HMOs, moral hazard and cost shifting in workers' compensation

Differential underestimation of work-related reinjury risk for older workers: Challenges to producing accurate rate estimates

BACKGROUND

Older workers are increasingly represented in the U.S. workforce, but frequently work part-timeor intermittently, hindering accurate injury rate estimates. To reduce the impact of reporting barriers on rate comparisons, we focused on reinjury (both injury recurrence and new injury) among workers with a workers' compensation claim, assessing: (1) reinjury risk for workers age 65+ versus <65; (2) importance of work-time at-risk measurement for rate estimates and comparisons; and (3) age distribution of potential risk factors.

METHODS

Washington State workers' compensation claims for a retrospective cohort of workers with work-related permanent impairments were linked to state wage files. Reinjury rates were calculated for the cohort (N = 11,184) and a survey sample (N = 582), using both calendar time and full-time equivalent (FTE)-adjusted time. Risk differentials were assessed using rate ratios and adjusted survival models.

RESULTS

The rate ratio for workers age 65+ (vs. <65) was 0.45 (p < 0.001) using calendar time, but 0.70 (p = 0.07) using FTE-adjusted time. Survey-based rates were 35.7 per 100 worker-years for workers age 65+, versus 14.8 for <65. Workers age 65+ (vs. <65) were more likely to work <100% FTE, but were similar regarding job strain, their ability to handle physical job demands, and their comfort reporting unsafe conditions or injuries.

CONCLUSIONS

Accounting for work-time at risk substantially improves age-based reinjury comparisons. Although the marked elevation in self-reported reinjury risk for older workers might be a small-sample artifact (n = 34), workers age 65+ are likely at higher risk than previously appreciated. Ongoing workforce trends demand increased attention to injury surveillance and prevention for older workers.

Coverage Gaps and Cost-Shifting for Work-Related Injury and Illness: Who Bears the Financial Burden?

The heavy economic burden of work-related injury/illness falls not only on employers and workers' compensation systems, but increasingly on health care systems, health and disability insurance, social safety net programs, and workers and their families. We present a flow diagram illustrating mechanisms responsible for the financial burden of occupational injury/illness borne by social safety net programs and by workers and their families, due to cost-shifting and gaps in workers' compensation coverage. This flow diagram depicts various pathways leading to coverage gaps that may shift the burden of occupational injury/illness-related health care and disability costs ultimately to workers, particularly the most socioeconomically vulnerable. We describe existing research and important research gaps linked to specific pathways in the flow diagram. This flow diagram was developed to facilitate more detailed and comprehensive research into the financial burden imposed by work-related injury/illness, in order to focus policy efforts where improvement is most needed.

A methodological proposal to evaluate the cost of duration moral hazard in workplace accident insurance

The cost of duration moral hazard in workplace accident insurance has been amply explored by North-American scholars. Given the current context of financial constraints in public accounts, and particularly in the Social Security system, we feel that the issue merits inquiry in the case of Spain. The present research posits a methodological proposal using the econometric technique of stochastic frontiers, which allows us to break down the duration of work-related leave into what we term "economic days" and "medical days". Our calculations indicate that during the 9-year period spanning 2005-2013, the cost of sick leave amongst full-time salaried workers amounted to 6920 million Euros (in constant 2011 Euros). Of this total, and bearing in mind that "economic days" are those attributable to duration moral hazard, over 3000 million Euros might be linked to workplace absenteeism. It is on this figure where economic policy measures might prove more effective.

A workplace modified duty program for employees in an oncology center

BACKGROUND

Workplace modified duty programs may provide reasonable accommodations to employees who have partial temporary job disability and could work on duty accommodations until they fully recover. However, little is known about the implementation barriers and effectiveness of such programs.

OBJECTIVE

This study is aimed at evaluating the implementation of a modified duty program for employees in an oncology center.

METHODS

A modified duty program for employees working at the Bank of Cyprus Oncology Center, a non profit organization with 200 employees located in the Republic of Cyprus was evaluated based on the health records of the occupational medicine department.

RESULTS

Employees' participation in the program was 3%. A total of 12 employees participated (6 each year). The participants were all women and the mean participation period was 21.6 days (range 10 - 65 days). The two most frequent reasons for a modified duty assignment were pregnancy and back pain. Employees were assigned either on limited duties or on a combination of limited duties and reduced work hours. Employees reported being very satisfied with their participation based on a follow-up narrative oral assessment.

