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FOIA Number: 2006-0810-F
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Presidential Library Staff.
Collection/Record Group:
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Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Subseries:
OA/ID Number:
1230
FolderlD:
Folder Title:
Briefing Book on Workers' Compensation [6]
Stack:
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Section:
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51
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2
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Divider Title:
IX
�Group Health Association of America
The Group Health Association of America (GHAA) described issues of concern for
HMOs if the medical component of the Workers' Compensation (WC) system is integrated
into the national health care system. GHAA sketched five specific concerns:
(1) Coordination of Care. In HMOs, general care is coordinated by a primary care
physician who may not be the appropriate coordinator for occupational injuries. The HMO
may have to hire or train a physician who is an "industrial specialist."
(2) Categories of Health Care Professionals. Few HMOs have the capacity to provide
specific types of medical specialties covered under existing WC laws such as chiropractors.
(3) Scope of Benefits Package. WC provides for broader coverage than general health care
and for longer durations. HMOs would have to leam to develop capitation fees to allow
for the WC benefits.
(4) Delivery System. HMOs would have to develop the skills to focus care on return to
work for work-related injuries. They may need to expand their provider base.
(5) Administration. HMOs typically do not have the capability to do the reporting that WC
insurers and employers require for work-related injuries.
GHAA is also concerned about case management if the medical and indemnity were
separated. None of the issues are insurmountable, however, but GHAA recommends a
phaseing-in of integration.
�SENT.BY:
<-> "<-' •
•
UHM-
92199210
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112!) 2llth Street NW. Suite. G O • Washington DC 2003^403 • Telephone: 202.778-3200 • Facsimile: 202-:«l-7487
O
Memorandum
TO:
Fred Siskind
US Department of Labor ^ ,
0
FROM:
Erling
jrjfasASZ^rtt"-*-**
General "
DATE:
March 12,
EE:
Health Care Reform and 24-Hour Coverage: Issues for H O
Ms
Currently, separate healthcare delivery systems exist for work related
and non-work related claims, reflecting differences in the workers'
compensation and non-occupational healthcare system. I f national health care
reform were to include occupational injuries under a '^A-hour coverage"
approach, H O and similar managed care entities would face the following
Ms
challenges:
1,
Freedom to choose physicians.
Workers' compensation laws pemit a degree of physician choice which
is not present when general health benefits coverage i s received through
physicians affiliated with an H O Care provided through H O s i s usually
M,
M'
coordinated by a primary care physician (PCP). A PCP i s defined as an
internist, family or general practitioner. Typically, no coverage is provided
when services are not authorized by the PCP. For occupational injuries, the
PCP may not be the most appropriate provider to coordinate care, Rather,
there may be need to be a newly defined role for the industrial specialist as
"PCP."
2,
Freedom to choose categories of health care professionals.
Workers* compensation laws permit a choice of health care
practitioners, including, for example, chiropractors, which may exceed that
Offered through HMOs. Currently, very few H O and similar managed care
Ms
entities have a broad capacity to provide occupational medical care. Provider
networks would have to be enhanced to include key specialties required to
support workers' compensation injuries. Specialties would have to include
occupational/industrial specialists, chiropractors and physical therapists.
3,
Scope of benefit package.
Workers' compensation generally requires coverage for a broader set of
services than even the most comprehensive general health benefits package,
including, for example, rehabilitation services. Workers' compensation also
does not permit the imposition of even modest cost sharing provisions.
Therefore, when plan providers have been instructed to accept copayments for
specified services (e.g., office v i s i t ) , there needs to be a clear method of
determining when not to collect where the loss is related to an occupational
�Fred Siekind
Page 2
injury and cost sharing i s not permitted. Some H O physicians receive
M
capitated or fixed monthly payments based on the benefits to be provided and
the number of enrolled members. Determining when/how to charge a "fee" for
non-enrollees, or the amount of additional capitation (to include potential
workers' compensation activity) for enrollees i s an issue.
4.
Duration of benefits.
Some workers' compensation benefits for some workers may extend for
periods beyond the period of employment and thus would typically not be
assumed by an H O or other health benefits carriers. An example would be an
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employee with a permanent disability.
5.
Delivery system.
Some H O would not have the delivery system arrangements including
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occupational medicine and related case management to assume responsibility for
workers' compensation medical care services and would have to develop this
capacity. The primary focus of H O i s wellness. Significant training i s
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required to extend the focus to return to work opportunities, especially in
conjunction with the employer's willingness to modifications in the
individual's normal work responsibilities. Some contracted H O physicians may
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not be skilled in, or may refuse to become involved in, workers' compensation
activities. As a result, H O may need to create a special networks for
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workers' compensation patients. Extending occupational medicine
responsibilities to H O may result in capacity problems. Networks may need
Ms
to expand their provider base to support workers' compensation activity.
6.
Administration capabilities.
Some H O do not have the systems capabilities to provide the reports
Ms
employers and workers compensation insurers need in a timely fashion.
Administration and possible involvement In work litigation issues would
constitute a new role for H O physicians. They may not be willing to
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participate in such activities. Completion of workers' compensation forms and
associated administrative issues may be considered outside of the terms of a
provider's contractual agreement with the H O
M.
Whether to address only medical care and leave state workers'
compensation disability laws untouched i s a major issue. For work related
injuries and illnesses, medical care and disability management are intertwined
and cannot easily be separated. For example, timeliness and quality of
medical care affects the ability of the injured employee to return to work,
and return to work and normal l i f e reduces psychological dependency on
continuing medical care. Moreover, return to work provides a good measure of
success for outcomes-based medical care evaluations.
None of these are insurmountable issues but would take some time to
work out. Therefore, any proposal to integrate general health benefits with
workers' compensation and auto coverage into 24 hour coverage would need to be
phased to accommodate the resolution of these issues and the legal and
delivery system changes that would be necessary.
EH:mcp/L:899
�Clinton Presidential Records
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marker by the William J. Clinton Presidential Library Staff.
This marker identifies the place of a tabbed divider. Given our
digitization capabilities, we are sometimes unable to adequately
scan such dividers. The title from the original document is
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Divider Title:
3
�INTERNATIONAL ASSOCIATION OF INDUSTRIAL ACCIDENT
BOARDS AND COMMISSIONS (IAIABC)
The IAIABC has s u b m i t t e d a paper t o t h e H e a l t h Care Reform Task
Force i n o p p o s i t i o n t o i n c l u d i n g WC m e d i c a l care i n t o a n a t i o n a l
h e a l t h p l a n " a t t h i s t i m e . " I n s t e a d , they recommend t h a t a
s e p a r a t e committee be e s t a b l i s h e d t o r e v i e w t h e s p e c i a l needs o f
WC programs i n t h e c o n t e x t o f t h e new h e a l t h care system.
One o f t h e i r major areas o f concern i s t h e need t o assure
c o o r d i n a t i o n between m e d i c a l and wage l o s s b e n e f i t s .
Cost
savings on m e d i c a l care might l e a d t o much h i g h e r wage l o s s
payments.
They contend t h a t i t i s necessary f o r one agency t o
c o n t r o l b o t h t h e m e d i c a l and wage l o s s components o f WC. I n
t h e i r view, t h e s t a t e agencies s h o u l d r e t a i n t h i s c o n t r o l .
The IAIABC c o n s i s t s o f s t a t e and t e r r i t o r i a l workers'
compensation agencies, f e d e r a l workers' compensation programs and
s e v e r a l c o u n t r i e s . I t a l s o has r e p r e s e n t a t i v e s from o t h e r
p a r t i e s i n t h e WC system, i n c l u d i n g employees, employers,
i n s u r e r s , p r o v i d e r s and a t t o r n e y s .
(Note t h a t w h i l e t h e U.S. Department o f Labor i s a member o f t h e
IAIABC, t h e paper and t h e recommendations were p r e p a r e d by t h e
e x e c u t i v e committee, which does n o t i n c l u d e a r e p r e s e n t a t i v e o f
the Department.)
�- m y 06 '93 13 = 24 IAIABC R COLL YER
I
P.2/12
A
I
A
B
INTERNATIONAL ASSOCIATION OF INDUSTRIAL ACCIDENT BOARDS AND COMMISSIONS
EXECUTIVE COMMITTEE
Qlfloers
Evelyn Scott Ferris, Oregon
President
April 13,1993
C John Urllng, Jr.. Pennsylvania
President-Elect
Gerald Stuyvesant, New Mexico
Vice President
Michael Cllngman. Oklahoma
Secretary
Allyn C. Tatum, Arkansas
Past President
Committee Members
Ann Clayton. Florida
James T. CMalley. Wisconsin
Byron K. Orton, Iowa
Barbara Patton. New York
Ian W. Sinclair, Ontario
Robert B. Collyer. Executive Director
Stephen M. Hadley, Utah
Chair, College Board qf
Regents
STANDING COMMITTEE
CHAIRS
Adjudteation
Jane Luger. Minnesota
Administration &, Procedure
Michael G. LeFever. South CaroUna
Dr. Gary Claxton
US Dept, of Health & Human Services
Room 415-F, HHH Building
200 Independence Ave., SW
Washington, DC 20201
Dear Dr. Claxton:
The attached position paper of the International Association of
Industrial Accident Boards and Commissions (IAIABC), after
careful thought and preparation, is submitted for your
consideration by the IAIABC Medical Committee with
endorsement by the IAIABC Executive Committee.
We commend your Committee for your commitment to solving
one of tlie Nation's most perplexing and complex problems.
Our conclusion, however, and strong recommendation is that:
*
A National Health Care Plan simply should not
absorb Workers' Compensation Health Care
Programs at this time without carefully
implemented strategies for addressing the
unique set of linked goals from medical care to
medical stabilization, to productive employment.
*
If the problems of workers' compensation are not
carefully considered we believe the following will
result:
Legislation
Toby Wright. New Mexico
Medical
Judith G. Greenwood. West Virginia
RehabQUatlan
Alain Albert. Quebec
Safety
John Pompei. Oregon
Self Insurance
Janet Klrby. Illinois
Statistics
Joyce A. Sewell. Utah
79TH ANNUAL
CONVENTION
Portland Hilton
Portland. Oregon
October 2-6, 1993
1.
2.
3.
4.
Costs will increase, not decrease.
State laws would be in total disarray and
confusion.
Litigation would flourish within the
workers' compensation system.
The progress of state programs in the
managed health care arena would be
retarded or lost.
1575 Aviation Center Pkwy., Suite 512 • Daytona Beach, FL 32114 • (904) 252-2915 • Fax (904) 258-9965
�'06'' '93 i 3 ! 2 5 " i f i i f i B C R'COLLYER
P. 3/12
In spite of the above concerns, we see the Conunittee as a great opportunity to address
the rising costs in the workers' compensation field. We, therefore, recommend that the
National Health Care proposal omit the inclusion of workers' compensation at this time
and that a separate cooperative committee be established to review the special
considerations and proposals of the workers' compensation medical care programs as
they relate to National Health Care Committee recommendations.
