Tag Archives: cost shifting

Dirty Tricks Lead To Reduced Benefits In Cuomo’s New Budget

Governor Cuomo signed a new budget this week. While many extolled his progressive agenda that included free college tuition for the middle class, renewing the millionaire’s tax, and giving a tax break on dues for union members, he also quietly and without much fanfare in the news media, struck a huge blow to injured workers. 

Unfortunately for those members of our society who no longer are able to work as a result of an injury, or sustained a life altering injury while on the job, their benefits became part of a horse-trade in Albany much to their detriment. Governor Cuomo, anxious to get his big publicity items in the budget in case he seeks higher office, seems to have used Workers’ Compensation as a bargaining chip. 

The Business Council circulated fake facts blaming injured workers’ benefits for the high cost of doing business in the state, when in reality employer costs nationwide for Workers’ Compensation are at their lowest levels in 35 years.  Locally, Workers’ Compensation costs in New York have declined dramatically as well; compensation is only a small portion of employer costs and is extremely profitable for insurers. The Business Council seems to have a number of members with strong ties to the insurance industry, which makes their position even further suspect.

In 2007, the Council was successful in lobbying to obtain caps on indemnity benefits and has now continued its assault so that the prior limit on weekly benefits will be further reduced. When caps were first put into place, they did not go into effect until judges determined that injured workers had reached maximum medical improvement and that their conditions could be classified as permanent. This new provision automatically starts the cap after 2½ years, regardless of a person’s abilities or condition, or whether or not he will ever be able to work again or find work that meets medical restrictions. It is up to the injured worker to show that he has not reached maximum medical treatment that the carrier can refute.  

The Business Council has continued its attack by alleging that permanent loss-of-use awards were unfair to the employer. They argue that the prior guidelines were outdated and did not take into consideration new advances in medicine. Again, fake facts! The guidelines are based on range of motion and loss of function after all modalities are exhausted, including new advances in medicine available. As a result, the new law directs the Board to “consult” with a group stacked with pro business and insurance interests, but no representatives of injured workers to “review” the current guidelines with the ultimate goal of reducing benefits. The fact that workers who have permanent life-altering injuries to their arms, legs, hands, feet, fingers, and toes have absolutely no say is extremely distressing.

When does this eroding away of Workers’ Compensation benefits end? Two years ago, ProPublica published a series of articles entitled “The Demolition of Workers’ Comp”.  They documented the cutbacks made in many states with disastrous consequences. Their report noted that since 2003, 33 states passed Workers’ Compensation laws that reduce benefits or make it more difficult to obtain benefits. New York is part of that list, having enacted laws not once, but twice, since then.

Many believe that reducing benefits to injured workers will force them back to work. Studies have shown that this is another myth perpetuated by the falsehood that injured workers are frauds. What happens in reality is that many injured workers are unable to work and are forced into poverty or have to collect alternate benefits. Social Security Disability benefits, which are paid by the American taxpayers, are generally offset by Workers’ Compensation benefits. Without Workers’ Compensation payable by the insurance carrier, the burden on the taxpayer is larger. Rather than the Workers’ Compensation insurance carrier paying for medical treatment, it is put through Medicare. This is known as cost shifting and it affects all of us, as we are the ones who end up paying – and paying dearly.

 

Catherine M. Stanton is a senior partner in the law firm of Pasternack Tilker Ziegler Walsh Stanton & Romano, LLP. She focuses on the area of Workers’ Compensation, having helped thousands of injured workers navigate a highly complex system and obtain all the benefits to which they were entitled. Ms. Stanton has been honored as a New York Super Lawyer, is the past president of the New York Workers’ Compensation Bar Association, the immediate past president of the Workers’ Injury Law and Advocacy Group, and is an officer in several organizations dedicated to injured workers and their families. She can be reached at 800.692.3717.

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“Cost-Shifting” Exposed: How Injured Worker Medical Care Decisions Are Made (And Who Pays)

Medical coverage is a topic on everyone’s mind. Obamacare, while controversial, has started a real dialogue in this country regarding health care. Regardless of whether you are in favor of the current law, most Americans want affordable health care for themselves and their families.

Many employers pay for a substantial amount of their workers’ premiums as a benefit to them, and take this into consideration when making salary decisions due to the high cost, thereby leaving workers to pay for all or some of their medical coverage. Sometimes insurers pay for benefits that are not their responsibility because the proper entity refuses to pay. This is known as cost shifting. As a practitioner in the field of Workers’ Compensation, this idea of cost shifting has become an all too common occurrence. 