CONCLUSION

The small participation rate does not allow for advanced statistical analyses. Further studies from larger organizations are urgently needed to evaluate the effectiveness of modified duty programs. The development of a legal framework for such modified duty programs in Cyprus as well as internationally may promote their implementation in order to facilitate the effective management of temporary partial job disability for the benefit of both employees and businesses.

Claims-shifting: The problem of parallel reimbursement regimes

Parallel reimbursement regimes, under which providers have some discretion over which payer gets billed for patient treatment, are a common feature of health care markets. In the U.S., the largest such system is under Workers' Compensation (WC), where the treatment workers with injuries that are not definitively tied to a work accident may be billed either under group health insurance plans or under WC. We document that there is significant reclassification of injuries from group health plans into WC, or "claims shifting", when the financial incentives to do so are strongest. In particular, we find that injuries to workers enrolled in capitated group health plans (such as HMOs) see a higher incidence of their claims for soft-tissue injuries (which are hard to classify specifically as work related) under WC than under group health, relative to those in non-capitated plans. Such a pattern is not evident for workers with traumatic injuries. Moreover, we find that such reclassification is more common in states with higher WC fees, once again for soft tissue but not traumatic injuries. Our results imply that a significant shift towards capitated reimbursement, or reimbursement reductions, under GH could lead to a large rise in the cost of WC plans.

Industrial Injury Hospitalizations Billed to Payers Other Than Workers' Compensation: Characteristics and Trends by State

OBJECTIVE

To describe characteristics of industrial injury hospitalizations, and to test the hypothesis that industrial injuries were increasingly billed to non-workers' compensation (WC) payers over time.

DATA SOURCES

Hospitalization data for 1998-2009 from State Inpatient Databases, Healthcare Cost and Utilization Project, and Agency for Healthcare Research and Quality.

STUDY DESIGN

Retrospective secondary analyses described the distribution of payer, age, gender, race/ethnicity, and injury severity for injuries identified using industrial place of occurrence codes. Logistic regression models estimated trends in expected payer.

PRINCIPAL FINDINGS

There was a significant increase over time in the odds of an industrial injury not being billed to WC in California and Colorado, but a significant decrease in New York. These states had markedly different WC policy histories. Industrial injuries among older workers were more often billed to a non-WC payer, primarily Medicare.

CONCLUSIONS

Findings suggest potentially dramatic cost shifting from WC to Medicare. This study adds to limited, but mounting evidence that, in at least some states, the burden on non-WC payers to cover health care for industrial injuries is growing, even while WC-related employer costs are decreasing-an area that warrants further research.

Factitious lesions of the hand

The presence of a lesion with atypical presentation, obscure clinical history, which does not improve with classic treatments, shall raise the red flag of the medical team. In such cases, the hypothesis of a factitious lesion shall be considered. Many times the correct diagnosis on the initial assessment may avoid high-cost diagnostic tests, unnecessary treatments, and time consumption of the medical team. We present here two classic cases of factitious lesions that, similar to those described in the literature, is difficult to diagnose and difficult to treat.

Who pays for work-related traumatic injuries? Payer distribution in washington state by ethnicity, injury severity, and year (1998-2008)

BACKGROUND

Acute work-related trauma is a leading cause of death and disability for U.S. workers but it is difficult to obtain information about injured workers not covered by workers' compensation (WC). This study aimed to: (1) describe trends in expected payer and linkage to WC claims, (2) compare characteristics of injured workers who did and did not have a linked WC claim, and (3) describe variation in expected payer and linkage to WC claims by ethnicity and injury severity.

METHODS

Data for injuries occurring from 1998 through 2008 were obtained from the Washington State Trauma Registry and linked to WC claims.

RESULTS

We found that 27% of work-related traumatic injuries did not have WC listed as a payer, while 37% did not link to a WC claim. Among those with WC listed as a payer, the odds of having a linked WC claim were 57% lower for workers with other non-WC insurance compared with the otherwise uninsured. Latinos were more likely to have a linked WC claim compared with non-Latinos, but there was no significant difference after partially controlling for WC-covered employment and other insurance.

CONCLUSIONS

This study demonstrated the importance of considering differential access to other insurance coverage and adaptation by health care settings to financial pressures when assessing trends in occupational injury incidence and reporting, especially when using WC as a proxy for work-relatedness. The addition of occupation, industry, and work status to trauma registries and hospital discharge databases would improve surveillance, research, policy and prevention efforts.

