Tag Archives: cost shifting

Dirty Tricks Lead To Reduced Benefits In Cuomo’s New Budget

Today’s post comes from guest author Catherine Stanton, from Pasternack Tilker Ziegler Walsh Stanton & Romano.

Governor Cuomo signed a new budget this week. While many extolled his progressive agenda that included free college tuition for the middle class, renewing the millionaire’s tax, and giving a tax break on dues for union members, he also quietly and without much fanfare in the news media, struck a huge blow to injured workers. 

Unfortunately for those members of our society who no longer are able to work as a result of an injury, or sustained a life altering injury while on the job, their benefits became part of a horse-trade in Albany much to their detriment. Governor Cuomo, anxious to get his big publicity items in the budget in case he seeks higher office, seems to have used Workers’ Compensation as a bargaining chip. 

The Business Council circulated fake facts blaming injured workers’ benefits for the high cost of doing business in the state, when in reality employer costs nationwide for Workers’ Compensation are at their lowest levels in 35 years.  Locally, Workers’ Compensation costs in New York have declined dramatically as well; compensation is only a small portion of employer costs and is extremely profitable for insurers. The Business Council seems to have a number of members with strong ties to the insurance industry, which makes their position even further suspect.

In 2007, the Council was successful in lobbying to obtain caps on indemnity benefits and has now continued its assault so that the prior limit on weekly benefits will be further reduced. When caps were first put into place, they did not go into effect until judges determined that injured workers had reached maximum medical improvement and that their conditions could be classified as permanent. This new provision automatically starts the cap after 2½ years, regardless of a person’s abilities or condition, or whether or not he will ever be able to work again or find work that meets medical restrictions. It is up to the injured worker to show that he has not reached maximum medical treatment that the carrier can refute.  

The Business Council has continued its attack by alleging that permanent loss-of-use awards were unfair to the employer. They argue that the prior guidelines were outdated and did not take into consideration new advances in medicine. Again, fake facts! The guidelines are based on range of motion and loss of function after all modalities are exhausted, including new advances in medicine available. As a result, the new law directs the Board to “consult” with a group stacked with pro business and insurance interests, but no representatives of injured workers to “review” the current guidelines with the ultimate goal of reducing benefits. The fact that workers who have permanent life-altering injuries to their arms, legs, hands, feet, fingers, and toes have absolutely no say is extremely distressing.

When does this eroding away of Workers’ Compensation benefits end? Two years ago, ProPublica published a series of articles entitled “The Demolition of Workers’ Comp”.  They documented the cutbacks made in many states with disastrous consequences. Their report noted that since 2003, 33 states passed Workers’ Compensation laws that reduce benefits or make it more difficult to obtain benefits. New York is part of that list, having enacted laws not once, but twice, since then.

Many believe that reducing benefits to injured workers will force them back to work. Studies have shown that this is another myth perpetuated by the falsehood that injured workers are frauds. What happens in reality is that many injured workers are unable to work and are forced into poverty or have to collect alternate benefits. Social Security Disability benefits, which are paid by the American taxpayers, are generally offset by Workers’ Compensation benefits. Without Workers’ Compensation payable by the insurance carrier, the burden on the taxpayer is larger. Rather than the Workers’ Compensation insurance carrier paying for medical treatment, it is put through Medicare. This is known as cost shifting and it affects all of us, as we are the ones who end up paying – and paying dearly.

 

Catherine M. Stanton is a senior partner in the law firm of Pasternack Tilker Ziegler Walsh Stanton & Romano, LLP. She focuses on the area of Workers’ Compensation, having helped thousands of injured workers navigate a highly complex system and obtain all the benefits to which they were entitled. Ms. Stanton has been honored as a New York Super Lawyer, is the past president of the New York Workers’ Compensation Bar Association, the immediate past president of the Workers’ Injury Law and Advocacy Group, and is an officer in several organizations dedicated to injured workers and their families. She can be reached at 800.692.3717.

Drug Formularies, Part 1: The Rest of the Story

Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.

A drug formulary is a term describing a list of drugs that are covered by an insurance plan. In workers’ compensation, formularies are touted as a way to reduce prescription costs and lead to more effective care. Formularies are particularly pushed as a solution for opioid use and abuse for injured employees.