Sincerely yours,
(gLdyro )tuiX£ J^itM
Evelyn Sc Ferris
Scott
President IAIABC
�MfiY 0 6
'93
P.4/12
1 3 : 2 5 I f l l f i B C R COLLYER
INTERNATIONAL ASSOCIATION OF INDUSTRIAL ACCIDENT
BOARDS AND COMMISSIONS
POSITION PAPER
MAJOR DIFFERENCES
BETWEEN
WORKERS' COMPENSATION MEDICAL CARE
AND
GROUP HEALTH CARE
PRESENTED TO THE WHITE HOUSE TASK FORCE ON HEALTH CARE
REFORM
APRIL 7, 1993
IAIABC
ROBERT B. COLLYER, EXECUTIVE DIRECTOR
1575 AVIATION CENTER PARKWAY, SUITE 512
DAYTONA BEACH, FLORIDA 32114
�my 06 '93 13=26 IAIABC R COLLYER '
P. 5/12
The international Association of I n d u s t r i a l Accident Boards and
Commissions (IAIABC) i s submitting t h i s paper to the Task Force
on Health Care Reform i n opposition to folding workers'
compensation medical care into a national health plan a t t h i s
time. The workers' compensation medical care environment i s
d i f f e r e n t from the group health medical care environment. These
differences make i t necessary to retain the control of medical
care delivery and i t s attendant costs within the state
j u r i s d i c t i o n a l agencies that administei^vorkers' compensation.
Not only is. i t necessary to retain the direct t i e between medical
and wage replacement benefits for accurate experience rating, but
very importantly for the effective management of the wage
replacement, or indemnity benefits. Further, workers'
compensation state agencies and business and labor interests have
been developing strategies to control escalating medical costs.
This paper documents the reasons for the differences between the
workers' compensation medical environment and general health
care, the strategies that are being developed to control the
increasing medical costs, and issues managed competition poses
for workers' compensation.
The IAIABC has an 80 year history i n workers' compensation and
consists of state and t e r r i t o r i a l workers' compensation agencies,
federal workers' compensation programs, and several countries
with a common law tradition. The organization also has
representatives from a l l stakeholders i n the workers'
compensation system: employees, employers, insurers, third party
payers, health and rehabilitation providers, attorneys, and other
interested parties.
DOCUMENTING THE DIFFERENCES IN WORKERS' COMPENSATION AND GROUP
HEALTH MEDICAL CARE COSTS AND DELIVERY OF MEDICAL CARE
Several research studies have documented that medical costs i n
workers' compensation i n recent years have been generally higher
than i n group health care programs and are increasing at a faster
rate. The 1990 Report to the Legislature on Health Care Costs
and Cost Containment in the Minnesota Workers' Compensation by
the Minnesota Department of Labor and Industry found that
workers' compensation medical charges were generally higher than
nonworkers' compensation charges for the same types of i n j u r i e s .
A year e a r l i e r i n 1989, the Workers' Compensation Research
I n s t i t u t e (WCRI) published Medical Costs i n Workers'
Compensation; Trends and Interstate Comparisons showing workers'
1
l
lx\ response to t h i s study, i n 1992, The Minnesota
Legislature passed a Workers-' Compensation B i l l implementing
managed care, treatment standards and a medical fee schedule
based on the r e l a t i v e values described by the Health Care
Financing Administration.
�MAY 06 '93 13 = 26 IAIABC R COLLYER
compensation medical costs growing more than one and one-half
times as f a s t as medical costs outside of workers' compensation
i n the 1980's. According to John Burton i n the most recent
edition of John Burton's Workers' Compensation Monitor
(January/February 1993), between 1980 and 1990 health care
payments increased from 33 to 40.9 percent of a l l workers'
compensation benefit payments nationally. However, most of these
studies were based on data from 1986 and 1987 before serious cost
containment efforts focusing on small and medium s i z e noncatastrophic claims were undertaken by workers' compensation
administrators.
L e s l i e Boden, senior economist with the I n s t i t u t e , further
documents workers' compensation to be a s p e c i a l case in Workers'
Compensation Health Care Cost Containment (eds. J . Greenwood and
A. Taricco, LRP Publications, 1992). Boden showed that states
with high nonworkers' compensation medical costs are not
necessarily high cost states i n workers' compensation. This
suggests that factors s p e c i f i c to workers' compensation, not just
general medical care prices and practices, contribute to
differences among the states i n the medical costs of workers'
compensation. Boden also showed that the growth of workers'
compensation medical costs i s closely related to the unemployment
rate. For these reasons, the state administrative agencies need
to r e t a i n control of the medical benefit and i t s t i e to wage
replacement.
In 1992 two papers were publicized outlining issues of concern
for policy development regarding workers' compensation medical
care and the delivery of medical services. The f i r s t paper came
from a blue ribbon panel on workers' compensation of the National
Conference of State Legislators. The second was a product of the
National Labor Management Discussion Group on Workers'
Compensation. Both papers agree that a c c e s s i b i l i t y to quality
medical care i s of primary importance i n the administration of
workers' compensation programs and that cost containment measures
ranging from fee schedules to managed care should be part of that
administration.
Workers' Compensation health care delivery and attendant costs
vary from general health care delivery and i t s costs for the
following reasons:
*
The goal of workers' compensation i s to return to work.
The employer i s responsible to pay for lost wages or
indemnity benefits.
*
There are often medical/legal issues i n workers'
compensation.
*
Workers compensation has f i r s t dollar coverage which i s
�MAY
06 '93 13:27
IAIABC R COLLYER
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not generally found i n the group health medical arena.
The responsibility of the employer/insurer to provide the
employee with wage replacement due to the work injury makes
workers' compensation a very d i f f e r e n t environment from the
general medical health care environment. The goal of workers'
compensation i s to provide the employee with cost effective
medical treatment i n order to achieve timely return to work. In
the general health care arena, return t«~work i s not a central
factor in the delivery of medical care. In workers' compensation
there must always be a balance between the medical and the
indemnity costs.
An example of how the medical care delivery and attendant costs
can vary in a workers' compensation case from general health care
can be seen in the treatment of a mild low back musculoskeletal
s t r a i n . I f a person with group health care coverage indicates
she or he has mild low back pain, there would be no particular
urgency in scheduling an examination. Since the health care
provider has l i t t l e or no r e s p o n s i b i l i t y in the employee's
decision to return to work, they have l i t t l e concern for followup after the i n i t i a l examination and l i t t l e regard for return to
work. In workers' compensation t h i s i s not acceptable.
The
employee must be evaluated quickly, and the health care provider
determines when he or she should return to work and i f there
should be any modifications or r e s t r i c t i o n s to job performance.
Intense, active physical therapy may be needed to speed along
functional recovery and return to productive work. In the
general health care arena, the person would probably not receive
t h i s level of intense treatment but be allowed to recover at a
slower rate because return to work i s not an issue for the health
care provider. In the workers' compensation system, i t i s
important to avoid delay i n treatment because of the delay i n
return to productive work. The payment of indemnity benefits
provides incentives for employers to get an injured employee back
to work. Since health care providers are at least i n d i r e c t l y
accountable to employers, they also have a stake in the return to
work process.
Other reasons relating to why the medical environment i s
different in workers' compensation from group health have to do
with s o c i a l and medical/legal aspects of workers' compensation.
A 1991 study on low back i n j u r i e s by Stanley Bigos at the Boeing
Plant in Washington reported that job satisfaction prior to the
injury was the most s i g n i f i c a n t factor in return to work, thus
employers as well as health care providers are key to functional
improvement and return to work. In addition, legal issues
related to causation or any extent of impairment after medical
recovery may r e s u l t i n additional o f f i c e v i s i t s and diagnostic
testing.
�MAY 06 '93 13:28 IRIfiBC R COLLYER
P.8/12
A f i n a l issue that makes the workers' compensation medical system
different from the group health medical system i s the fact that
workers compensation has f i r s t dollar coverage with no allowed
copays or deductibles. The employee does not have to pay for any
of the services or supplies i n the workers' compensation system.
This i s considered part of the no fault bargain with the employer
taking limited l i a b i l i t y for work related i n j u r i e s and diseases
with no damages.
In workers' compensation, the indemnity benefits and the s o c i a l
and medical/legal issues must always be considered when looking
at the delivery of medical care. Workers' Compensation has a
unique environment for medical care which must not be ignored
when developing p o l i c i e s for national health care.
STRATEGIES RECOMMENDED BY THE WORKERS' COMPENSATION COMMUNITY
Several strategies are being developed by the workers'
compensation community to deal with increasing medical costs.
These strategies take into consideration the differences i n the
health care environment between workers' compensation and the
group health care environment.
Some of the strategies developed by the workers' compensation
community include:
*
managed care for workers' compensation,
*
development of treatment guidelines for s p e c i f i c types
of i n j u r i e s , and
*
d i s a b i l i t y or case management for workers' compensation
cases.
Managed Care
The e s s e n t i a l elements of managed care for workers' compensation
include a network of q u a l i f i e d health care professionals who:
*
*
must be knowledgeable about s p e c i f i c j u r i s d i c t i o n a l
workers' compensation requirements;
*
must provide treatment i n a timely and e f f i c i e n t
manner;
*
P&e:-.. .
*t^w.., .
.
agree to abide by u t i l i z a t i o n review and treatment
guidelines;
must be knowledgeable about d i s a b i l i t y management with
close communication between the health care provider,
employee, employer and insurer for appropriate return
�MAY
06 '93 13=28 IAIABC R COLLYER
*
*
P.9/12
to work;
provide appropriate dispute resolution procedures when
a course, of medical treatment or associated medical
costs are called into question;
provide certification by appropriate state agency to
approve (an) organization (s) to deliver medical care
for workers' compensation.
—
Oregon and Minnesota have implemented managed care for workers'
compensation, and several other states are developing or
implementing pilot projects for managed care. Some self-insured
employers are independently contracting with managed care
organizations. These programs a l l take into consideration the
differences in workers' compensation and the general medical
arena.
Treatment Standards
The goal of establishing formal treatment guidelines i s two fold:
*
to provide injured employees with appropriate high
quality medical care facilitating timely return to
gainful employment;
*
to'limit costly inappropriate medical treatment and/or
testing and delays in returning injured employees to
work.
In reality, treatment protocols create a sentinel effect wherein
physicians w i l l be required to document reasons for deviating
from an accepted, appropriate medical treatment. This
discourages the extension of periods of disability without
sufficient cause.
Establishing treatment protocols benefits a l l parties in the
workers' compensation system. Injured employees benefit by
receiving appropriate medical care based on their medical
condition and the expectation that expedient recovery will
include return to work. Employers and insurers benefit by better
controlling medical and indemnity costs. Doctors benefit by
using guidelines to direct the management of patients care with
assurance that payment will be received for treatment rendered
within the protcol.
