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November 16, 2015

New Study Explores Affordable Care Act’s Impact on Workers Compensation

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Posted in News and Events

A new study conducted by the Workers Compensation Research Institute (WCRI) explores whether medical providers and their health care organizations are classifying cases as work-related, depending on financial incentives.

Due to some provisions of the Affordable Care Act, more medical providers are agreeing to capitation agreements. Capitation is a set payment for each plan member over a period of time. A fee-for-service model pays the provider and health care organization for each new service.

Under Workers Compensation Law, doctors make the decision whether an injury is work-related or pre-existing. With certain injuries, especially soft-tissue ailments, it can be unclear whether they were work-related injuries or not.

Because Workers Compensation reimbursement is established by law, and the price points tend to be higher, cases classified as work-related can bear higher financial incentives. The financial benefit can be even higher if providers already have capitation agreements, because most work-related injuries are reimbursed on a fee-for-service basis.

What does this mean for Workers Comp costs?

The study found that case-shifting only occurred where capitated plans were very common. In fact, the WCRI found that “patients covered by capitated group health plans were 11% more likely to have a soft-tissue injury called work-related than a similar patient covered by a fee-for-service group health plan” (WCRI, 2015).

According to the study, if only 3% of group health cases were shifted to Workers Compensation, Workers Comp costs would increase by $225,000,000 in a large state like California, $100,000,000 in a state like Pennsylvania, and $25,000,000 in a state like Iowa.

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