Putting Workers Comp Policies Under the Microscope

Episode Notes

Transcript

Workers Comp Matters
Putting Workers Comp Policies Under the Microscope
05/30/2019

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Intro: This is Workers Comp Matters, hosted by attorney Alan S. Pierce, the only Legal Talk Network program that focuses entirely on the people and the law in workers’ compensation cases. Nationally recognized trial attorney, expert, and author Alan S. Pierce is a leader committed to making a difference when workers comp matters.

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Alan S. Pierce: Welcome again to Legal Talk Network and Workers Comp Matters. This is your host Alan Pierce. I am with Pierce, Pierce & Napolitano in Salem where we represent injured workers in workers’ compensation claims.

We’re very happy to bring you another show. Today’s show involves a discussion of a recent publication from the Workers’ Compensation Research Institute on benchmarks for various states and jurisdictions in the United States as far as workers’ compensation issues.

And before we get to our guest Ramona Tanabe, I want you thank our sponsor and that is PInow, find a local qualified private investigator anywhere in the United States. Visit PInow to learn more.

And as I mentioned, we have done some shows with the Workers’ Compensation Research Institute over the course of the last several years. Today’s guest is Ramona Tanabe. She is with the Workers’ Compensation Research Institute and has been with them since 1996. She is currently leading the Institute’s flagship line of core benchmarking studies.

Her responsibilities include conducting studies on health policy, managing WCRI data collection, providing legal counsel, advising public officials and medical privacy issues and managing various internal and external functions at WCRI. She is a lawyer by training. She was in private practice in Chicago before joining WCRI.

Ramona, welcome to Workers Comp Matters.

Ramona Tanabe: Thank you so much Alan, I’m very pleased to be here.

Alan S. Pierce: I’m holding in my hand a rather lengthy report called CompScope Benchmarks. The edition I have is Benchmarks for Massachusetts, 19th Edition. It was published by WCRI in April of 2019 and today, I’d like you to discuss not just the benchmarks findings for Massachusetts but the CompScope project of measuring performance and measuring certain factors in the workers’ compensation area across States.

First of all, could you give us just maybe a brief overview of WCRI? What is your mission and who utilizes your services.

Ramona Tanabe: Absolutely. WCRI has been around since 1983. We are a not-for-profit public policy research organization, here in Cambridge Massachusetts. We provide information to all stakeholders in the workers’ compensation systems and that information is regularly used in public policy discussions. We don’t take positions on policy nor do we didn’t make recommendations. We provide the information so that when there is a discussion, it can be an informed decision and an informed discussion. Our goal is to be as transparent as possible in what we provide so that it’s useful in the public policy debate.

Alan S. Pierce: And by public policy debate, does that include things like proposed legislative changes to a particular States workers’ comp system. Let’s say either raising or lowering certain areas of benefits and the impact that might have, is that the type of public policy or even setting rates for premium, are these the type of public policy areas that your statistical analyses are useful with?

Ramona Tanabe: To some of what you mentioned, yes. So for example, it might be a state having a discussion about revising their medical fee schedule or implementing a drug formulary or changing their benefit rates and looking at what’s the implication of that to the current set of injured workers that we have in the State.

We don’t provide information to help set rates for premium. There are other organizations that do that and do that, we have the staff to do that much better than we ever could.

So we focused on public policy in what you think of as the benefit delivery system. When a claim occurs, what are the processes by which an injured worker gets their income replacement benefits, gets the medical services that they need, and gets return to work that type of thing. How do those compare across States?

Alan S. Pierce: First of all you have the collection of this data from different states but to me, the most difficult task would be comparing State A, to State B, to State C when each individual state or jurisdiction has its own fee schedules, its owned indemnity of rates, percentages of average wage, et cetera.

(00:05:04)

So how do you deal with variances among all of the states to try to come up with any type of general benchmarks or conclusions?

Ramona Tanabe: That’s a good question. If you just compared for example the average medical payment for a claim across states, we think of that comparison as apples to potatoes, and we’ve created a number of adjustments for comparability or selection for comparability so that the comparisons that we do across states are kind of like yellow apples to red apples.