Excess healthcare costs associated with prior workers' compensation activity

BACKGROUND

Workers compensation (WC) does not fully compensate workplace injuries and illnesses. This work examines whether cost shifting occurs to group health insurance for work-related injuries and illnesses.

METHODS

Thomson Reuters MarketScan databases of medical insurance claims were used. WC and other benefit system data, employee status and types of medical insurance coverage were also available. Medical cost was analyzed using two-part models: the first part modeled the monthly probability of a worker having any group health medical claims, and the second part modeled the total monthly cost of those medical claims. Models included an estimate of a worker's annual medical costs prior to a WC claim. The predicted monthly medical costs were derived by retransformation using Duan's smearing factor.

RESULTS

Individuals with prior WC claims were more likely to file a group health medical claim compared to those with no prior WC claims (OR = 1.25) and incurred a higher average monthly medical costs (among nonunion hourly men aged 18-34 years with prior WC claims: $203.72 vs. $160.29 with no prior claim, an increase of $43). These increases were observed in all industrial sectors with the service sector having the highest monthly increase ($66).

DISCUSSION

The results reveal that individuals with prior WC claims had higher probability of filing a group health medical claim and higher average monthly medical costs in all sectors. This suggests that a part of employer liability costs related to WC gets shifted to the group health medical insurance system.

Carpal tunnel surgery: patient preferences and predictors for satisfaction

Carpal tunnel syndrome is a debilitating disease of the upper extremity affecting patient function and quality of life. Surgical interventions have been developed that effectively treat this disease. However, there remains a subset of patients who are not fully satisfied with their outcome. Extensive investigation has been undertaken to analyze preoperative factors predictive of higher patient satisfaction. This review summarizes the role of unique patient characteristics and patient psychology, worker's compensation, patient demographics, certain clinical features, and patient preferences and expectations regarding patient satisfaction following carpal tunnel surgery. Understanding the complex nature of patient satisfaction will enable surgeons to indicate patients for surgical intervention better, provide appropriate preoperative counseling, and manage expectations postoperatively.

Effects of workers' compensation on the diagnosis and surgical treatment of patients with hand and wrist disorders

BACKGROUND

Workers' Compensation differs from standard insurance, and it is unclear how or if Workers' Compensation insurance influences the diagnosis and treatment of hand and wrist disorders. The aim of this study was to compare the diagnosis and course of treatment of hand disorders between patients with Workers' Compensation insurance and patients with standard insurance.

METHODS

The complete medical records of patients who visited an academic orthopaedic hand clinic between January 2005 and January 2007 were reviewed, and information on patient history, utilization of diagnostic tests, diagnosis, surgery, and wait-time to surgery was collected. Patients with Workers' Compensation insurance and those with other, third-party coverage were analyzed and compared. Patients without insurance were excluded from this study.

RESULTS

1413 patients (representing 2121 diagnoses) were included in the study. One hundred and sixteen patients (8%) had Workers' Compensation insurance and 1297 patients (92%) had standard insurance. Patients with Workers' Compensation insurance were younger than patients with standard insurance (mean age, forty-three years compared with fifty years, respectively; p < 0.05) and were also more likely to be male (50% compared with 40%, respectively; p = 0.04). Generally, Workers' Compensation patients more often had neurological conditions (p < 0.01), but there was no significant difference in the most common diagnoses between the two groups. Patients with Workers' Compensation underwent surgery slightly more often than did patients with standard insurance (44% compared with 35%, respectively; p = 0.07) and had a higher average number of visits before undergoing surgery (2.3 visits compared with 1.2 visits, respectively; p < 0.05). Twenty-three (45%) of the fifty-one patients with Workers' Compensation insurance who received a diagnosis indicating the need for surgery underwent surgery after the first visit, compared with 316 (69%) of 458 patients with standard insurance (p < 0.05). Patients with Workers' Compensation insurance were more likely than patients with standard insurance to undergo electrodiagnostic testing (26% compared with 15%, respectively; p < 0.01) or magnetic resonance imaging (16% compared with 9%, respectively; p = 0.02).

CONCLUSIONS

Compared with patients receiving standard insurance, patients receiving Workers' Compensation insurance have a greater number of clinic visits before undergoing surgery and receive more diagnostic testing. More research is needed to explore these differences and their potential clinical and economic consequences.

