Showdown on workers comp comes as companies see major savings
10/16/2017

A coming showdown at the Capitol between the health care industry and a business coalition over proposed changes to the state workers' compensation system comes as companies are already seeing major savings under the current model.

This year, Wisconsin companies are saving nearly $170 million in premiums -- or 8.46 percent -- from the year before, when premiums fell 3.19 percent.

To doctors and hospitals, who oppose a proposal that would add a fee schedule to medical payments, the 8 percent drop is proof that the current system works well. They say making a major switch -- "government price-setting,'' in their view -- could throw off the state's high outcomes. They also say their critics are too focused on costs of some individual medical procedures, rather than taking a look at the system as a whole, and that there's room for employers to negotiate prices down within the existing system.

"We don't see a problem that's broken," said Joanne Alig, senior vice president of policy and research at the Wisconsin Hospital Association.

The premium drop is largely because fewer employees are getting injured in the workplace and filing workers' comp claims, though slower growth in medical costs have also played a part, according to the Wisconsin Compensation Rating Bureau, whose actuaries recommend premium levels for the program to state regulators.

Despite the premium drops in the last two years, rates have stayed roughly the same over the past decade, according to the Department of Workforce Development.

A coalition of business groups notes the drop largely reflects efforts to make workplaces safer and reduce incidents. The Worker's Compensation Employers Coalition, which is led by Wisconsin Manufacturers & Commerce and includes groups ranging from grocers to contractors, says those efforts have paid off -- and adding a fee schedule would lead to even more savings.

The coalition argues that doctors overcharge them for injured employees' medical bills, and they'd like to drop the costs of procedures closer to what they pay for employees in their regular health insurance plans.

"A knee surgery should cost what a knee surgery costs," said John Tindall, the director of client claim advocacy at Integrated Risk Solutions. "It shouldn't matter whether it's a work injury or not."

Tindall is one of the five management representatives on the Worker's Compensation Advisory Council, which is proposing a bill to lawmakers that includes the fee schedule and a wide range of other changes to the program, including bumping up the payments that injured employees get and efforts to reduce opioid abuse.

The council also includes five labor representatives, who support the compromise package they worked out with management. Some Democrats also say though it's still early, they're inclined to support the bill because they believe in the process. Doing so would put them on the same side of a group they frequently clash with: WMC.

"[It's] not every day that you see the AFL-CIO and WMC agreeing on a bill," said Rep. Tod Ohnstad, D-Kenosha. "This is one of those rare times, and I'm going to respect the process."

Stephanie Bloomingdale, secretary-treasurer of the Wisconsin State AFL-CIO, said in a statement that the union "urges legislators to fully support" the bill.

"The Agreed-Upon Bill contains improvements for injured workers, and represents good policy for all stakeholders," she said. "It continues Wisconsin's proud tradition of having management and labor come together to recommend necessary reforms to keep the state's worker's compensation system top-notch."

The council's proposals have generally passed the Legislature with little fanfare. That changed two sessions ago, when the council proposed adding the fee schedule and the bill failed as the session was coming to a close.

Wisconsin was the first state to implement a comprehensive workers' comp system, with the law approving it passing in 1911. And in many respects, the state's system performs far better than others in the country, both sides agree.

The latest report from the Massachusetts-based Workers Compensation Research Institute, for example, found that among the states it reviewed, Wisconsin:

*has a shorter duration in temporary disability benefits employees receive, indicating that workers get back on the job faster; *has lower rates of lawyers being involved in workers' compensation claims; *is one of the states with the lowest medical care utilization rates, which means employees needed fewer doctor visits and received fewer services per visit; *and had high rates of worker satisfaction with their care.

Debate centers on whether Wisconsin's costs are higher than national average

But the key question as the legislative debate moves forward is whether the state's medical costs in workers' comp are higher than elsewhere.

Business leaders say that's the case, so Wisconsin should join many other states with a fee schedule to rein in those costs.

"I think it would further improve the business climate," Wisconsin Insurance Alliance's Andy Franken said. "It would be another way to attract new businesses. I think what we've learned from other states is if we keep it simple and provide a fair medical fee schedule, workers and businesses benefit."

To back up that assessment, the coalition points to the institute's figures. WCRI's latest Medical Price Index study showed that the prices paid for medical services in Wisconsin were the highest of the 31 states it reviewed.

But critics of a fee schedule say there's more to the story.

Though they acknowledge that in some cases the costs of procedures are higher, they also note that injured employees in Wisconsin have fewer doctor visits per claim -- partly because they're getting better care when they show up to the doctor.

Still, even though the state’s medical costs per claim were similar to other states that WCRI reviewed in prior years, newer data from the institute shows the state’s medical costs per claim are now higher than other states WCRI looked at.

Mark Grapentine, senior vice president of government relations at the Wisconsin Medical Society, said the overall results "more than make up" for any higher costs for individual procedures.

"What matters the most is the overall cost for the system as a whole," he said. "Wisconsin has a very, very good system that performs very well, and we're getting people back on the job faster and happier and willing to work. And the health care world is a major part of that."

The bill has yet to be introduced in the Legislature

The council met today to finalize the language in the bill and expects it will be sent over next week to the Legislature, where it's expected to be referred to the two chambers' labor committees.

The office of Rep. Bob Kulp, R-Stratford, who chairs the Assembly labor committee, declined to comment until the bill is finalized.

The chair of the Senate labor committee is Sen. Steve Nass, R-Whitewater. Nass spokesman Mike Mikalsen said the bills will likely come before the labor committees again this session and he expects a public hearing in the Senate in November or December.

As for whether Nass would support the bill, Mikalsen said he hasn't gotten a chance to go through the language and noted that for many lawmakers, the hearings and stakeholders' input will likely be "pivotal" in getting their backing.

CORRECTION: This article has been updated to reflect that while workers’ compensation medical costs per claim in Wisconsin were similar to states that WCRI reviewed in prior years, more recent data from the institute shows medical costs per claim are now higher than other states WCRI reviewed.


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