Several state workers' compensation agencies, including
Minnesota, Rhode Island, and Colorado, are proposing treatment
standards or guidelines which include limitations on treatment
for soft tissue injuries. In addition, the American Academy of
Orthopedic Surgeons Committee on Occupational Health and The
�MAY
06 '93 13:29. IAIABC R COLLYER
" " T '
'
P. 10/12
American Chiropractic Association support the need for treatment
guidelines and protocols for musculoskeletal i n j u r i e s .
D i s a b i i i t v Management/Case Management
D i s a b i l i t y case management in workers' compensation i s a
continuous coordination of communication involving providers,
injured employees, t h e i r employers, the insurers, i n many cases
family members of the employees, and attorneys who may represent
employees. Case management i s a service intended to a s s i s t an
employee i n coordinating and gaining access to needed medical and
s o c i a l s e r v i c e s essential to getting the employee medically and
functionally stable and returned to work. The medical and the
work r o l e recovery must be coordinated. The case manager also
a s s i s t s providers in discriminating work r e l a t e d conditions from
any other type of health condition not related to the work place.
Case management in the workers' compensation environment i s an
intense case-by-case effort going beyond achieving medical
s t a b i l i t y to achieving the employee's return to a productive work
role. I n instances where physical function has been
s i g n i f i c a n t l y compromised, "work hardening programs may be
needed. The case manager i s the most appropriate person to work
with the physician and the employer to assess i f any modification
of the worksite or of the job i t s e l f w i l l be needed to effect a
timely return to work, p a r t i c u l a r l y i n l i g h t of the Americans
with D i s a b i l i t i e s Act.
11
ISSUES RELATED TO MANAGED COMPETITION
Managed competition i s based on the f i s c a l policy of controlling
r i s i n g health care costs while at the same time providing
universal access to health care. I t uses the strength of large
purchasing groups to minimize the costs and maximize the
services. I t does not determine what these s e r v i c e s are except
on a contractual basis. These are usually basic, but can be
expanded. Workers' compensation programs, however which by
statute must provide for a l l care which i s medically reasonable
and necessary i n cases of work-related i n j u r i e s and diseases has
not been addressed u n t i l now.
I t i s appropriate, therefore, that
the issues which distinguish workers' compensation health care
p o l i c i e s from group health care p o l i c i e s be brought into focus.
Because workers' compensation represents 2% of the t o t a l national
medical b i l l , i t would appear to be a simple p o l i t i c a l expedient
to absorb workers' compensation into a universal health care
policy. However, as stated e a r l i e r , workers' compensation i s
unique within the health care delivery system. The f i r s t thing
to recognize i s that there are 51 workers' compensation
j u r i s d i c t i o n s i n the U.S., each having control over the process
within t h e i r respective states and D.C.
That i s to say the
�MAY
06 '93 13=30 IAIABC R COLLYER
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s t a t e s , not the federal government, control l e g i s l a t i o n governing
the processes of state workers' compensation programs. I f
workers' compensation i s folded into general medical care, there
i s considerable potential for c o n f l i c t i n g regulatory authority.
Should the federal government choose to fold the medical
component of workers' compensation into managed competition
plans, c l e a r l y the impact would extend much further than medical
care delivery i t s e l f . The following a r ^ s i x areas of impact:
1.
2.
3.
4.
5.
6.
indemnity (wage loss)
adjudication process
rehabilitation
claims processing
reserves
causation
The choices of how payment i s made for wage replacement could
vary from having t h i s benefit r o l l e d over into the Social
Security D i s a b i l i t y program, to the purchase of a separate
indemnity benefit policy, to a l i m i t on indemnity benefits by
some categorization of d i s a b i l i t y . The former i s problematic
because of the large number of permanent p a r t i a l d i s a b i l i t y
claims in workers' compensation whereas Social Security i s
attuned to only t o t a l d i s a b i l i t y . The l a t t e r presents
significant problems of equity. A separate policy for indemnity
benefits also presents the problem of tying the indemnity back to
the medical care or defining a c e i l i n g or duration.
Workers' compensation has well established adjudication processes
for claim resolution. Each state has i t s own laws to govern the
process. Managed competition, a health purchasing process for
f i s c a l benefit, has no such provision and given that medical
issues drive indemnity issues, dispute resolution procedures
would need to be developed.
Rehabilitation i s a major factor i n workers' compensation to
a s s i s t in the early return to work and/or to provide care for the
injured workers with a major traumatic injury. I f workers'
compensation medical care delivery i s absorbed by managed
competition plans, case management and r e h a b i l i t a t i o n provisions
would be e s s e n t i a l as discussed in an e a r l i e r section of t h i s
paper.
Claims processing in workers' compensation i s different from that
occurring in t r a d i t i o n a l health care delivery systems. I t i s not
a matter of simply reimbursing for a procedure performed.
Currently causality must be established for each and every
diagnosis and the relationship of the procedure to the diagnosis
made clear. The claims adjuster must manage the process to
ensure payment i s f a i r and appropriate on behalf of the policy
�MAY 06 '93 13=30 IAIABC R COLLYER
P.12/12
holder.
I f the reserves o f t h e workers' compensation c a r r i e r s are tapped
to pay f o r managed competition plans without concern f o r t h e
other costs o f workers' compensation - f u t u r e medical costs i n
established claims, indemnity b e n e f i t s , attorneys fees, c o u r t
costs, investment losses - then there i s the p o t e n t i a l t o
destroy the insurance business as we know i t .
F i n a l l y , the matter o f causation needs t o be c l e a r l y defined i f
managed competition i s t o be adopted "for workers' compensation.
There i s nothing i n managed competition which addresses t h i s
basic workers' compensation concept o f l i m i t e d l i a b i l i t y
dependent on the work-relatedness o f an i n j u r y or i l l n e s s t o
j u s t i f y short term wage replacement b e n e f i t s or longer term
d i s a b i l i t y benefits.
CONCLUSION
The IAIABC commends the Task Force on National Health Care Reform
on t a c k l i n g such a major issue as h e a l t h care cost containment.
Even though workers' compensation i s only a small percentage o f
the o v e r a l l h e a l t h care costs, i t has major p o l i t i c a l , s o c i a l ,
i m p l i c a t i o n s w i t h i n t h e states and t o a l l other p a r t i e s i n the
workers' compensation system. This paper has documented the
reasons f o r the d i f f e r e n c e s i n the environment o f workers'
compensation medical care from t h a t of group h e a l t h care,
discussed some o f the s t r a t e g i e s f o r c o n t r o l l i n g costs i n
workers' compensation, and i n d e n t i f i e d issues t h a t managed
competition poses. Workers' compensation has stood as a s t a t e
program f o r medical care and wage replacement b e n e f i t s f o r n e a r l y
a century. While the medical care component must be coordinated
w i t h various f a c e t s o f a n a t i o n a l health care p o l i c y t o increase
q u a l i t y o f care and t o c o n t r o l costs, i t must not be absorbed
w i t h i n a new and u n t r i e d d e l i v e r y plan t h a t must f i r s t address
general h e a l t h care needs, p a r t i c u l a r l y o f uninsured and
underinsured. There must be c a r e f u l l y implemented s t r a t e g i e s f o r
addressing the unique s e t o f l i n k e d goals from medical care t o
medical s t a b i l i z a t i o n t o work r o l e recovery and p r o d u c t i v e
employment. Further, a n a t i o n a l h e a l t h p o l i c y i f w e l l
implemented and a p p r o p r i a t e l y coordinated w i t h workers'
compensation w i l l reduce current cost s h i f t i n g i n t o workers'
compensation and w i l l supply the impetus f o r the s t a t e s t o put i n
place s t r a t e g i e s t o achieve medical cost c o n t r o l and, a t the same
time, c o n t r o l o f indemnity b e n e f i t costs.
�P.13/12
MAY 06 '93 13:31 IAIABC R COLLYER
DIFFERENCES BETWEEN WORKERS' COMPENSATION
AND GENERAL HEALTH CARE
WORKERS' COMPENSATION
GENERAL HEALTH CARE
1. No co-pay by worker to provider.
Frequently co-pay by patient.
2. No payment of premium by worker.
Frequently co-pay by employee with
employer.
3. Pays for time off work, temporary total
from injury date to stabilization .
Usually no similar provision.
4. Pays for permanent impairment
Usually no similar provision.
according to treatment required.
* Fee Schedules
* Usual and Customary Fee
* Preferred Provider Contracts
paid and coverage requested.
<5. Causation major issue for who pays.
Causation m^jor issue for treatment
diagnosis.
7. Rehabilitation requirements vary from
state to state by statutes.
Rehabilitation requirements vary from
policy to policy and doctor to doctor.
8. Return to work requirements built in.
Generally no return to work requirement.
9. Established adjudicative process through
administrative bodies.
No established adjudicative process.
10. Claims processing requires return to
work consideration.
Claim processing usuaUy has no return to
to work requirement.
11. Reserve requirements include future
medical costs, attorney fees, indemnity
benefits, court costs.
Reserve requirements usually only
include medical consideration.
�Clinton Presidential Records
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marker by the William J. Clinton Presidential Library Staff.
This marker identifies the place of a tabbed divider. Given our
digitization capabilities, we are sometimes unable to adequately
scan such dividers. The title from the original document is
indicated below.
Divider Title:
l_i
�Liberty Mutual Insurance Company
Liberty Mutual (LM) supports comprehensive health care reform. LM emphasizes
the unique characteristics of the Workers' Compensation (WC) system which it believes
should not be significantly altered in health care reform. LM points out that WC medical
claims are often tramatic, requiring selective medical care. Thus, the total case management
experience of insurance companies is unique in the health care area and should be
continued.
�LIBERTY MUTUAL INSURANCE COMPANY
STATEMENT ON BENEFIT INTEGRATION
Comprehensive
Health Care
Reform is Essential
Liberty Mutual Insurance Company strongly supports a
comprehensive solution to America's health care crisis. Our company
endorses public policy which maintains the fundamental role employers
play in financing health care. Equally important is maximizing the impact
of managed care techniques on controlling health care cost increases and in
improving health care quality. Moreover, we encourage efforts to ensure
that improvements in the nation's overall health care system are shared
with the workers' compensation system. Such efforts, however, must not
lessen the value inherent in the workers' compensation system nor
threaten the unique focus that the workers' compensation system has on
accident prevention, rehabilitation, and return to work.
The Workers'
Compensation System Has Added Value
the nation's workers' compensation system is an integrated sytem of
medical care and disability management. This unique system creates
appropriate economic incentives which encourage employers to maintain
safe work places and to assist injured employees in returning to work. By
combining medical. pare and cash benefits, workers' compensation insurers
are obligated to manage cases so that overall costs are controlled. In
addition, unique and important medical and therapeutic benefits, not
generally included in other insurance systems are provided through
workers compensation.
The
Workers'
Compensation System
is Different
The provision and financing of traditional health care is focused on
commonly seen, simply treated health conditions, with an increasing (and
appropriate) attention to preventive health care. Workers' compensation
medical claims, on the other hand are frequently unusual, traumatic, and
quite serious requiring triage to care givers who will apply appropriate
treatment protocols. As a result of this unique focus and mission, the
workers' compensation system has developed approaches to total case
management that are not matched by other aspects of the health care
system. This difference can be seen in both the process by which claims
are handled in the two systems and in the kind of benefits provided by
each. The attached exhibits support this point.