Compensation costs of work-related back disorders among union carpenters, Washington State 1989-2003

BACKGROUND

We measured resources used to provide medical care and to estimate lost productivity represented by payments for lost work time or impairment for work-related back injuries among a large cohort of union carpenters over 15 years.

METHODS

Using administrative data we identified a cohort of carpenters, their hours worked, their workers' compensation claims and associated costs. After adjustment for inflation and discounting to 2006 dollars, yearly costs for injuries and payment rates based on hours worked were calculated. Using negative binomial regression, dollars paid per claim were modeled based on age, gender, union tenure, and predominant type of work of the carpenter and whether the injury resulted from overexertion or acute trauma.

RESULTS

Workers' compensation costs for back injuries exceeded $128 million dollars between 1998 and 2003, representing payments of $0.97 for each hour of work. Costs per hour of work declined substantively over time due largely to declining overexertion injury rates. Traumatic injuries, though less common than overexertion injuries, were more expensive. Costs increased with the number of prior back injuries and with increasing age, beginning as early as age 30.

CONCLUSIONS

Increasing costs even among relatively young carpenters likely reflect the heavy nature of their work rather than simply the effects of biological aging. Musculoskeletal back problems remain a common, and consequently costly, source of injury among these carpenters that needs to be addressed through engineering modifications; there are also clearly needs for prevention of the often more costly back injuries associated with acute trauma.

Incentives in a Medicaid carve-out: impact on children with special health care needs

OBJECTIVE

To evaluate whether a specialty care payment "carve-out" from Medicaid managed care affects caseloads and expenditures for children with chronic conditions.

DATA SOURCE

Paid Medicaid claims in California with service dates between 1994 and 1997 that were authorized by the Title V Children with Special Health Needs program for children under age 21.

STUDY DESIGN

A natural experiment design evaluated the impact of California's Medicaid managed care expansion during the 1990s, which preserved fee-for-service payment for certain complex medical diagnoses. Outcomes in time series regression include Title V program participation and expenditures. Multiple comparison groups include children in managed care counties who were not mandated to enroll, and children in nonmanaged care counties.

DATA COLLECTION/EXTRACTION METHODS

Data on the study population were obtained from the state health department claims files and from administrative files on enrollment and managed care participation.

PRINCIPAL FINDINGS

The carve-out policy increased the number of children receiving Title V-authorized services. Recipients and expenditures for some ambulatory services increased, although overall expenditures (driven by inpatient services) did not increase significantly. Cost intensity per Title V recipient generally declined.

CONCLUSIONS

The carve-out policy increased identification of children with special health care needs. The policy may have improved children's access to prevailing standards of care by motivating health plans and providers to identify and refer children to an important national program.

Predictors of Successful Work Role Functioning After Carpal Tunnel Release Surgery

This study identified the clinical, individual, and workplace predictors of successful work role functioning (WRF) after carpal tunnel release surgery (CTRS). A community-based cohort (n = 197) was followed for 6 months post-CTRS. Predictors of successful WRF were analyzed prospectively using ordinal logistic regression. Baseline WRF predicted successful WRF at 2 months, whereas being depressed and a workers' compensation claimant predicted being out of work. Baseline WRF, improved self-efficacy, and a supportive organization predicted 6-month successful WRF. Supportive organizations have an impact on the effectiveness of medical interventions for CTS. The significance of improved self-efficacy at 6 months and depression at 2 months postsurgery highlights the importance of psychosocial management of musculoskeletal disorders.

Inpatient hospital care for work-related injuries and illnesses

BACKGROUND

The aim of this study was to compile nationally representative statistics describing inpatient hospital care for patients with work-related injuries and illnesses covered under workers' compensation (WC) insurance in the United States.

METHODS

Three years of data (1997-1999) from the Nationwide Inpatient Sample (NIS) were used to describe WC inpatient stays with respect to patient and hospital characteristics, principal diagnoses, number and type of procedures provided, total charges, length of stay, and time from admission to administering of the principal procedure.

