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Clinton Plan Could Raise Workers' Comp Expenses, Critics Say : Health care: Uneven cost controls might inspire doctors to shift patients to that insurance system, they suggest.


The Clinton Administration health reform package, while offering hope for easing some costs of the workers' compensation system, leaves possible loopholes that experts worry could shift more burden onto the overtaxed system and drive up already high costs.

These experts say the Clinton plan--by slapping weaker cost controls on medical care delivered under workers' compensation than under regular health insurance--could prompt doctors to improperly shift patients into expensive workers' comp systems.

The practice of illicit "cost shifting" already inflates the price employers pay for workers' compensation across the country. Business leaders and researchers say the problem would endure and might worsen under the Clinton proposals.

Doctors, other health care practitioners and their employers "would have no financial incentive to do the right thing," said Richard Victor, executive director of the Workers' Compensation Research Institute in Cambridge, Mass.

Rather, he said, these health care providers "would have tremendous incentives to classify cases as work-related if there is any ambiguity" over whether a patient's injury occurred on or off the job.

One major incentive is that workers' compensation would continue to operate as a "fee-for-service" system, with the doctor being paid every time the patient visits. Regular health insurance, on the other hand, would pay health care plans a fixed amount per patient regardless of how many visits the patient makes.

In addition, workers' compensation would cover types of treatment not covered by regular insurance. It would also pay for every dollar of a patient's bill, while regular health insurance would require co-payments from patients.

In California and other states, workers' comp problems have spurred recent legislative reforms. Costly abuses have plagued these state-regulated systems, and workers' compensation medical costs have risen even faster than health care expenses generally.

Nationwide, employers' total spending on workers' compensation has nearly tripled to roughly $70 billion over the last 10 years, with medical costs accounting for 40% of the total. The remaining 60% is for cash benefits paid to compensate injured workers for the wages they lose while off the job.

Clinton Administration officials have tried to line up business support for health care reform by promising savings in workers' compensation. Indeed, many business and labor leaders are pleased by the potential medical cost savings of the package.

But many business leaders are concerned about cost shifting and say Administration officials may be ignoring the fact that cash benefits for patients in workers' compensation programs cost more than the health care. Consequently, the incentives to shuffle patients into workers' comp systems would cause cash benefits to balloon, while also enabling health care providers to elude the toughest cost controls.

"There may be some savings in medical costs, but that's only one side of workers' compensation," said Mark Stuart, a lobbyist in charge of occupational safety issues for the National Assn. of Manufacturers.

Victor said he is uncertain whether the Clinton plans would help or hurt state workers' compensation systems, but he said the Administration's projected savings "are overstated, and the cost may even rise."

The Clinton plan does provide for some restrictions on workers' compensation beyond the cost controls regulating the entire health care system. Among other things, a fee schedule would be imposed that limits charges for medical procedures, and protocols would be adopted to prevent unnecessary treatment. Also, health care plans would employ case managers to ensure that workers' compensation claims move smoothly through the system.

Insurance and labor officials agree that the Clinton scheme for workers' compensation, while showing promise, may be weakened by its apparent attempt to please all sides.

Bowing to the wishes of organized labor, the Clinton plan promises that workers can go to their regular doctors for treatment of on-the-job injuries. James N. Ellenberger, a spokesman for the AFL-CIO, said it would put trust into the system and deter costly workers' comp litigation in which both sides shop for doctors who offer favorable opinions.

In a provision delighting the insurance industry, the Clinton package calls for separate carriers to provide workers' compensation and regular health coverage--at least until a commission studies the issue. Insurers say this approach will allow employers' workers' comp premiums to continue to be adjusted to provide firms with a financial incentive to maintain safe workplaces.

Another benefit, insurers say, is that they will be able to return injured employees to work as soon as possible, cutting the cash benefits paid out.

Debra Ballen, the research chief of the American Insurance Assn., offered a hypothetical example of a person with a back injury. Bed rest might be the least expensive way medically to solve the problem, she said. But what if the back injury occurred on the job, and the insurer was paying workers' compensation cash benefits to replace the employee's lost wages? The insurer and employer, Ballen said, "might favor a higher-technology, higher-cost treatment" to return the patient to work sooner.

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