�GROUP CLAIMS
Illness or Injury Occurs
I
Patient chooses MD
(Point of service)
PPO
HMO
I
Indemnity
•
UR
UR
I
I
Capitated
reimbursement
to MD
Fixed fee
schedule
reimbursement
to MD
Patient pays
flat copayment
UR
Fee
for
Service
i
Patient pays
flat copayment/
coinsurance
Patient pays
deductible/coinsurance amt
amt (lower co-pay
for In-PPO providers)
•complies w/ UR
or pays user penalty
End of Treatment
no work place safety or injury prevention intervention
no return to work intervention
no first report filing requirement
fees based on either capitation (fixed premium for all
services) or fee for service with co-payments and
deductibles
no legal liability component
no software link between accidents and prevention
strategies
no specialized work related injury protocols
no specialized work injury specialist network of providers
�INJURY
Compensabil ty
Issue
TO
GROUP
HEALTH
PROVIDER
CHOICE
ISSUES
NO
YES
Med only
No
deductibles
No copay
Unlimited
FEE
SCHEDULES
AND U/C
LAWYERS
AND
LITIGATION
Lost time
indemnity
Medical
Rehab
care
Out
patient
programs
RTW
• Work
hardening
• Occupational
therapy
Indemnity
RTW
Modified
Duty
(RTW)
Extended
disability
Permanent
and Total
•Unlimited
Medical
• Attendant
No
care
Permanency • Loss of
• Home
Function
• Disfiguration modifications
Lifetime
Vocational
• Loss of
indemnity
Rehab
earning
Funeral
capacity
benefits
Dependency
benefits
Lump sum
�A Breakdown Of Liberty^ Payments to Physicians - 1990
c
o
c
w
ft
)ioCff^<t>
�Liberty Mutual Group Health - Amouht Paid by Designation Code
180000000
1600000002 140000000TO
§ 120000000£
S.
I
o
<
100000000800000006000000040000000-
�Clinton Presidential Records
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indicated below.
Divider Title:
15"
�Texas Workers' Compensation Commission
In 1989, Texas overhauled its Workers' Compensation (WC) system because of
uncontrolled medical and legal costs which forced many employers out of the system. The
Texas system instituted strict price controls on health care and a new dispute resolution
system.
The view of the Texas Commission is that integrating WC into the national health
care system would shift the focus of WC away from prevention toward treatment of injuries
which would be an undesirable outcome. The Commission stresses five components of a
good WC system: employee choice of doctor with some restrictions on changes in the initial
choice, recognizing the insurer's rights in the claims process, adequate life-sustaining care
for life-threatening injuries, employers bear the cost of the system, and a strong preventative
component.
�mm
TODD K. UriOWN
EXECUTIVE DIRECTOR
TEXAS
WORKERS' COMPENSATION COMMISSION
4000 South IH.35, AusUn, Texas 78704
512-448-7900
April 8; 1993
Mr. Fred Siskind
U.S. Department of Labor
Washington, DC
FAX: 202-219-9216
Dear Mr. Siskind:
Thank you for die opportunity to comment on the possibility of rolling workers' compensation into the
broad-based refonns now being developed by Mrs. Clinton and members of the President's Task Force
on National Health Care Reform.
I think it will be extremely benefidal to discuss workers' compensation in the broader context of national health care, but I also believe It is important to recognize that workers' compensation is inherently
a different type of system. It is, after all, a system of care and compensation. That means the roles,
rights and responsibilities of each of the players may be a bit different than in a system designed primarily to provide only care.
As you may know, in 1989 Texas overhauled its workers' compensarion system, in part because runaway mpdical and legal eosts had driven insurance premiums up and forced many employers out of Uie
system, j That left hundreds of thousands of employers — and their employees — unprotected. The
Texas Legislature aiiempied to cwect the problem in two ways: (1) by mandating strict price controls
to hold (Jiown medical costs — fee guidelines limit the amount that health care providers can be reimbursedfortreating workers' compensation patients — and (2) by instituting a system designed to reduce
disputes and the need for costly dispute resolution proceedings and legal involvement.
There afcfivekey components, eft- cornerstone pliilosuphies, ofthe Texas workers' compensation system. Each of these components is crucial to the program's overall success and I believe each should be
addressed if workers' comp is seriously included as pan of any national health care reform plan.
Thefirstkey component is the preservation of the injured worker's free initial choice of doctor, with some restrictions on the worker's ability to change doctors. The Texas law recognizes the injured
worker's right to select his or her own health care provider but alsorecognizesthe need to eliminate
�costly and unnecessary "doctor shopping." I know some workers' compensation systems assign or
delegate specific doctors to treat workers' compensation patients. In Georgia, for instance, each covered
employer is assigned a group of doctors who will provide treatment for the employer's injured workers,
much like an HMO. The goal of such a system is to provide consistent, adequate and low-cost care. In
Texas, iwe attempt to achieve the same goal while retaining tlie employee's right to choose his or her
own doctor. Employees are allowed a free initial choice, but after the initial selection, the employee
may change doctors only with the approval of the carrier or the Commission. Changes will not be
approved if the sole purpose is to allow the worker to receive a more favorable medical report, or a
report that would extend or increase the worker's benefits. The injured worker may change doctors
freely if circumstances require a change — if the worker or the doctor moves, for instance, or if the
doctor becomes unwilling or unable to treat the worker. As I understand it, the preliminary indications
are that; the President's Task Force will recommend that patientsretaintheir right to choose their doctors. I believe that, in the context of workers' compensation it is equally important to restrict a worker's
ability to change doctors at will.* Such a consideration may not be as critical in the provision of nonworkers' compensation health care.
v
The second key component of a sound workers' compensation program is recognizing and maintaining
the insurance carrier'srightsin the claims process —- therightto contest continued indemnity payments,
for instance. In Texas, the law provides that temporary, or wagereplacement,benefits be paid until the
worker teaches maximum medical improvement, or until a doctor certifies that the worker's medical
condition has improved as much as it's going to. To ensure that a carrier's indemnity losses remain as
low as possible, the carrier must have therightto challenge the date of MMI. The Texas law provides
that MMI disputes (brought by cither the carrier or the worker) beresolvedby a designated doctor. The
designated doctor may be agreed to by the carrier and the worker or, if a doctor can't be agreed on,
appointed by the Commission. Failure torecognizethe carrier'srightto challenge continued benefit
payments raises the possibility of prolonged, unnecessary payments by the carrier and undue insurance
industry ilosses. Repeated payment of undue benefits can only drive costs up and drag down the overall
efficiency of the system,
A third component of i^ie Texas system, and one that conflicts with the concept of managed care reportedly under consideration by the Task Force, is the right of workers who suffer life-threatening injuries to
receive adequate life-sustaining care. As I understand it, the Task Force may rely heavily on the Oregon
health cafe plan as a model for its proposed national plan. I finnly believe that society's debt to workers
who suffer work-related injuries should extend to include life-sustaining care.
The fourth key component of an effective workers' compensation system is that employers who use the
system pay for it.\l believe this is the only way to ensure that employers remain accountable and responsible. According to our estimates, about half of all workers' compensation costs are for medical treatment (in 1991, the average claim cost in Texas was about $14,000, split almost evenly between medical
treatment costs and benefits costs). Safety is truly a bottom-line issue. If you move medical costs out of
the workers' comp system, I believe you eliminate half of the economic incentive to employers to
provide safer and healthier workplaces for their employees.
Finally, I believe that a workers' compensation system must contain a strong preventative component.
Texas' workers' comp system does. The Texas Workers' Compensation Act attempts to hold system
costs down by holding the number of claims down. The Acl established a comprehensive statewide
health and safety program that helps employers provide safer workplaces, and in some instances, pro-
�vides penalties if an employer's rate of injury exceeds those normally expected for similar-sized businesses |n the same line of work. I'm afraid that folding workers' comp into a national health care
system;might shift the focus away from prevention of injuries to merely the treatment of the injury itself.
I must kdmit, however, that I was heartened by Mrs. Clinton's comments in Austin on Tuesday that, to
truly reform health care, we mustredefineour concept of what a health caie system should be and
concentrate as much on maintaining health as treating illness.
1 a honored that Texas is one of the few states you have chosen to seek information from. I believe th
m
system we have implemented here is one of the strongest and best in the country. I believe we have
rightly chosen a system that protects individualrightsbut restricts activities that burden the system and
drive costs up. I believe we haverightlychosen a sysiem that is fair and efficient. If I can be of any
additional help to you, please do not hesitate to call on me.
Thank you again for the opportunity to share m thoughts with you on workers' compensation as pan of
y
a larger effort toredevelopthe nation's health care system.
Sincerely,
0
Todd K. Brown
�Clinton Presidential Records
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digitization capabilities, we are sometimes unable to adequately
scan such dividers. The title from the original document is
indicated below.
Divider Title:
�The Travelers
The Travelers Companies (TC) supports national health care reform and partial
integration of the Workers' Compensation (WC) system into the new health care system.
TC's primary interest is in a federal role that would bring consistency to state WC laws that
disallow the use of managed care.
In TC's view, if WC were excluded from overall health care reform then cost shifting
from the health care system to the WC system would increase substantially. Inclusion means
application to WC medical of all cost savings methods instituted for overall health care.
However, the indemnity and medical components of WC should not be separated, otherwise
any savings on the medical side may be more than offset by increased costs on the indemnity
side.
Specifically, TC recommends for the WC system: a national medical fee schedule,
employee choice of phyicians from a set of physicians selected by the insurer or employer,
further Federal preemption of state managed care restrictions, and disincentives for failure
to use managed care.
�T h e R a V e l e r S
Richard W. Palczynski, FCAS, MAAA
Commercial Lines
The Travelers Companies
One Tower Square
Hartford. CT 06183
April
9,
1993
Telephone: 203 277-2878
WORKERS' COMPENSATION AND HEALTH CARE REFORM
A PROPOSAL FROM THE TRAVELERS
Workers' Compensation i s a $70 B i l l i o n cost to America's
employers, $30 B i l l i o n of which i s medical cost. Within
the next s i x weeks, President Clinton w i l l send to Congress
a comprehensive program to reform the way America provides
and pays f o r health care. While many d e t a i l s are not
known, we do know t h a t the Administration i s s e r i o u s l y
c o n s i d e r i n g the i n c l u s i o n of Workers' Compensation medical
c o s t s i n t h e i r proposal. T h i s l e t t e r i s intended to
underscore the tremendous stake t h a t we a l l have i n the
outcome of t h i s debate.
\
T r a v e l e r s supports health c a r e reform and the concept of managed
competition.
We also support change i n Workers' Compensation.
