By Kimberly George, SVP, Senior Healthcare Advisor, Sedgwick
Undoubtedly, the passage of the Affordable Care Act (ACA) in March of 2010 changed the face of the healthcare system in this country. The historical legislation has evolved significantly since that time and will continue to morph in the years ahead. While debate will surround and shape much of the legislative language, employers should prepare for the projected and practical implications associated with this new law.
One of the areas that will be impacted by the ACA is workers’ compensation. While it is estimated that workers’ compensation accounts for only between two to three percent of healthcare costs, today’s workforce is considered among the nation’s most valued assets. The health and well-being of workers is of paramount importance to virtually all employers. For this reason, the ACA’s impact on workers’ compensation has created a high level of interest within the industry and in boardrooms across the country.
There are three broad areas employers should focus on when considering the ACA’s impact on workers’ compensation. These are:
- Access to care
- Quality of care
- Cost of care
Understanding how the ACA affects each of these focal points will enable employers to prepare and capitalize on the impending changes in the months ahead.
Access to Care
One of the initial objectives behind the creation and passage of the ACA was to provide every American access to affordable healthcare insurance. Sources estimate that an additional 30 million individuals are likely to be covered and eligible to seek treatment and care under the new legislation. One of the most obvious questions centers on the quantity and availability of physicians to support the increased demand and strain on the system. Simply put, will there be enough doctors to treat injured and ill workers?
According to the Health Resources and Services Association (HRSA), at least 55 million Americans currently live in areas with an inadequate supply of primary care doctors. Further, Forbes reported earlier this year that the Association of American Medical Colleges projected a physician shortage upward of 90,000 by the year 2020. Such a limited supply could impede access to care and cause delays in treatment and recovery. This, in turn, would have a detrimental impact on costs and productivity for the employer community.
While many view the increased use of physician assistants and nurse practitioners as a potential solution to the shortage, many states do not currently recognize these medical professionals as treating providers. While change is being discussed in some jurisdictions, there are wide variances among the states as shown below:
- Arizona – allows nurse practitioners to authorize an injured employee’s inability to work
- California – allows nurse practitioners to cosign a first report of injury and authorize up to three days of time off from work for an occupational injury
- Montana – includes advanced practice registered nurses as providers for workers’ compensation
- Ohio – continues to reimburse certified registered nurse anesthetists, clinical nurse specialists, and certified nurse practitioners
- Oregon – allows nurse practitioners to provide compensable medical services and authorize temporary disability payments for 180 consecutive calendar days.
Another area that could potentially impact access to care and treatment of work-related injuries is an increasing number of consolidations among health systems, hospitals and physician organizations. When hospitals merge and the new system’s leadership does not want to provide occupational health services, that is one less hospital available to treat workers’ compensation injuries.
Quality of Care
A second area that employers should focus on when contemplating the impact of the ACA is quality of care. Employers are learning the value of having quality providers apply treatment early on in the process. This has been shown to enhance and expedite recovery. Quality providers understand the workers’ compensation system, and they know how to treat occupational injuries. Time and again, this class of providers has shown they can produce superior outcomes and results. The ACA will help spotlight the need and value of quality care providers. This is a stark contrast to the more traditional cost containment and managed care approach characterized by volume discounts and excessive paperwork.
Additionally, quality of care is likely to improve as a result of employers placing an increased emphasis on employee engagement. Employers are creating a more educated class of healthcare consumers. These individuals understand their diagnoses and treatment options and are more actively involved in the recovery process. Further, their commitment to managing their overall health and well-being often facilitates a more rapid recovery and return to work. The importance of employee engagement cannot be overstated as employers look for ways to decrease costs and improve productivity in this new healthcare environment.
Cost of Care
A third area of importance to employers when considering the impact of the ACA on workers’ compensation is what effect will the new legislation have on costs. This is a more difficult area to forecast but there are early observations which may hold clues.
