focus on important unresolved details, obtain better data, and address shortcomings without legislative intervention.
Unfinished Legislative Agenda
In 2007, we must pursue these changes:
1. Require the workplace to be the principle cause of an injury and establish clearer, more concise definitions of “accident” and “injury”
2. Achieve balance, understanding and efficiency for greater impartiality and fairness.
3. Involve employers in selecting medical providers
4. Acknowledge workers are responsible to be alcohol and drugfree in workplaces
5. Allow alternative benefit delivery systems, more commonly referred to as collectively bargained or jointly negotiated workers’ compensation systems
6. Amend the 2005 medical fee schedule to reduce medical fee geo-zip codes from 29 to five as established by Medicare
What Employers Need to Do
Keep workers’ compensation atop Illinois’ public policy agenda. Legislators must be reminded Illinois employers remain dissatisfied with the unsympathetic bureaucracy and excessive, anti-competitive costs they experience compared with other states. Legislators need to know Illinois’ workers’ compensation laws are threatening current and future jobs vital to their communities. IBI
Government a Target for WC Benefits
When excessive fraud and abuse are tolerated by government officials and rewarded by the Workers’ Compensation Commission, taxpayers shoulder the costs of this multi-million dollar scandal. Government may be overly vulnerable for abuse because its managers are elected, its funds are unlimited, the true owners (taxpayers) are dispersed and anonymous, contentious labor relations are avoided and politics is often influential.
Progress could occur if elected officials take responsibility to protect taxpayers from improper and excessive costs. Government leaders should bond with private employers to confront unacceptably high workers’ compensation costs.
Fraud Finally Acknowledged in Statute
Illinois law recognized workers’ compensation fraud initially in 2005 when the Division of Insurance received authority and funds to investigate fraud. Little has happened since. Despite lauding the fraud unit when signing the legislation, the current administration failed to fund and aggressively implement the law.
The Illinois Chamber recently wrote every county state’s attorney to encourage more fraud investigations and prosecutions. The new fraud statute is meaningless until vigorously applied. Our state’s attorneys are sanctioned to deter fraud and provide employers relief.
Disability Payments Ripe for Abuse
It is appropriate to provide long-term benefits for employees who truly are “permanently and totally disabled.” Such benefits were intended to apply only to the limited cases where employees can no longer work.
The Sun-Times series reveals the folly of defending “permanent and total disability” tax-free benefits to injured individuals who are engaged in other gainful activity. Similar examples demonstrate problems in “temporary total disability” payments and in calculating the nature and extent of any permanent disability.
To restore credibility for the system we must focus on coverage for medical expenses and fair compensation for lost wages, actual and future. The employer’s goal is to restore an employee’s health and see them return to productive work.
2005 Brought Changes, Not Reform
Well-intentioned legislation last year increased benefits to injured workers. It was expected to curb abuse and hold down rising costs for employers. While benefit increases have taken full effect, cost controls for medical fees have not been fully implemented.
In fact, employers face higher costs under 2005 changes. The National Council on Compensation Insurance established their 2006 advisory rate with a 9.2% increase, and a proposed 2% increase for 2007. NCCI indicated the fee schedule implemented February 1, 2006 only produced a 0.1 percent savings. Employers are far from achieving savings necessary to offset benefit increases.
Fee Schedule Insufficient & Incomplete
A medical fee schedule adopted this year by the Workers’ Compensation Commission failed to appropriately cover common services. Higher reimbursements are paid for ambulatory treatment centers, emergency facilities, dental and outpatient hospital services than employers expected.
In particular, it is stunning that outpatient services, a major component of workers’ compensation expense, would be ignored.
For employers to benefit from medical fee schedules, the Commission’s “default” schedule of 76 percent of providers’ charges must be revisited to reflect the spirit of the 2005 legislative agreement. The Commission must bring these services under the medical fee structure as soon as possible.
The Commission exceeded its authority by allowing generous reimbursements for “pass-through charges” where pricing is left to providers. The Commission chose to provide no restraint on costs of prosthetics/orthotics, pacemakers, lens implants, implants, ambulance fees, investigational devices, and drugs requiring detailed coding.
The Commission’s newly created Medical Fee Advisory Board hasn’t addressed “cost outliers”. Instead of using Advisory Board guidance, the Commission applied a blanket approach measured by dollars rather than injuries requiring extraordinary treatment. Reimbursements to specialized rehabilitative hospitals to treat severe and unusual injuries are undermined by this approach. The Workers’ Compensation Commission is obligated to focus on important unresolved details, obtain better data, and address shortcomings without legislative intervention.
Unfinished Legislative Agenda
In 2007, we must pursue these changes:
1. Require the workplace to be the principle cause of an injury and establish clearer, more concise definitions of “accident” and “injury”
2. Achieve balance, understanding and efficiency for greater impartiality and fairness.
3. Involve employers in selecting medical providers
4. Acknowledge workers are responsible to be alcohol and drugfree in workplaces
5. Allow alternative benefit delivery systems, more commonly referred to as collectively bargained or jointly negotiated workers’ compensation systems
6. Amend the 2005 medical fee schedule to reduce medical fee geo-zip codes from 29 to five as established by Medicare
What Employers Need to Do
Keep workers’ compensation atop Illinois’ public policy agenda. Legislators must be reminded Illinois employers remain dissatisfied with the unsympathetic bureaucracy and excessive, anti-competitive costs they experience compared with other states. Legislators need to know Illinois’ workers’ compensation laws are threatening current and future jobs vital to their communities. IBI