But Workers' Compensation i s p r i m a r i l y a d i s a b i l i t y management
system, not simply a medical system. The i n s u r a n c e i n d u s t r y
c o n t r o l s the cost of d i s a b i l i t y by a s s u r i n g t h a t medical
treatment i s focused on r e t u r n to work.
I f t h i s unique d i f f e r e n c e i s not recognized, i n c l u s i o n
Workers' Compensation i n Health Care Reform w i l l not
c o s t of occupational i n j u r i e s . Indeed the cost could
i n c r e a s e , f u r t h e r t a x i n g a system already under g r e a t
of
reduce the
significantly
stress.
The i s s u e i s n ' t whether to consider Workers' Compensation in
the Health Care debate. The i s s u e i s how. T r a v e l e r s supports
a f e d e r a l r o l e t h a t b r i n g s consistency to s t a t e laws on
managed c a r e . We support s p e c i f i c c r e d e n t i a l i n g of AHPs as
Workers' Compensation q u a l i f i e d . We support the continuation
of Workers' Compensation medical coverage as primary, with
f r e e market c o n t r a c t i n g between AHPs and employers.
We have i n t h i s debate a great opportunity to improve the
Workers' Compensation system f o r a l l involved. The attached
paper p r o v i d e s more d e t a i l on what we b e l i e v e should be done
to reduce c o s t s f o r employers.
R i c h a r d W. P a l c z y n s k i
�WORKERS' COMPENSATION AND HEALTH CARE REFORM
A PROPOSAL FROM THE TRAVELERS
Workers' Compensation i s f i r s t and foremost
a disability
management system.
S i x t y p e r c e n t o f Workers' Compensation
l o s s c o s t s a r e expended t o reimburse i n j u r e d workers f o r l o s t
wages and l e g a l f e e s . The r e m a i n i n g 4 0% covers m e d i c a l c o s t s
and t h i s number has e s c a l a t e d from 30% i n 1980. M e d i c a l c o s t
e s c a l a t i o n has been exacerbated
by t h e f a c t t h a t Workers
Compensation m e d i c a l
i s v i r t u a l l y u n l i m i t e d i n d o l l a r amount
and d u r a t i o n .
1
As
a
d i s a b i l i t y management system, Workers
Compensation
fulfills
i t s p r i m a r y g o a l o f r e t u r n i n g i n j u r e d workers back t o
t h e i r p r e - d i s a b i l i t y employment as q u i c k l y as p o s s i b l e and a t
t h e same t i m e a t t e m p t s t o achieve maximum m e d i c a l r e c o v e r y .
T h i s r e t u r n t o work g o a l can o n l y be accomplished i f t h e
insurers
o r employers
responsible
f o r paying
Workers'
Compensation b e n e f i t s have a s i g n i f i c a n t i n f l u e n c e over t h e
medical treatment ("health c a r e " ) .
I f Workers' Compensation i s e i t h e r t o t a l l y
excluded
from
H e a l t h Care Reform o r i n d i s c r i m i n a t e l y i n c l u d e d t h e impact
will
be c a t a s t r o p h i c .
E x c l u s i o n o f Workers Compensation i s
f r a u g h t w i t h i n c r e a s e d employee and p r o v i d e r c o s t s h i f t i n g t o
Compensation,
further
t a x i n g a system a l r e a d y
Workers•
s t r e s s e d t o t h e l i m i t s o f a f f o r d a b i l i t y and beyond i n many
Medical
cost s h i f t i n g
i s n o t new t o Workers'
states.
Compensation, and t h e concern i s t h a t any h e a l t h care r e f o r m
that
i g n o r e s Workers' Compensation w i l l d r a m a t i c a l l y e s c a l a t e
t h e problem.
On t h e o t h e r hand, i n d i s c r i m i n a t e i n c l u s i o n
significantly
increases t h e d i f f i c u l t y
i n r e t u r n i n g i n j u r e d workers t o t h e
w o r k p l a c e by t a k i n g t h e management o f t h e m e d i c a l t r e a t m e n t
p r o c e s s away f r o m t h o s e r e s p o n s i b l e f o r p r o v i d i n g Workers'
Compensation b e n e f i t s .
I n d i s c r i m i n a t e i n c l u s i o n a l s o would
r e s u l t i n t h e use o f p r o v i d e r s t h a t a r e u n f a m i l i a r w i t h t h e
workplace
and t h e r e f o r e
less
able
t o recommend j o b
accommodations
t o f a c i l i t a t e r e t u r n t o work. I n a d d i t i o n , t h e
need f o r and t h e e x t r a c o s t o f p r o v i d e r t e s t i m o n y and
�- 2 -
a d d i t i o n a l documentation so fundamental t o the i n d i v i d u a l
s t a t e ' s Workers' Compensation "wage l o s s " hearing process
(labeled a "dueling doctor" system i n many states) may create
disdain
f o r Workers'
Compensation claims among medical
p r o v i d e r s , w i t h r e s u l t i n g poor service.
For
example, an important need i n managing o v e r a l l Workers'
Compensation costs i s a strong sense o f urgency i n treatment
scheduling, diagnosis and progress evaluation. Every day l o s t
through p r o v i d e r or worker inconvenience, f i l l e d appointment
calendars or i n a t t e n t i o n i s one extra day of "wage l o s s "
costs.
Workers' Compensation insurers use t h e i r "medical b i l l
paying"
leverage
t o speed
up t h e decision making of
providers.
The o b j e c t i v e i s t o b r i n g i n j u r e d workers t o t h e
p o i n t o f maximum medical improvement f a s t e r and thereby allow
an
earlier
determination
of the t r u e p o s t - i n j u r y work
p o t e n t i a l of t h e worker. I n d i s c r i m i n a t e i n c l u s i o n would break
t h a t important leverage.
While t o t a l i n c l u s i o n of Workers'
Compensation would l i k e l y reduce medical costs, t h e c e n t r a l
concern i s t h a t t h e r e s u l t i n g "wage l o s s " cost increases would
more than o f f s e t t h a t reduction.
It
i s therefore
important t o i d e n t i f y a s o l u t i o n f o r
Workers' Compensation i n t h e Health Care Reform debate t h a t
takes
advantage
o f t h e cost containment o p p o r t u n i t i e s
associated
with
Managed
Competition and y e t recognizes
Workers' Compensation's unique needs. There are s i g n i f i c a n t
o p p o r t u n i t i e s f o r Workers' Compensation cost r e d u c t i o n i n
Health Care Reform. This paper w i l l o u t l i n e three categories
of o p p o r t u n i t i e s :
(1)
I n d i v i d u a l cost savings o p p o r t u n i t i e s i d e n t i f i e d i n t h e
o v e r a l l h e a l t h care debate f o r a l l medical claims.
(2)
System-wide o p p o r t u n i t i e s uniquely associated w i t h
Workers' Compensation.
(3)
S t r u c t u r a l o p p o r t u n i t i e s o f Managed Competition
a p p l i c a b l e t o Workers' Compensation.
�- 3 -
The following i s an outline of some of the opportunities
associated with each category:
(1)
INDIVIDUAL COST SAVINGS OPPORTUNITIES IDENTIFIED IN THE
OVERALL HEALTH CARE DEBATE FOR ALL MEDICAL CLAIMS
This category includes i n i t i a t i v e s that would:
o
Introduce malpractice reform and thereby reduce
the costs of defensive medicine,
o
R e s t r i c t and require f u l l disclosure of doctor
self-referrals,
o
Limit coverage for experimental procedures,
o
Establish uniform treatment protocols, and a
quality process for outcomes measurement,
o
Increase fraud penalties for both providers and
employees,
o
Mandate Electronic Data Interchange (EDI) formats
and strategy,
o
Allow use of generic drugs and centralized drug
purchasing
and many other individual i n i t i a t i v e s being considered for a l l
health care.
I t i s important to assure that a l l such
initiatives
to
the extent approved for non-occupational
i n j u r i e s , also apply to Workers Compensation.
1
�- 4(2)
SYSTEM-WIDE OPPORTUNITIES UNIQUELY ASSOCIATED WITH
WORKERS' COMPENSATION.
This category addresses the inconsistency o f i n d i v i d u a l
s t a t e Workers' Compensation laws governing medical fee
schedules and Managed Care. State medical fee schedules
i n Workers' Compensation e x i s t i n only about h a l f o f t h e
s t a t e s and, where they e x i s t , they vary widely i n t h e i r
form and p r o p r i e t y .
I n a d d i t i o n , s t a t e s t a t u t e s vary
widely on t h e issue o f employee choice o f physician some w i t h employer choice, some w i t h u n l i m i t e d employee
choice and most w i t h some v a r i a n t i n between.
States vary widely on t h e i r allowance o f u t i l i z a t i o n
review, b i l l a u d i t i n g , and second opinions. There i s a
great o p p o r t u n i t y t o b r i n g consistency n a t i o n a l l y t o
medical
fee schedules and Managed Care i n Workers'
Compensation.
Managed Care should include a mandated
d i s i n c e n t i v e f o r those who do not use the Managed Care
network.
This could take t h e form o f e i t h e r decreased
benefit
coverage
f o r the o f f i c e / h o s p i t a l v i s i t or
reimbursement only t o the extent o f what the cost would
be i f t h e network was u t i l i z e d . Travelers recommends:
o
A n a t i o n a l medical fee schedule using the Medicare
RVRBS schedule adjusted t o recognize the increased
demands placed on medical providers f o r Workers'
Compensation,
o
A l i m i t e d but reasonable employee choice f e d e r a l
s t a t u t e t h a t would allow employee choice w i t h i n
a network o f physicians and h o s p i t a l s which are
selected by t h e i n s u r e r or employer,
o
Further f e d e r a l preemption o f s t a t e managed care
r e s t r i c t i o n s on u t i l i z a t i o n review, b i l l a u d i t s ,
network ownership and t h e l i k e ,
o
D i s i n c e n t i v e s f o r f a i l u r e t o use Managed Care.
All
f o u r recommendations operate as a package i n t e r connected i n t h e i r a b i l i t y t o d i r e c t employees t o an
e f f e c t i v e and a cost e f f i c i e n t environment.
�- 5 (3)
OPPORTUNITIES OF MANAGED COMPETITION APPLICABLE TO
WORKERS' COMPENSATION
This category offers perhaps the most long term savings
i f the uniqueness of Workers' Compensation i s recognized.
Travelers
suggests
that Health Insurance Purchasing
Cooperatives
(HIPCs) be required to credential individual
Accountable
Health Plans (AHPs) as Workers' Compensation
qualified, and then allow insurers and employers to
contract with qualified AHPs i n open market competition.
Any
contractual price
negotiations would supersede
medical fee schedules.
I n t h i s way, the insurer or
employer
responsible for Workers' Compensation "wage
l o s s " benefits w i l l maintain influence over the medical
direction of injured workers and the providers involved
w i l l be sensitive to the return to work objective.
I t i s l i k e l y that capitated prices for benefits comparable to the non-occupational "basic benefits" package
w i l l be negotiated contractually. A "fee for service"
agreement would l i k e l y also be included for benefits in
excess of the basic benefits package when such benefits
are needed for workers' compensation.