By way of background, as a result of social reform, most states enacted some form of Workers’ Compensation legislation in the early 20th Century. In exchange for timely payment of medical and indemnity benefits, workers gave up the right to sue their employers. In 2007 in New York, there was a series of further reforms that led to compromise between labor groups, the insurance industry and the Business Counsel. There was an increase in the amount of weekly benefits to injured workers to conform with the State average weekly wage (now a maximum of approximately $800 per week) in exchange for a limit on the amount of weeks an injured worker is entitled to receive these benefits.  Additionally, medical treatment guidelines have been introduced with the premise that they would streamline costs and get injured workers faster and more effective medical care. These guidelines are based upon the principles of Evidence Based Medicine (EBM), which is the use of clinical trials and data to determine whether a specific treatment should be recommended for a specific diagnosis.  It is sometimes referred to as “cookbook” treatment. 

In New York, the Court of Appeals recently ruled by a 4-3 margin that any treatment not specifically included and pre-authorized is presumptively unnecessary. In other words, if a treatment requested is not within the medical treatment guidelines, it is denied. This takes the decision making out of the hands of the treating physician who is really in the best position to determine what treatment would be most beneficial for patients. In order to overcome this presumption, the doctor now must engage in what has been seen in most cases as an exercise in futility to request a variance to overcome this presumption.

The New York Committee for Occupational Safety and Health (NYCOSH) reported that the New York State Workers’ Compensation Board received 202,643 variance requests in the first 10 months the guidelines were implemented. A quarter of the requests were rejected by the Board immediately. The rest can lead to protracted litigation. As a result, in many instances injured workers will now shift the cost to another party, such as their own private insurance, Medicare or even worse, pay for the treatment out of pocket. It is the path of least resistance. We all pay an additional price for medical costs borne by group health insurance carriers, Medicaid, and Medicare that should in fact be paid by Worker’s Compensation insurers. This cost shifting may increase Workers’ Compensation insurance profits, but it hurts both the employers’ and the employees’ bottom line. Injured workers don’t stop needing treatment just because their medical claim is denied. Someone has to pay for the cost of lost time and medical treatment. It is time that the proper party step up and take responsibility.

 

 

Catherine M. Stanton is a senior partner in the law firm of Pasternack Tilker Ziegler Walsh Stanton & Romano, LLP. She focuses on the area of Workers’ Compensation, having helped thousands of injured workers navigate a highly complex system and obtain all the benefits to which they were entitled. Ms. Stanton has been honored as a New York Super Lawyer, is the past president of the New York Workers’ Compensation Bar Association, the immediate past president of the Workers’ Injury Law and Advocacy Group, and is an officer in several organizations dedicated to injured workers and their families. She can be reached at 800.692.3717.

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Cost Shifting: Worker’s Compensation Dirty Little Secret

Today’s post comes from guest author Thomas Domer, from The Domer Law Firm.

Today I taught worker’s compensation “Offsets” in the course I teach at Marquette Law School. The students were aghast at the amount of “cost shifting” that occurs in worker’s compensation: that is, medical costs paid by a variety of sources other than worker’s compensation for medical expenses that should be paid by the worker’s compensation insurer.

We all pay an additional price for medical costs borne by group health insurance carriers, Medicaid, and Medicare that should in fact be paid by worker’s compensation insurers. This “cost shifting” occurs in two significant ways. First, if the claim is denied by the worker’s compensation insurance carrier, medical costs may be paid by the worker’s group health insurance or other private insurance company, or through State Medicaid or federal Medicare programs (the cost of which we all pay in taxes). When those claims are settled, the worker’s compensation insurer routinely saves money by reduced negotiated payment contracts with medical providers, between the provider and the group health carrier, Medicare, or Medicaid (rather than the “full boat” payments that should be paid by the worker’s compensation insurer). If the treatment is deemed work-related after a hearing, the worker’s compensation insurer will pay the other insurer, but at reduced rates.

Second, since only about one in ten cases involves any kind of litigation, workers who are not represented routinely bill their group or other insurance carrier for medical treatment that should be paid by worker’s compensation. Bolstering this notion is a recent article in the Insurance Journal. In the article Jonathan Gruber, Professor of Economics at M.I.T. was quoted indicating that worker’s compensation carriers should see fewer claims as a result of more Americans obtaining health insurance under the Affordable Care Act. He said “As more people have health insurance there is less need for them to have injuries covered by worker’s compensation and this should lower worker’s compensation costs.” Nowhere in this analysis is the notion that the appropriate payor for a worker’s compensation injury should be a worker’s compensation insurer, not health insurance premiums (which are shared by us all) nor Medicare and Medicaid (again shared by us all in the form of taxes).

Workers hurt on the job should have their medical treatment paid by the worker’s compensation insurer, who has received a premium for that risk from the worker’s employer. Cost shifting may increase worker’s compensation profits, but it hurts both the employers’ and the employees’ bottom line.

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