The headline numbers about the reduction of prescription costs look eye popping. One group of pharmacy benefit managers, the companies that manage drug formularies, claimed a 9 percent reduction in prescription costs over the last year. Ohio, which has the largest state-run workers compensation fund in the country, claimed a 16 percent reduction in prescription costs in the first three years after they implemented a drug formulary. Ohio reported 15.7 million fewer doses of opioids in that time period and a 36 percent reduction in opioid costs.

The Rest of the Story about Drug Formularies

Florida workers’ compensation judge David Langham has asked “what is the rest of the story” about drug formularies. If drug formularies are so effective, then why have they only been adopted in a few states for workers’ compensation?

While drug formularies are a relatively recent development in workers’ compensation, they are well established in the larger world of health insurance. Drug formularies have long been criticized for increasing costs in health insurance plans by reducing prescription usage because costs are shifted to insureds, which forces insureds to seek more expensive care, because chronic conditions go untreated. Overall costs are increased. The costs are also shifted onto insureds who have to pick up the costs for more expensive procedures that could have been taken care of through medication. Cost shifting from the employer onto the employee, other forms of insurance and the government is already a serious problem in workers’ compensation. Drug formularies in workers’ compensation could exacerbate the issue of cost-shifting.

Do Drug Formularies add up?  Cost = Price * Utilization

When you study drug formularies for any amount of time, you run across the equation that drug costs equal price multiplied by utilization. Proponents of drug formularies tout that they can decrease both the utilization and the price of prescription drugs. Ohio has provided detailed information about the decrease in the utilization of certain drugs like opioids because of formularies. However, the decrease in the utilization in opioids cited by proponents of drug formularies coincides with an overall long-standing decrease in the frequency or number of workers’ compensation claims. Fewer overall claims mean less overall utilization, which could explain some of the cost decrease. A better measure of the effectiveness in drug formularies in controlling costs would be measured by looking at prescription cost per claim. So far, drug formulary proponents have been unable to show that data. Even if drug formulary proponents could show that data, there is still the issue of whether reductions in prescription drug costs lead to increases medical costs by forcing injured employees to seek more expensive care that could have been taken care of by prescriptions.

On the price end of the equation, drug formularies are thought to control costs by having pharmacy benefit managers negotiate bulk discounts on prescription drugs. But pharmacy benefit managers have come under fire with allegations that they actually increase drug prices or at the very least are powerless to stop the increases in drug prices. The issue of drug formularies, pharmacy benefit managers and drug prices is complicated and will be addressed in Part 2 of this series.

Cost Shifting: The Dirty (not so little) Secret of Worker’s Comp

Today’s post comes from guest author Tom Domer from The Domer Law Firm.

Seasoned worker’s compensation practitioners know some employers and worker’s comp carriers consciously employ questionable tactics to limit their exposure. They mischaracterize high risk employee job titles as low risk to reduce premiums; they call long-term employees “Independent Contractors” to get them off worker’s compensation roles; they hire doctors to render boilerplate predictable opinions to deny claims; and they discourage genuine worker’s comp claims by telling employees to submit work-related medical bills to group insurers, Medicare or Medicaid.

They discourage genuine worker’s comp claims by telling employees to submit work-related medical bills to group insurers, Medicare or Medicaid.

This last piece of fraud is the most nefarious, especially since medical costs now exceed indemnity payments in Wisconsin and most other states. The cost shifting means we all pay (as increased group health premiums and taxes) for medical expenses that should be paid by worker’s comp carriers. In states such as Wisconsin where work injury related treatment expenses are paid at doctors’ usual and customary rates, shifting the cost to a group carrier, Medicare or Medicaid saves worker’s comp carriers millions.

The cost shifting means we all pay (as increased group health premiums and taxes) for medical expenses that should be paid by worker’s comp carriers.

Denial of a claim by using “legitimate doubt” or purchasing the opinion of an adverse medical examiner results in medical treatment provided at reduced negotiated rates through non-worker’s comp coverage (Union health care, Medicare, Medicaid, etc.). Continue reading