With t h i s arrangement, s t a t i s t i c a l data for insurance
experience rating and related purposes would continue to
be
maintained by insurers, preserving the important
pricing incentives for safety and return to work.
Accordingly, Travelers recommends:
o
The establishment of broad e l i g i b i l i t y standards
for Workers' Compensation AHPs,
o
A separate National Health Board or HIPC credentialing
of AHPs as Workers' Compensation qualified,
o
Free market contractual arrangements with insurers/
employers and Workers' Compensation AHPs,
o
Employer choice of Workers' Compensation AHP for
a l l employees.
�- 6 -
The l a s t p r o v i s i o n i n v o l v i n g employer choice i s important
t o assure the use of providers t h a t are f a m i l i a r w i t h the
workplace
and
that
are
willing
t o evaluate the
appropriateness of j o b m o d i f i c a t i o n s t h a t encourage e a r l y
r e t u r n t o work. Employers and insurers would continue t o
be
fully
responsible
f o r the
cost
of Workers'
Compensation.
CONCLUSION
Accordingly, we recommend t h a t h e a l t h care l e g i s l a t i o n be
p r o a c t i v e f o r Workers' Compensation by a l l o w i n g Workers'
Compensation t o b e n e f i t from i n d i v i d u a l cost containment
i n i t i a t i v e s , by p r o v i d i n g uniform Managed Care d i r e c t i o n
t o t h e s t a t e s , and by a l l o w i n g Workers' Compensation t o
benefit
from
the
strong
medical cost containment
i n c e n t i v e s of the HIPC/AHP s t r u c t u r e w i t h o u t s a c r i f i c i n g
c o n t r o l of wage loss b e n e f i t s . I n t h i s way, workplace
s a f e t y and e a r l y r e t u r n t o work i n c e n t i v e s would remain
strong and v i a b l e , and q u a l i t y h e a l t h care w i l l be
available at affordable prices.
The
alternatives
of
either
excluding
Workers'
Compensation
from
the
health
care
reform
or
i n d i s c r i m i n a t e l y i n c l u d i n g Workers' Compensation may be
the crowning blow t o an already d i s t r e s s e d s o c i a l system.
Notice:
C l a r i f i c a t i o n of t h e issues i n t h i s paper or f u r t h e r
i n f o r m a t i o n can be obtained by c o n t a c t i n g
Mr. Richard Palczynski, Senior Vice President,
The Travelers Corporation, One Tower Square,
H a r t f o r d , Connecticut 06183, Telephone: (203)277-2878
�' T U o T r f i l ^ / A l o - r C I
11 IC J U L d Y d d . 3J
Richard W. Palczynski, FCAS, MAAA
Sen/or Wee President
Commercial Lines
The Travelers Companies
One Tower Square
April
12,
1993
Hartford, CT 06183
Telephone: 203 277-2878
Mr. F r e d e r i c k S i s k i n d
Department o f Labor
200 C o n s t i t u t i o n Avenue, N.W.
Room S 2312
Washington, D. C. 20210
Dear
Fred:
I e n j o y e d o u r c o n v e r s a t i o n on t h e s u b j e c t of W o r k e r s '
Compensation and H e a l t h Care. As agreed, I have
a t t a c h e d The T r a v e l e r s p r o p o s a l on t h i s i s s u e f o r
your information.
Please f e e l f r e e t o c a l l me a t any t i m e .
Best
regards.
Yours v e r y t r u l y .
R i c h a r d W. P a l c z y n s k i
RWP/ms
Attachment
�Clinton Presidential Records
Digital Records Marker
This is not a presidential record. This is used as an administrative
marker by the William J. Clinton Presidential Library Staff.
This marker identifies the place of a tabbed divider. Given our
digitization capabilities, we are sometimes unable to adequately
scan such dividers. The title from the original document is
indicated below.
Divider Title:
\2_
�American College of Occupational
and Environmental Medicine
April 13, 1993
Ira Magaziner
Senior Advisor for Policy Development
White House Old Executive Office Building
Room 216
Washington, D.C. 20500
Dear Mr. Magaziner:
In our letter of March 12th, we stated we would provide you our recommendation for National
Health Care Reform. Dr. Jeffrey Harris and his committee, at the direction of the ACOEM
Board, has prepared "The ACOEM Position on National Health Care Reform". This position
has been reviewed and approved by the ACOEM Board of Directors.
We would welcome an opportunity to further participate in the National Health Care Reform
dialogue.
Please feel free to contact our Washington representative, Mr. Pat O'Connor, at 202-223-6222
to arrange for our participation. You may, of course, contact our Executive Director, Donald
Hoops, Ph.D., at our national office, 708-228-6850. I also would welcome contact from you
or your staff at 405-271-8103.
Roy L. DeHart, M.D., FACOEM
President
55 WEST SEEGERS ROAD • ARLINGTON HEIGHTS, ILUNOIS 60005 • (708)228-6850 • FAX (708) 228-1856
�American College of Occupational
and Environmental Medicine
E X E C U T I V E DIRECTOR
DONALD L. HOOPS. PhD
O F F I C E R S 1992- 1993
PRESIDENT
ROY L. DE HART, MD, FACOEM
PRESIDENT-ELECT
ELIZABETH E. GRESCH, MD, FACOEM
FIRST VICE PRESIDENT
GEORGE W. ANSTADT, MD, FACOEM
UNIVERSITY OF O K L A H O M A
THE DOW CHEMICAL COMPANY
EASTMAN KODAK COMPANY
800 N.E 15TH ST
2030 DOW CENTER. FLOOR 7
901 ELMGROVf; ROAD
O K L A H O M A CITY. O K L A H O M A 73190
M I D L A N D . MICHIGAN .10671
ROCHESTER. NEW YORK M653-5&33
SECOND VICE PRESIDENT
J. FREDERIC GREEN, M , FACOEM
D
SECRETARY
JAMES F. WITTMER, MD, FACOEM
TREASURER
KENT W. PETERSON, MD, FACOEM
DEERE & COMPANY
II 1 C O W O R A T I O N
OCCUPATIONAL H E A i . l H SIRAIEC.lES
J O H N DEERE ROAD
1330 AVENUE Of- THE AMERICAS
901 PRESTO'! AVE HUE V-G0
NEW YORK. NEW YORK 1001 9 5.190
CHARLOTTESVILLE
MOLINE
ROOM 500
ILLINOIS 61265
VIRGINIA 22601
DIRECTORS
1990-1993
REYNOLDS B. BRISSENDEN
1991-1994
I, MD, FACOEM
DEERE 8 C O M P A N Y
1992-1995
EDWARD J . BERNACKI, MD, FACOEM
DENNIS G. EGNATZ, MD, FACOEM
THE JOHNS HOPKINS INSTITUTIONS
MILES INCORPORATED
1600 FIRST AVENUE EAST
BILLINGS ADMINISTRATION. ROOM I 29
1 1 27 MYRTLE STREET
M I L A N . ILLINOIS 61264
600 NORTH WOLFE STREET
ELKHART
INDIANA -16511
BALTIMORE. M A R Y L A N D 21205
EMMETT B. FERGUSON, JR., MD, FACO
WAYNE O. BUCK, MD, FACOEM
TIMES MIRROR COMPANY
HESTER J . HURSH, MD, FACOEM
P O BOX 21296
TIMES MIRROR SQUARE
WISCONSIN BELL
KENNEDY SPACE CENTER
LOS ANGELES. CALIFORNIA 90053
722 N. BROADWAY. ROOM 1005
MILWAUKEE. WISCONSIN 53202
ROBERT S. RHODES, MD, FACOEM
FLORIDA 32815
JEFFREY S. HARRIS, MD, FACOEM
ALEXANDER f. ALEXANDER CONSULTING GROUP
GENERAL MOTORS CORPORATION
ROBERT J. McCUNNEY, M , FACOEM
D
BNA CORPORATION CENTER BUILDING 100
DETROIT WEST REGION
UNIVERSITY HOSPITAL
SUITE .100
POWERTRAIN. MIC 3-10
88 EAST NEWTON STREET
NASHVILLE. TENNESSEE 37230
YPSILANTI. MICHIGAN -18198
BOSTON. MASSACHUSETTS 021 18.2393
LESTER L. SACKS, MD, FACOEM
JACK RICHMAN, MD. FACOEM
GENERAL MOTORS CORPORA HON
BEECH STREET OF CALIFORNIA
HEALTHSERV. LTD
23060 BRlTNER COURT
2 CAVALIER
261 ELTON PARK ROAD
BIRMINGHAM
LAGUNA NIGUEL. CALIFORNIA 92577-2667
OAKVILLE. ONTARIO
C A N A D A L6J I C I
WILLIAM M. TAYLOR, MD, FACOEM
LUCIUS C. TRIPP, MD, FACOEM
MICHIGAN .18C"0
MARY SUE WESTER, MD, FACOEM
GENERAL MILLS INCORPORATED
GTE TELEPHONE OPERATIONS
DOUGLAS A. SWIFT, MD, FACOEM
J l GENERAL MILLS B L V D
ONE GTE PLACE
OCHSNER CLINIC
MINNEAPOLIS
T H O U S A N D OAKS. CALIFORNIA 91362-381 l
1511 JEFFERSON HIGHWAY
MINNESOTA 5 M 2 5
NEW ORLEANS LOUISIANA 70121
HOUSE O F DELEGATES
SPEAKER
KENNETH H. CHASE, MD, FACOEM
SPEAKER-ELECT
RAJA K. KHURI, MD, FACOEM
W A S H I N G T O N OCCUPATIONAL HEALTH ASSOCIATES
AT&SF RAILWAY COMPANY
MORGAN GUARANTY TRUS! COMPAf-JY
1120
1 700 GOLF ROAD
23 WALL S TREE !
S C H A U M B U R G . ILLINOIS 60173-5860
NEW YORK. NEW YORK 10260-0023
19TH STREET. N W . SUITE 410
' A S H I N G T O N . D.C 20036
RECORDER
WILLIAM J . SCHNEIDER, MD, FACOEM
�The ACOEM Position on National Health Care Reform
The American College
(ACOEM)
of Occupational
and Environmental Medicine
ACOEM i s t h e l a r g e s t m e d i c a l s o c i e t y i n t h e w o r l d concerned w i t h
t h e h e a l t h o f t h e work f o r c e , r e p r e s e n t i n g over 6000 p h y s i c i a n s
I t began i n 1916 as t h e American I n d u s t r i a l Medical A s s o c i a t i o n .
O c c u p a t i o n a l medicine i s a s p e c i a l t y c e r t i f i e d by t h e American
Board o f P r e v e n t i v e Medicine and i s a p r i m a r y care s p e c i a l t y (as
d e f i n e d by P.L. 102-408).