It’s never going to be yellow apples to yellow apples because of the differences in the states. Some of the things you just can’t adjust for.

But for example, the way States define benefits is sometimes different and they use different terminology. We create a common set of definitions not only across States but also across the data sources that we collect data from and then we make it sing as one voice so to speak, so that we are comparing the same measures.

We adjust for a subset of claims to adjust for the waiting periods. So we’re looking at claims with more than seven days of lost time. Different states have different waiting periods. So this eliminates that differential. We look at the types of injuries that are occurring within each state. We look at the industry mix and then finally we, adjust for wages.

So at the end of all those adjustments, it’s as if you took the same group of claims and drop them into each state and then the resulting differences are likely due to the system features that each jurisdiction has in place.

Alan S. Pierce: I see and I’m looking at of course your 19th Edition Benchmarks report so I assume there have been 18 prior editions for the past 18 or so years.

Ramona Tanabe: That’s right. So the report you’re referring to is called CompScope and that we think of that as putting the compensation system under a microscope.

Alan S. Pierce: And this report came out April of 2019 and of course as soon as it came out, I get all sorts of Google and other alerts. So I know a lot of people in the industry await this and look for it. I noticed that in your report for 2019, you basically used 18 different states. In the prior editions of the CompScope study before this one, is it always the same states or the different states depending on the particular year?

Ramona Tanabe: They’re mostly the same. We started back with the first edition had eight states in it and obviously, we were trying to build interest and grow the usefulness of the report. So we currently have 18 states in the report and those 18 states are chosen for different reasons.

We look for states that represent the full range of states in terms of cost, higher cost states, lower cost states and ones that are in the middle of the road because when we’re comparing to like how the states look we want the middle of the states to look like a national median if you will.

They’re also diverse in terms of system features, in terms of geographic location and the states are also the ones that participate are interested in knowing how they compare with other states; the drivers of their costs and cost growth and implications of any regulatory or legislative changes.

Alan S. Pierce: And why don’t I at least very quickly name off the 18 states; Michigan, Tennessee, Texas, Massachusetts, Arkansas, Minnesota, Indiana, Florida, Wisconsin, New Jersey, California, Georgia, Iowa, Illinois, North Carolina, Virginia, Pennsylvania and Louisiana. And by the way, I’m using the postal abbreviations for these states and I think I got them all right.

So when you analyze data from those states, where do you go for your source of materials? What type of data are you trying to capture and where do you go to get it?

Ramona Tanabe: WCRI collects data from data sources, from insurance carriers, third-party administrators, from self-insured employers and we have created our own data call that we send out and capture the data ourselves to support the information in that underlies not only the CompScope reports that we’re talking about but all of the research that’s done across WCRI.

Alan S. Pierce: And how many researchers go into the CompScope study?

Ramona Tanabe: We currently have I think six researchers working on our CompScope team. I should mention that the CompScope report, you have the Massachusetts version of the 19th Edition.

(00:10:00)

The CompScope series includes two reports annually. The one that you have and then there’s a companion report that’s CompScope Medical Benchmarks that drills into the medical cost per claim, who’s providing the services, how many of the services.

Alan S. Pierce: Okay before our break, where we can perhaps talk about some conclusions that can be drawn across stateliness and among between the states. Can you may be give us a rundown of the particular areas that are studied cost per claim within seven days of lost time. How many different areas are there data for and could you give us an idea for categories of the data?

Ramona Tanabe: Oh sure. We have many different areas that we benchmark. Those include income replacement benefits including temporary total disability, permanent partial disability, how frequently do lump sum settlements occur, what are the average amounts of the lump sum settlements. Then we also have a number of measures that look to the medical information, how many services are provided for an average claim, what kinds of services are received.

We also measure that time to notice of an injury, the time to the first payment for the injured worker, frequency of vocational rehabilitation use and cost, as well as the duration of disability.

Alan S. Pierce: I also noticed I don’t know if it’s a measure factor but you also track the involvement of lawyers in this system and what percentage of lost time cases over certain amount of days has lawyer involvement as well as the cost of litigation expense. Is that something that’s also studied and compared and contrasted between and among the states?

