According to a study recently published by privately owned think-tank Workers’ Compensation Research Institute, nearly two-thirds of states studied have a substantial disparity between what employer-provided private health insurance and workers’ compensation insurance pay for the same medical procedures. The study examined comprehensive medical records from the 16 states that make up more than 60 percent of the country’s annual paid workers’ compensation medical care benefits.
In almost every state studied where there wasn’t a legally mandated fee schedule in place that monitors how much money medical providers are allowed to charge work comp insurers, records showed that when injuries were paid for by a work comp insurance provider, the costs were signficantly higher than if a private health insurance policy was used instead. For the “regulated” states that did set a maximum amount charged for particular injuries, the payments by work comp insurers were typically lower than those paid by private health insurers.
In New Jersey, for example, the Institute found that the average cost of a routine surgery to repair shoulder damage was 37 percent higher for work comp insurers than for private insurers. In Virginia, the disparity is even greater; that state showed that workers’ compensation insurance providers will end up paying more than twice what private health insurance companies do for the same exact procedure.
You may be wondering what the gross disparity between the two methods of payment mean, and that is a fair question. Well, higher workers’ compensation insurance payments to medical providers generally translates to higher premiums for employers, and some might choose to forego the legally mandated work comp insurance (that provides protection for employees who are injured on the job by covering medical expenses and a portion of the income they lose while recovering), instead just hoping that employees stay safe in the workplace.
Others may end up going out of business altogether or dramatically changing the focus of their business, since premiums are also dependent upon the types of injuries (and the cost for treating them) common to particular industries.
Source: South Bend Tribune: “Study: procedures often cost more under workers’ comp,” Richard Newman, July 1, 2013.