As such, i t s s p e c i a l i s t s a r e deeply
concerned w i t h t h e p r e v e n t i o n o f i l l n e s s and i n j u r y and t h e
p r o m o t i o n o f h e a l t h , as w e l l as a managed continuum o f care from
w e l l n e s s t o i l l n e s s . F u r t h e r , we a r e concerned w i t h t h e h e a l t h o f
p o p u l a t i o n s as w e l l as i n d i v i d u a l s , and w i t h t h e b e s t way t o
d e l i v e r measurable h i g h q u a l i t y care t o Americans. F u r t h e r , we a r e
concerned
with
the interrelationship
between
h e a l t h and
p r o d u c t i v i t y . We r e c o g n i z e t h a t t h e a b i l i t y t o work i n a h e a l t h y
and p r o d u c t i v e manner promotes h e a l t h and w e l l b e i n g .
Because ACOEM members work c l o s e l y w i t h employers, many o f us b r i n g
t h e i r p e r s p e c t i v e t o t h i s d i s c u s s i o n . Employers w i s h t o purchase
h i g h q u a l i t y care f o r employees and dependents and assure v a l u e f o r
t h e funds expended.
Many o c c u p a t i o n a l h e a l t h p r o f e s s i o n a l s work i n o r g a n i z a t i o n s u s i n g
t e c h n i q u e s o f T o t a l Q u a l i t y Management o r Continuous
Quality
Improvement t o d r a m a t i c a l l y improve p r o d u c t and s e r v i c e q u a l i t y and
lower n e t c o s t , i m p r o v i n g v a l u e t o t h e customer.
We b r i n g t h i s
p e r s p e c t i v e and knowledge t o h e a l t h and m e d i c a l c a r e . I t appears
t h a t t h e r e c o u l d be c o n s i d e r a b l e improvement i n v a l u e w i t h
improvement i n t h e p r o d u c t i o n and c l i n i c a l processes o f p r e v e n t i o n
and c a r e , and w i t h some changes i n data c o l l e c t i o n and i n f o r m a t i o n
use.
I n sum, o c c u p a t i o n a l and e n v i r o n m e n t a l medicine has t r a d i t i o n a l l y
been concerned w i t h t h e p r e s e r v a t i o n and improvement o f t h e h e a l t h
o f w o r k e r s , p a r t i c u l a r l y r e l a t e d t o work hazards. Our p e r s p e c t i v e s
have broadened t o i n c l u d e h e a l t h p r o m o t i o n and d i s e a s e p r e v e n t i o n ,
p r i m a r y c a r e a t t h e work s i t e , "economic e p i d e m i o l o g y , " b e n e f i t s
d e s i g n , u t i l i z a t i o n management, and q u a l i t y improvement o f g e n e r a l
m e d i c a l c a r e . Perhaps t h e b r o a d e s t p e r s p e c t i v e i s a c h i e v e d i n t h e
" v a l u e management" paradigm, which suggests t h a t a fundamental
i s s u e i s how t o achieve t h e b e s t v a l u e i n terms o f h e a l t h
improvement f o r t h e funds spent.
�The ACOEM Proposal
The American C o l l e g e o f O c c u p a t i o n a l and Environmental Medicine
proposes changes i n s i x key areas r e l a t e d t o h e a l t h c a r e r e f o r m :
coverage, f i n a n c i n g , s u p p l y , demand, a d m i n i s t r a t i o n and i n f o r m a t i o n
management:
Coverage
i
Worksite-based
primary care, h e a l t h
p r o m o t i v e and
p r e v e n t i v e s e r v i c e s should be reimbursed. These s e r v i c e s
are o f t e n more c o s t e f f e c t i v e and l e s s d i s r u p t i v e t o
workers and s u p e r v i s o r s ' schedules when p r o v i d e d a t t h e
worksite.
'
j
t
A b a s i c package o f b e n e f i t s t h a t emphasizes p r e v e n t i o n ,
p r i m a r y c a r e , and c o n t i n u i t y o f care s h o u l d be p r o v i d e d
The b a s i c b e n e f i t s package s h o u l d be d e f i n e d t o meet
m e d i c a l p r a c t i c e g u i d e l i n e s , process e f f i c i e n c y standards
and outcome s p e c i f i c a t i o n s r a t h e r t h a n t o cover t y p e s o f
service.
Only proven, c o s t e f f e c t i v e , and a p p r o p r i a t e
t e c h n o l o g y , s e r v i c e s , and p h a r m a c e u t i c a l s would
be
cov.ered. Resources s h o u l d be d i r e c t e d away from t e r m i n a l
care o r low y i e l d t o more p r o d u c t i v e uses.
^
To improve t h e q u a l i t y o f care and manage t h e d i s a b i l i t y
o f w o r k - r e l a t e d i l l n e s s e s and i n j u r i e s , and t o s t o p c o s t
s h i f t i n g , we f e e l i t i s c r i t i c a l t o c r e a t e a u n i f o r m
reimbursement
and
medical
management
system f o r
o c c u p a t i o n a l l y r e l a t e d i l l n e s s and i n j u r y t h a t p r o v i d e s
t h e same q u a l i t y , e f f i c i e n c y and e f f e c t i v e n e s s as g e n e r a l
m e d i c a l s e r v i c e s . One o p t i o n i s a merger o f t h e two
systems and d i s a b i l i t y coverage w i t h a f o c u s on t h e
a p p r o p r i a t e care o f t h e worker and a p p r o p r i a t e and
e f f e c t i v e management o f d i s a b i l i t y , e s p e c i a l l y i n c l u d i n g
p r o v i s i o n o f m o d i f i e d d u t y t o accommodate impairments.
T h i s m i g h t r e q u i r e a F e d e r a l law p r e e m p t i n g s t a t e laws.
The "work r e l a t e d n e s s " t e s t would become i r r e l e v a n t , as
would
l e g a l issues of compensability.
Disability
coverage f o r any absence would be combined.
F i n a n c i n g A l l Americans s h o u l d be r e q u i r e d t o purchase o r o b t a i n
b a s i c m e d i c a l i n s u r a n c e f o r m e d i c a l l y necessary c a r e from
an employer p r o v i d e d b e n e f i t s p l a n o r from another
( p o s s i b l y government o r g a n i z e d ) f i n a n c i n g p o o l .
Low
income Americans would r e c e i v e t a x c r e d i t s o r vouchers
f o r t h i s purchase.
T h i s i s n o t an i n t e n t t o c r e a t e a
s e p a r a t e b u t unequal system o f care f o r t h o s e i n s m a l l
business o r t h e unemployed.
The government p l a n i s a
r i s k p o o l i n g mechanism.
�Insurance or s e r v i c e s purchased i n a d d i t i o n t o t h e b a s i c
package should not be t a x d e d u c t i b l e . Only one coverage
would be p e r m i t t e d per f a m i l y . Employee c o n t r i b u t i o n s
might w e l l be s c a l e d t o income t o a v o i d p r e s e r v i n g a
r e g r e s s i v e system.
A s t o p l o s s would be i n c l u d e d t o assure c a t a s t r o p h i c
coverage. Employee out o f pocket expense a t t h e p o i n t o f
s e r v i c e should be h i g h enough t o c r e a t e p r i c e s e n s i t i v i t y
t o r e s t o r e market f o r c e s t o h e a l t h care t o some e x t e n t .
A l l payers should pay
p r i c e s based on
rational
r e l a t i o n s h i p s t o o t h e r goods and s e r v i c e s r a t h e r t h a n t h e
c u r r e n t p r a c t i c e s o f p a y i n g p r i c e s based on c o s t ,
a r b i t r a r y s u p p l i e r demand, d e f i c i t s l e f t by o t h e r payers
(e.g. c o s t s h i f t i n g ) , or moving s t a t i s t i c a l p r o f i l e s
based on p r o v i d e r - s e t p r i c e s .
Any d i s c o u n t s s h o u l d be
r e l a t e d t o volume r a t h e r t h a n a c c o u n t i n g r u l e s or
p r e f e r e n t i a l agreements.
I n o t h e r words, purchasers
s h o u l d become p r i c e makers r a t h e r t h a n p r i c e t a k e r s .
M e d i c a l p r i c i n g should not d i s p r o p o r t i o n a t e l y reward
p r o c e d u r a l i s t s and p r o c e d u r a l i n t e r v e n t i o n .
Clinical
p r e v e n t i v e s e r v i c e s should be i n c l u d e d .
The r e c e n t l y
i n t r o d u c e d Resource Based R e l a t i v e Values Scale f o r
Medicare i s an a t t e m p t t o more a c c u r a t e l y r e f l e c t t h e
p h y s i c i a n l a b o r i n v o l v e d i n v a r i o u s v i s i t s and o t h e r
interventions.
Supply
Excess c a p a c i t y and m a l d i s t r i b u t i o n i n t h e m e d i c a l care
i n d u s t r y must be addressed by r e d i s t r i b u t i n g F e d e r a l
f u n d i n g t o undergraduate and graduate m e d i c a l e d u c a t i o n
from s p e c i a l t y o r i e n t e d s c h o o l s and programs t o those
concerned w i t h h i g h q u a l i t y p r i m a r y c a r e , and t o mid
level
practitioner
(e.g.
nurse
practitioner
and
p h y s i c i a n s a s s i s t a n t ) programs.
I n c e n t i v e s should also
be p r o v i d e d f o r l o c a t i n g i n underserved areas and f o r
r e t r a i n i n g f o r p r i m a r y care ( f o r example, f o r g i v i n g
educational loans).
Residency programs f o r those s p e c i a l t i e s i n which t h e r e
i s a major n a t i o n a l s h o r t a g e , P r e v e n t i v e M e d i c i n e , P u b l i c
H e a l t h , and O c c u p a t i o n a l Medicine (see t h e I n s t i t u t e o f
Medicine N a t i o n a l Research C o u n c i l Reports) w i l l r e q u i r e
a d d i t i o n a l f e d e r a l s u p p o r t . Medicare e d u c a t i o n a l d o l l a r s
could provide the required f i n a n c i a l support.
Reimbursement f o r overhead f o r redundant
facilities
s h o u l d be b a r r e d t h r o u g h b o t h F e d e r a l programs and t h e
b a s i c b e n e f i t s package.
F a c i l i t y c o s t a c c o u n t i n g must
c l e a r l y s e p a r a t e t h e overhead f o r needed and unneeded
�capacity.
This
should
a l s o discourage
redundant
expansion and market e n t r y by unnecessary p r o v i d e r s .
Excess c a p a c i t y might be r e d i r e c t e d towards s o c i o m e d i c a l
programs i n s t e a d o f m e d i c a l c a r e .
Programs s h o u l d be
i n s t i t u t e d t o r e t r a i n employees who would be d i s p l a c e d by
t h e c l o s u r e o f redundant f a c i l i t i e s and p r a c t i c e s .
Payers should r e q u i r e p r o o f o f e f f e c t i v e n e s s o f a l l
d e v i c e s , drugs and procedures and should r e q u i r e t h a t new
drugs, d e v i c e s and procedures i n t e n d e d t o improve on
e x i s t i n g ones be r e q u i r e d t o demonstrate improved c o s t
e f f e c t i v e n e s s f o r reimbursement.