Ramona Tanabe: It is. Because one of the benefit delivery expenses that occurs within workers’ compensation is our litigation expenses.

Alan S. Pierce: All right, well at this point I think we are going to take a brief break and have a message from our sponsors.

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Alan S. Pierce: And welcome back to Workers Comp Matters, I am here with Ramona Tanabe and we are talking about the CompScope Report that issued in April of 2019. Ramona, you gave us a good idea of the different areas that WCRI studies as part of its CompScope project.

I guess the idea is to kind of come up with trends, things that are happening around the country and some conclusions that can be drawn by gathering this data across 18 particular states. It seems like they are carefully selected to give a good statistical example that can be extrapolated perhaps elsewhere. So can you give us a general idea what are some of the key general findings that have come out of this particular year’s research as far as trend is going forward?

Ramona Tanabe: Sure. I identified three trends that we saw that were common across the 18 states that we studied. The first of those was benefit delivery expenses. What do I mean by benefits delivery expenses, we are looking at expenses that are allocated to a specific claim and they generally fall into two categories; medical cost containment and litigation expenses.

Medical cost containment includes the things like bill review, utilization review, case management and provider networks. Litigation expenses includes defense attorney payments, medical-legal expenses, such as independent medical exam, medical testimony and depositions.

And all of those benefit delivery expenses have increased about 4% per year for the past decade in most of those study states. So in each on the 18 states, there has been an increase overtime, a steady slow increase. So while the average amount paid in the states for those types of expanses might vary greatly, the increase has been consistent across states.

Alan S. Pierce: Does this just account for general inflation costs? I know when I am — if I have to pay for independent medical evaluation of one of my clients, I know that the doctors are charging us more and when I request medical records from providers, the bills are a little bit higher. So on my end, when I do incur costs for, it is a really benefit – why it’s benefit delivery, if we are trying to get benefits from my client, I know my cost have increased.

(00:15:02)

So how much of that might be attributable just generally to normal inflation?

Ramona Tanabe: Right. So some of it is attributed to just general inflation overtime. The medical cost containment could be with states that have implemented their fee schedule. There’s something to now pay for in terms of bill review. Changing treatment guidelines requiring or not requiring utilization review and changing those regulations. So there’s all kinds of medical cost containment pieces that show up in these expenses as well.

Alan S. Pierce: And I would assume if the costs are going up for medical cost containment; on the other side, somebody is studying somewhere the effect on the actual medical costs that are being contained and how much are they changing or going down as a result of increased cost containment measures.

So just because can I — as a layman, make the argument that well if cost containment costs are going up 4% per year for the last 10 years that doesn’t necessarily mean medical costs are going up. In fact that may mean could that mean medical costs are going down because insurance is doing a better job of containing those costs.

Ramona Tanabe: It could be. But it could also mean that there are different types of medical services being provided. Technology has changed overtime.

Alan S. Pierce: Yeah absolutely.

Ramona Tanabe: So perhaps MRIs have got more expensive that type of thing. So there are different — some go up and some go down but on average, this is what we are seeing for those expenses and it’s been a steady increase overtime.

Alan S. Pierce: Okay, what are some of the other areas for which you can make — draw some general conclusions of trends?

Ramona Tanabe: Sure. One of the other areas we saw was in the frequency of lump sum settlements, also for around the past decade since around 2008. Now there are lot of factors that influence lump sum settlements and those differ across states. Those would be what type of benefit system is it, is it a permanent partial disability state, is it a wage loss state, is it a combination.

And within a permanent partial disability state, what’s the basis of the benefit, is it impairment, is it disability or loss of earning capacity, what’s their weekly benefit amount for a permanent partial disability, how many weeks are paid. So there are many factors that go into lump sum settlements but generally, we have seen an increase in the frequency of lump sum settlements across states since 2008.

And some states have very specific reasons. For example, in California, in 2012, they passed Senate Bill 63 and we see settlements after that occurring earlier in the claim. Now, this might be because that bill eliminated add-ons and specific pieces for permanent partial disability benefits, making them more predictable and more certainty in the determination of permanent disability.

