Despite their battle to contain costs of all kinds, CFOs rarely look at their companies’ workers compensation payments.
Reasoning that the per-unit outlays for the medical care of workers injured on the job are fixed by state statute, finance executives tend to shrug and pay bills at 100 percent of the asking price of the doctor and hospital without questioning them.
Now, however, there may be a good basis for digging into what often seems like inordinately high workers comp costs – the rapid-fire publication in less than a week of two benchmarking studies by the Workers Compensation Research Institute. The reports compare payments for the same injuries under the workers comp and private insurance systems and find workers comp costing a whole lot more.
Armed with the WCRI statistics, a finance chief or risk manager could conceivably approach a doctor or a hospital and ask: Is there any rational reason you charge us so much more for the same procedure when the injury happens at work than when it happens at home?
The evidence is stark. Nonhospital prices paid for common surgeries performed on injured workers were higher than the prices paid by group health insurers for the same surgery in almost all of the 22 states covered by the survey.
In some of the states, in fact, the workers comp prices paid for common surgeries were two to four times higher than the prices paid by group health insurers in the same state, says the WCRI study, which focuses on the prices paid for the professional services involved in certain kinds of surgeries and office visits.
Such payments made to surgeons and other medical professionals make up 10 percent to 20 percent of total workplace medical costs, according to Richard A. Victor, executive director of WCRI and a co-author of the surgery study. An even greater portion of the workers comp payment pie, 15 percent to 30 percent, consists of outlays to hospitals, where the same cost issue persists.
In a 16-state study released last Friday, for example, WCRI found that hospital outpatient payments for shoulder surgeries under workers comp were at least $2,000 (or 43 percent) higher than they were under group health. In two-thirds of the states, employers paid more for the identical outpatient hospital treatments under workers comp than under group health benefits.
Why are doctors and hospitals paid so much more for treating on-the-job injuries than they are for the same injuries suffered in the back yard, for instance? The hospital survey cites the usual suspects: “additional paper work, delays and uncertainty in reimbursements, formal adjudication and special focus on timely return to work.”