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Time for workers’ comp fee schedule is now

By: Bridgetower Media Newswires//September 29, 2017//

Time for workers’ comp fee schedule is now

By: Bridgetower Media Newswires//September 29, 2017//

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Daydream with me for a moment.

Imagine a world where you price a job only after you’ve completed the work. If the project owner doesn’t like your price, their only recourse is to consult a state-certified database of prices you have charged for similar work, and pay you the average. Knowing this, you continue to charge more than the average, driving that number up over time. Your customers’ costs – and your revenue – grow and grow.

It sounds like a good dream, if you’re on the right side of it.

Now open your eyes, and look at your worker’s compensation costs.

This opaque, heavy-handed pricing system is at the heart of a very real nightmare for many Wisconsin businesses. Under current law, medical providers charge any price they wish for treating an injured worker. Employers can adjust those bills, reimbursing the medical provider no more than 1.4 standard deviations above the mean fee for a particular service as shown in a state-certified database of average charges.

The result?

Costs for worker’s compensation medical treatment in Wisconsin are among the highest in the country.

According to a report from the Worker’s Compensation Research Institute:

  • Wisconsin had the highest average per-claim medical payments from 2014 to 2015.
  • Prices for non-hospital services and hospital outpatient services were highest in Wisconsin, compared to 27 other states in the same study.
  • Wisconsin employers pay more than double the typical price for common services, like pain management injections, radiology services and even basic evaluation and management.
  • Prices for worker’s compensation medical treatment grew faster than any other study state from 2009 to 2014.

Every two years, the state of Oregon ranks all 50 states and the District of Columbia on their overall rates for worker’s compensation costs. In 2014, Wisconsin was 23rd. In 2016, it rose to the 12th most expensive state for worker’s compensation.

Wisconsin, a pioneer and leader in worker’s compensation for more than a century, is one of just six states without a fee schedule used to hold down the cost of using worker’s comp to pay for medical treatments.

This summer, Wisconsin’s Worker’s Compensation Advisory Council (I was appointed as a management representative in October 2016) negotiated an agreed-bill package that includes meaningful control of medical costs. The proposed fee schedule would allow employers to reimburse medical providers using fees that approximate those paid by group health insurers.

The agreed bill also increases the weekly permanent partial disability – also known as PPD – rate by $20 in 2018, to $382; and $25 in 2019, to $407. (PPD is a benefit paid to injured workers who suffer certain injuries that leave them with a lasting disability, or who undergo certain specified medical procedures.) Additionally, a 15-percent increase in PPD was approved for injured workers who suffer scheduled injuries (injuries not to the head or spine) who are then unable to return to their job because of the injury.

By my calculations, the increased PPD benefits would cost employers approximately $35 million more a year. The fee schedule could save employers $150 million annually.

This bill is a good deal for Wisconsin workers and the companies that employ them.

The 10-member Advisory Council was created by state statute to maintain stability in the worker’s compensation system by insulating it from inevitable shifts in control of the Legislature by the two major political parties. With equal representation from management and labor, the Council’s agreed bill enjoys the support of the main players in worker’s compensation – employers and employees. The question now is whether the agreed bill – and the council process – will enjoy the support of the state Legislature.

Medical providers are, of course, zealously guarding the status quo. They wield considerable influence, but their arguments don’t hold up:

There’s the preposterous implication – an insult to medical professionals – that if worker’s compensation fees are reduced, the assessment and treatment of a work-related condition will be somehow inferior to what the treatment of the same condition would be if were presented as not arising from the work place.

There’s the ill-informed notion that a fee schedule would be tantamount to government interference in a free market. But there is nothing in the worker’s compensation that acts like a free market. The rates paid for worker’s compensation insurance, the benefits paid to injured workers, even the administration of basic claims are all tightly controlled by the state. Indeed, there is already government control over pricing as I described above – it’s just not effective.

There’s the deceitful talking point that recent decreases in overall worker’s compensation rates in Wisconsin, which fell about 8 percent from 2016 to 2017, are indicative of a healthy system. The truth is: Reduced frequency and severity of injuries precipitated the decrease, and masked increased medical costs. The 8-percent drop is despite a 5-percent increase in medical costs over the same period.

Then there’s the assertion – laughable to any worker’s compensation professional – that medical providers lead the way in getting injured workers back on the job. In my experience as a worker’s compensation-claims adjuster, treating doctors are more often an impediment to early returns to work. I surveyed nearly 100 colleagues on this point – just 25 percent agree that medical providers cooperate on return to work, and nearly 75 percent say they “often” or “very often” have to challenge treating medical providers to get an injured worker off disability.

But it’s not just rhetoric at work in Madison. With elections looming, the valuable financial support of medical providers may have more weight in the hearts and minds of lawmakers than the will of Wisconsin employers.

So we enter a critical time for worker’s compensation in Wisconsin. Employers, who fund the system without any help from taxpayers, must take a principled stand. So far, some 46 business and trade organizations have joined a coalition supporting the agreed bill, and hundreds of petitions are pouring in from business owners.

But the support must grow louder. There’s no room on the sidelines this time. If you have not signed a petition, do so. If you belong to a trade association that hasn’t voiced support, urge them to do so. Contact your lawmakers. Appear at public hearings. Encourage your colleagues to get involved. It’s only with the support of the entire Wisconsin business community that this important reform will succeed.

John Tindall is director of client claim advocacy at Integrated Risk Solutions, an independent commercial-insurance and risk-management agency. Tindall also represents management interests on the Wisconsin Worker’s Compensation Advisory Council.


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