RESULTS

Approximately 209,139 WC hospitalizations occurred annually, representing 0.62% of all inpatient admissions. The average total charge per WC hospitalization was 14,966 dollars. After adjusting for the type of diagnosis and other factors, WC hospital care was found to involve 13-24% more procedures, have a slightly longer (4%) length of stay, and take 23-54% less time from admission to the principal procedure than inpatient care for comparable diagnoses paid by other sources. Inpatient care for disc and spinal disorders paid by WC had 16% higher charges than similar non-WC cases. Three-year trends showed a steady decline in the number of WC hospitalizations between 1997 and 1999 but a sharp 16% rise in total charges per WC stay.

CONCLUSIONS

This research provides an initial foundation for understanding the extent and nature of hospitalized care for injured workers in the US and identifying significant trends in the delivery of care.

On the "efficiency" of managed care plans

The claim that managed care plans are more efficient than fee-for-service plans has been made so often that it has reached the status of folklore, but the evidence is inconclusive. The claim is usually based on one or both of the following errors: (1) lower medical care costs mean lower total costs (medical plus administrative costs) and (2) lower HMO premiums mean HMOs are more efficient than fee-for-service plans. The first assertion ignores evidence indicating that managed care has driven up administrative costs for both insurers and providers. The second ignores evidence that managed care plans have numerous methods of shifting costs that are unavailable or less available to fee-for-service plans. The lull in health care inflation during the mid-1990s is often cited as evidence that managed care is efficient. But the lull may have been caused not by the spread of managed care but by the near-simultaneous occurrence of four events: a downturn in the insurance underwriting cycle, the 1990-1991 recession, endorsement of managed competition by numerous politicians, and the merger fever triggered by those endorsements.

Health, safety, and productivity in a manufacturing environment

The Health and Productivity Management model at International Truck and Engine Corporation includes the measurement, analysis, and management of the individual component programs affecting employee safety, health, and productivity. The key to the success of the program was the iterative approach used to identify the opportunities, develop interventions, and achieve targets through continuous measurement and management. In addition, the integration of multiple disciplines and the overall emphasis on employee productivity and its cost are key foci of the International Model. The program was instituted after economic and clinical services' analyses of data on International employees showed significant excess costs and a high potential for health care cost reductions based on several modifiable health risk factors. The company also faced significant challenges in the safety, workers' compensation, and disability areas. The program includes safety, workers' compensation, short-term disability, long-term disability, health care, and absenteeism. Monthly reports/analyses are sent to senior management, and annual goals are set with the board of directors. Economic impact has been documented in the categories after intervention. For example, a comprehensive corporate wellness effort has had a significant impact in terms of reducing both direct health care cost and improving productivity, measured as absenteeism. Workers' compensation and disability program interventions have had an impact on current costs, resulting in a significant reduction of financial liability. In the final phase of the program, all direct and indirect productivity costs will be quantified. The impact of the coordinated program on costs associated with employee health will be analyzed initially and compared with a "silo" approach.

Moral hazard: a question of morality?

Economists use the term moral hazard to describe the tendency for insurance plans to encourage behavior that increases the risk of insured loss. Numerous economic studies have examined moral hazard effects in workers' compensation. Many of these have focused on the supposed propensity of workers to exercise less caution or to file more claims in response to increases in workers' compensation benefit levels. Although many authorities insist that moral hazard is a value-neutral concept, there are often pejorative connotations associated with contemporary discussions of moral hazard that intentionally or unintentionally disparage the motives of workers and undermine public support for workers' compensation programs. This article critically examines that literature and explores the conceptual underpinnings of economists' claims that employee moral hazard is rampant in workers' compensation. We examine the historical roots of moral hazard and its role in recent economic analyses of workers' compensation, consider the practical and ethical implications of that discourse, and offer suggestions for a truly value-neutral approach that would describe the system more fairly and accurately.

Expanded profile of the SHAFT syndrome

The SHAFT syndrome is a factitious disorder in which a patient manipulates the surgeon to perform operations to fulfill his or her psychological needs. The acronym describes patients who are sad, hostile, anxious, frustrating, and tenacious. A chart review from January 1990 to June 1996 was undertaken to provide a profile to aid in the recognition and diagnosis of the SHAFT syndrome. An analysis of 28 patients revealed characteristics supporting a definitive SHAFT profile. Patients with SHAFT syndrome seek physicians to perform invasive procedures. Their typical complaint is pain, usually without objective physical findings that would support a more definitive diagnosis. Such patients tend to be women, cry with pain, describe symptoms out of proportion to objective findings, and have a history of psychiatric care.