How Group Health Claims-Shifting Affects Workers’ Compensation


Study predicts there will be more cost shifting to workers’ compensation as ACOs gain in popularity in the group health market. A good example of unintended consequences. ACA is chock full of unintended consequences………..

By Andrew G. Simpson | March 5, 2015

Workers’ compensation insurers should expect more cost shifting from group health plans as a key provision of the Affordable Care Act (ACA) takes hold, according to new research from the Workers Compensation Research Institute (WCRI).

The claims shift is already happening in states where capitated health plans are popular because workers’ compensation pays physicians more than capitated health plans pay, according to the study. Workers’ compensation pays doctors a fee-for-service while capitated health plans pay providers a set amount for each patient.

Also, since a provision of the Affordable Care Act is designed to encourage the formation of Accountable Care Organizations (ACOs), which follow the capitation payment model, the study predicts there will be more cost shifting to workers’ compensation as ACOs gain in popularity in the group health market.

The result could be tens of millions of dollars in additional costs for workers’ compensation, according to the report.

WCRI Executive Director Dr. Richard Victor presented the study’s findings, which WCRI stressed are preliminary and subject to change, during the WCRI’s annual conference in Boston on Thursday.

Soft Tissue Claims

WCRI found that the claims most likely to be shifted to workers’ compensation are ones for soft tissue injuries where there is some question whether the injury is work-related.

“Decisions about ‘work-relatedness’ rely heavily on the assessment by the treating doctor,” noted Victor.

Whether fractures, lacerations, contusions and similar injuries are work-related is usually obvious. However, the “work-relatedness” of soft tissue injuries to a back, knee or shoulder may be less clear—creating an opportunity for financial incentives to influence decisions, according to the study.

The study looked at claims under fee-for-service group health plans and capitated health plans. In states where most group health plans are fee-for-service like workers’ compensation and where capitation plans serve less than 10 percent of the market, there was no case-shifting effect.

But in states where capitated health plans have a market share of more than 22 percent, there was a 30 percent increase in soft tissue workers’ compensation claims.

Capitation Enrollment

Enrollment in capitation plans has actually been on the decline over the last decade. In 2013, only 14 percent of insured workers were in capitated health plans, compared to 29 percent in 2000.

States with the biggest enrollments in capitated plans currently include California, New York, Pennsylvania, Michigan and Massachusetts. States with little use of capitation include Texas, Illinois and North Carolina.

Victor said he expects the ACA will begin to reverse the downward trend in capitation and that states with little capitation now could experience heavy case-shifting in the future.

“Initially, larger shifting of soft tissue cases to workers’ compensation is more likely to occur in states where capitation is currently more common,” said Victor. “Ultimately, states with little current use of capitated plans may see the largest shifts to workers’ compensation.”

WCRI offered two examples to illustrate the cost effect. If capitation increased from 30 percent to 55 percent in Pennsylvania (a high capitation state now), there would be an 8.5 percent shift of soft tissue claims to workers’ compensation, costing about $55 million.

In low-capitation Illinois, if capitation jumped from 12 percent to 27 percent, there would be a 12 percent increase in soft tissue workers’ compensation claims at a cost of $90 million.

In an ACO, doctors and hospitals share financial and medical responsibility for coordinating services to patients. An ACO is rewarded for the quality of medical outcomes and for keeping costs low. In addition to rewarding doctors with higher payments, shifting cases to workers’ compensation has the added possible benefit of removing theses cases from an ACO’s accountability formula, the study notes.