In 2006, Massachusetts instituted similar healthcare reform. This state reform contained many provisions like those contained in the ACA. A Rand study released in 2012 found evidence suggesting that the reform may have reduced workers’ compensation billing volume and costs.
Additionally, some predict that workers’ compensation costs will go down because there will be less cost shifting from group health to workers’ compensation under the new system. The reasoning is that more individuals will have healthcare insurance and access to care. It is believed there will be a lesser tendency to report a non-occupational injury as work-related in order to obtain care.
Additionally, others speculate that technology could interject greater efficiencies into the system, thereby driving costs down. Technology plays a significant role in connecting payers, providers, patients, caregivers, and health systems. This type of connected health maximizes healthcare resources with programs such as telehealth and remote care. These options provide flexible opportunities for consumers to engage with clinicians and better self-manage their care outside the hospital or doctor’s office. When care providers are connected with patients and key programs, they can deliver quality healthcare in a cost-effective and efficient way.
One of the unknown factors with respect to cost ramifications centers on premium rebating. The new legislation allows for insurers to refund premiums back to employers for strong healthcare program performance. These funds may then be given back to employees or set aside for future program payments. If employers refund premium dollars to employees, they are considered employee income and are counted as part of the organization’s payroll. Workers’ compensation premiums are generally tied to payroll costs and exhibit a direct correlation to change. Workers’ compensation costs could theoretically rise as a result of better than expected program performance.
In summary, the ACA‘s biggest impact will be based on its ability to create dialog about healthcare in this country. If that dialogue causes us to reexamine how we view access, quality, and cost of care, the system will likely improve. The growing board-level interest in the overall health of the workforce, a renewed focus on patient advocacy and engagement, and emerging medical technologies and connected care are all opportunities yet to be fully realized. Today’s opportunity lies in employer activism and speaking out collectively to shape and mold this legislation in the future.
About Kimberly George
Ms. George is a senior vice president, senior healthcare advisor at Sedgwick. In this new position, Kimberly will explore and work to improve Sedgwick’s understanding of how health care reform affects its business models and product and service offerings. She will also serve as senior healthcare advisor to Stone Point Capital, one of Sedgwick’s primary shareholders. Kimberly previously served as Sedgwick’s managed care practice lead. She joined Sedgwick in 2001 overseeing integrated disability medical programs and later case management services.
Prior to joining Sedgwick, Kimberly worked as a consultant within the 24-hour health and integrated disability management arena. She also held a leadership position with a large national managed care organization’s case management division. Her career has focused on creating health and productivity programs for employers, impacting quality and cost of risk. Kimberly has been a registered nurse for 20 years. Although she began her career as a neuro-trauma nurse, she quickly transitioned to the insurance and benefits arena. Her experience in the cost containment field spans nearly 20 years. Kimberly’s roles in the property and casualty field include product development, national telephonic case management and utilization review oversight, and integrated disability management as well as her previous position with Sedgwick as managed care practice lead. Her insurance background includes workers’ compensation, short- and long-term disability, auto, liability, professional liability, longshore and total absence management.
Kimberly is an excellent presenter and a frequent speaker at national conferences and events. She is often featured in industry journals and publications and is a highly regarded authority in the managed care and workers’ compensation arena.
Follow Kimberly George through her LinkedIn group, “Transforming Healthcare for Tomorrow“
Sedgwick Claims Management Services, Inc., is the leading North American provider of technology-enabled claims and productivity management solutions. Sedgwick and its affiliated companies deliver cost-effective claims, productivity, managed care, risk consulting, and other services to clients through the expertise of more than 11,000 colleagues in some 200 offices located in the U.S. and Canada. The company specializes in workers’ compensation; disability, FMLA, and other employee absence; managed care; general, automobile, and professional liability; warranty and credit card claims services; fraud and investigation; structured settlements; and Medicare compliance solutions. Sedgwick and its affiliates design and implement customized programs based on proven practices and advanced technology that exceed client expectations. For more, see www.sedgwick.com.