So therefore they are able to settle claims earlier but that’s California. There are different reasons in every single one of the states that we study but in generally, I can tell you that the frequency of lump sum has increased overtime.

Alan S. Pierce: All right as I was perusing really a very voluminous report and I didn’t even scratch the surface because I was really focusing primarily on Massachusetts, I did see some reference to Florida and as you probably know, Florida has sort of been in the workers’ comp news in the last four or five years because Florida, like some other states, have faced some constitutional challenges to their workers’ comp system.

And maybe two, three, four years, there were a couple of decisions that came down from the Florida Supreme Court finding that some of the law in the Workers’ Comp Statute didn’t make constitutional muster especially in terms of attorney fee schedules, and in striking down the fee schedule or the fee provisions of the workers’ comp law, there was a great controversy and among people that this will lead to higher lawyer involvement and this will lead to higher cost and higher claims. Do you know whether or not your study dealt with that issue in Florida or what it might have found?

Ramona Tanabe: We do measure the effect of the Supreme Court Cases in Florida in the study. But remember that it’s across all claims that are occurring within the jurisdiction. So you can see an increase in the frequency of lump sum settlements but the trend actually reflects when the decisions were happening.

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So yes, we do monitor when there are not only regulatory changes, but court cases that could have an impact or a change on claims that are happening within the workers’ comp system.

Alan S. Pierce: And before we leave the subject, are there any other sort of general trends other than the medical cost containment and the frequency for example of lump sum settlements that might be applicable across jurisdictions, maybe even across all 50?

Ramona Tanabe: Yeah, one last trend that I will mention is a shift of where injured workers are receiving their care. There are generally fewer inpatient hospital visits and there is a shift from outpatient facilities, hospital outpatient facilities to ambulatory surgery centers. Why are these changing?

It could be technology changes or business models, consolidations, competition for access to workers’ compensation business or some effect of local norms of what’s happening in general health care that are also showing up in workers’ compensation or it could simply be choice and convenience.

Concurrent with this decrease of hospital services, there is also a decrease in the percentage of surgeries that are happening. And when I say surgeries, I mean major surgeries, something that you’d think of that you would like anesthesia for. These are possible reasons for this or maybe alternative to surgery, pain management injections or physical therapy or pain management or there could be non-surgical options that are happening too.

Alan S. Pierce: It’s very interesting. If somebody out there wants to learn more or delve into your CompScope findings, how might they do that? Is there something that is a subscription basis, is something they can find online, is it — how is it available?

Ramona Tanabe: All of our reports are available on our website for a very nominal fee. You can purchase any of the reports. All of our reports are available free of charge to government officials, because we want them to be able to have access to the information where all the other stakeholders do as well.

So feel free to visit our website. You can — people can also put in their email address, get added to our email list, so that they can be aware of reports that are coming out and also follow us on all of our social media outlets.

Alan S. Pierce: Okay and your web address is?

Ramona Tanabe: It is www.wcrinet.org.

Alan S. Pierce: Okay. And may I assume that there are folks weeding through the data right now for the 20th Edition that we will probably see about 11 months from now?

Ramona Tanabe: They are, they’re weeding through, but actually they’re weeding through the data and writing the reports as we speak that are on the companion report, the CompScope Medical Benchmarks that will be issued early this summer.

Alan S. Pierce: Okay, well Ramona, I want to thank you very much for being a guest on Workers Comp Matters and making a very complex area at least more understandable for those of us who are not particularly data-driven and especially having to do this in an audio rather than a video format, where we could at least see some bar graphs, et cetera.

So on behalf of Workers Comp Matters and Legal Talk Network this is Alan Pierce, wishing you a good day and hope to have you back listening to us soon. Thanks.

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Outro: Thanks for listening to Workers Comp Matters today on the Legal Talk Network, hosted by attorney Alan S. Pierce, where we try to make a difference in workers’ comp legal cases for people injured at work. Be sure to listen to other Workers Comp Matters shows on the Legal Talk Network, your only choice for legal talk.

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