There should be renewed a t t e n t i o n t o t h e h e a l t h s a f e t y o f
t h e workplace i n a l l i t s p h y s i c a l and o r g a n i z a t i o n a l
aspects.
Demand
Employee
cost
awareness
and
decision
making
a p p r o p r i a t e n e s s must be i n c r e a s e d by r a i s i n g copayments
and d e d u c t i b l e s t o l e v e l s where t h e y w i l l r e s t o r e p r i c e
sensitivity,
t h r o u g h t h e use o f e m p l o y e e - c o n t r o l l e d
spending
accounts, or t h r o u g h r e b a t e s t o employees
a g a i n s t group averages i n o r d e r t o r e s t o r e some measure
o f market c o s t s e n s i t i v i t y .
F u r t h e r , we recommend t h a t e d u c a t i o n f o r employees and
dependents on wise use o f t h e m e d i c a l care system and
s e l f care be r e q u i r e d as p a r t o f t h e b a s i c b e n e f i t s
package. C o n s i d e r a t i o n s h o u l d a l s o be g i v e n t o r e q u i r i n g
n e u t r a l m e d i c a l i n f o r m a t i o n h o t l i n e s f o r employees and
dependents a t t h e " p o i n t o f need" f o r s e r v i c e s . We a l s o
recommend a major
Federal
initiative
to
install
comprehensive h e a l t h e d u c a t i o n , i n c l u d i n g wise use and
s e l f c a r e , i n a l l schools a t a l l grade l e v e l s .
D e c i s i o n making about d i a g n o s t i c and t r e a t m e n t d e c i s i o n s
s h o u l d be a j o i n t a c t i v i t y between p r o v i d e r s o f c a r e ,
p a t i e n t s , and t h e i r f a m i l i e s .
F i n a l l y , c o n s i d e r a t i o n should be g i v e n t o r a t i n g b e n e f i t s
c o s t s t o employees and dependents based on l i f e s t y l e
r e l a t e d r i s k s under v o l u n t a r y c o n t r o l . T h i s i s an i n t e n t
t o " l e v e l t h e p l a y i n g f i e l d " and end t h e s u b s i d y o f r i s k y
behavior.
�Administration
Standard data c o l l e c t i o n and b i l l i n g instruments (forms
e l e c t r o n i c i n t e r f a c e s ) and data elements should be
required. A s i n g l e claims format and e l e c t r o n i c t r a c k i n g
should s i g n i f i c a n t l y reduce a d m i n i s t r a t i v e overhead.
This system would include both occupational and non
occupational h e a l t h care.
The
current
level
of marketing
and
internal
a d m i n i s t r a t i v e expenses should be reduced as much as
possible t o free funds f o r d i r e c t care.
Jnfonnation
Management
Adequate c l i n i c a l
i n f o r m a t i o n , based on the
National I n s t i t u t e of Medicine's
Uniform C l i n i c a l Data Set w i t h m o d i f i c a t i o n s should
be required f o r each claim or other t r a n s a c t i o n .
Data should be merged i n t o accessible databases t o
provide normalized provider comparisons and form
the basis f o r outcomes research.
There should be s u b s t a n t i a l support f o r outcomes
research, which must address the cost e f f e c t i v e n e s s
of a l t e r n a t i v e treatments and f u n c t i o n a l s t a t u s as
w e l l as m o r b i d i t y and m o r t a l i t y .
The same data should be c o l l e c t e d f o r occupational
and non occupational i l l n e s s e s and i n j u r i e s .
Q u a l i t y and
Value
I/nprovement
Continuous Q u a l i t y Improvement should be r e q u i r e d of
all
service d e l i v e r y organizations t o f o s t e r
continuous
improvement
in
efficiency
and
effectiveness.
This should be a c o n d i t i o n of reimbursement f o r a l l
medical care.
We support the f o r m u l a t i o n and widespread use of
tightly-worded
practice
parameters,
process
g u i d e l i n e s or standards f o r a l l care as benchmarks
or midpoints
f o r analysis of variance and
improvement i n the q u a l i t y of care.
We would encourage d i r e c t c o n t r a c t i n g between
employers or employer pools and a l i m i t e d number of
providers t o f o s t e r j o i n t s u p p l i e r improvement
p r o j e c t s , reduce a d m i n i s t r a t i v e overhead, and
reduce loss of customer Q u a l i t y C h a r a c t e r i s t i c s and
i n f o r m a t i o n i n " t r a n s l a t i o n " by t h i r d p a r t i e s .
�An a s s o c i a t e d i s s u e , which should be reduced by
q u a l i t y improvement, and concomitant r e d u c t i o n o f
v a r i a n c e i n medical p r a c t i c e , i s t h e volume o f
current malpractice l i t i g a t i o n .
As an i n t e r i m
step,
medical
malpractice
investigation
and
r e s o l u t i o n s h o u l d be conducted by m e d i c a l - l e g a l
panels w i t h a r b i t r a t i o n and d i s c i p l i n a r y a u t h o r i t y ,
funded by a gross r e c e i p t s t a x on m e d i c a l s e r v i c e s .
J u r y t r i a l s , w h i l e r e q u i r e d by t h e C o n s t i t u t i o n f o r
c r i m i n a l m a t t e r s , would be r e s e r v e d as a method o f
last resort.
We b e l i e v e t h a t t h i s s y s t e m i c , p r e v e n t i v e and s t r u c t u r a l approach
t o r e f o r m o f t h e m e d i c a l care system and a s s o c i a t e d s o c i o m e d i c a l
i s s u e s w i l l l e a d t o a more c o s t e f f e c t i v e method o f m a i n t a i n i n g and
i m p r o v i n g t h e h e a l t h o f Americans.
We b e l i e v e t h a t piecemeal
s o l u t i o n s w i l l n o t have t h e d e s i r e d e f f e c t .
B u i l d i n g a more
a c c e s s i b l e , p r o a c t i v e , and comprehensive h e a l t h care system w i l l
not be easy, b u t i t w i l l prove t o be a s i g n i f i c a n t i n v e s t m e n t i n
the f u t u r e o f America. P r o d u c t i v i t y can be s u p p o r t e d by enhancing
h e a l t h and m i n i m i z i n g d i s a b i l i t y , b e s t done by s t r a t e g i c , p r o a c t i v e
h e a l t h management. T h i s program a l s o s u p p o r t s maintenance o f our
s t a n d a r d o f l i v i n g r a t h e r t h a n a t r a n s f e r o f r e s o u r c e s t o one
s e c t o r a t t h e expense o f a l l o t h e r s .
Key Q u a l i t y C h a r a c t e r i s t i c s
I n d e s i g n i n g any changes which w i l l a f f e c t t h e m e d i c a l c a r e system,
i t i s i m p o r t a n t t o f i r s t d e f i n e t h e Key Q u a l i t y C h a r a c t e r i s t i c s we
are t r y i n g t o achieve f o r those who seek and t h o s e who pay f o r
care.
I n most o t h e r i n d u s t r i e s , t h e s e c h a r a c t e r i s t i c s g u i d e t h e
development and improvement o f processes and p r o d u c t s . I t would
serve us w e l l t o summarize t h e s e as we a t t e m p t t o i n c r e a s e v a l u e
and h e a l t h s t a t u s :
•
I n d e l i v e r i n g t h e most c o s t - e f f e c t i v e c a r e , p r e v e n t i o n s h o u l d
be emphasized. H e a l t h p r o m o t i o n and d i s e a s e p r e v e n t i o n have
proven t o be t h e b e s t i n v e s t m e n t t o improve h e a l t h s t a t u s .
•
Access t o t h e "system" s h o u l d be
p h y s i c i a n , o r group o f p h y s i c i a n s .
•
Access s h o u l d i n c l u d e prompt and e f f e c t i v e customer s e r v i c e ,
and t h e a v a i l a b i l i t y o f p r i m a r y care s e r v i c e s i n most i f not
a l l geographic l o c a t i o n s .
•
Care and d i s a b i l i t y management s h o u l d be o f t h e same q u a l i t y
f o r work r e l a t e d and non o c c u p a t i o n a l i l l n e s s and i n j u r y .
through
a
primary
care
�T o t a l compensation s h o u l d c o n s i s t o f a balanced and manageable
package o f wages and b e n e f i t s t h a t meets t h e p r e f e r e n c e s and
needs o f t h e work f o r c e .
H e a l t h care f i n a n c i n g
f i n a n c i a l loss.
should provide p r o t e c t i o n
The b e n e f i t s p l a n should balance o u t o f pocket
f i n a n c i a l i n c e n t i v e s t o purchase care w i s e l y
from
major
costs
with
The p l a n s h o u l d p r o v i d e " p o r t a b l e " b e n e f i t s which a r e n o t t i e d
t o a p a r t i c u l a r employer and which a r e n o t dependent on h e a l t h
status.
Necessary i n f o r m a t i o n and s k i l l s t o make m e d i c a l l y r e l a t e d
d e c i s i o n s s h o u l d be r e a d i l y a v a i l a b l e .
Data c o l l e c t i o n and
p a t t e r n s o f c a r e , as
The same data s h o u l d
compensation m e d i c a l
a v a i l a b i l i t y should support a n a l y s i s of
w e l l as p r i c e , volume and t e c h n o l o g y use.
be c o l l e c t e d f o r group h e a l t h and workers
care.
P r a c t i c e parameters and process s t a n d a r d procedures would be
used as benchmarks f o r a n a l y s i s o f process s t a b i l i t y and
variance.
The a d m i n i s t r a t i v e system s h o u l d be e f f i c i e n t and customer
f r i e n d l y . A d m i n i s t r a t i v e and m a r k e t i n g overhead s h o u l d be as
low as p o s s i b l e .
The q u a l i t y o f care s h o u l d be measurable and c o n t i n u o u s l y
i m p r o v i n g i n b o t h e f f i c i e n c y and e f f e c t i v e n e s s , which have
been shown t o move t o g e t h e r . V a r i a t i o n i n methods and r a t e s
o f m e d i c a l s e r v i c e s s h o u l d be reduced as t h i s o c c u r s .
P r i c e s s h o u l d be f a i r and r e a s o n a b l y r e l a t e d t o t h e c o s t s o f
o t h e r goods and s e r v i c e s .
They s h o u l d f o l l o w market
principles
and d e c l i n e w i t h
competition or t e c h n i c a l
innovation.
ACOEM P e r s p e c t i v e i n Health Care Reform
The " n a t i o n a l h e a l t h care r e f o r m " debate has had two d i f f e r e n t
t h r u s t s f o r a t l e a s t t h e l a s t 25 y e a r s .
One group has advocated
" u n i v e r s a l coverage" f o r a l l Americans, e i t h e r t h r o u g h a government
o p e r a t e d m e d i c a l care system o r t h r o u g h some form o f p u b l i c and
p r i v a t e f i n a n c i n g . U n i v e r s a l coverage would i n c l u d e l o n g t e r m care
i n many p r o p o s a l s . A second group wishes t o r e s t r a i n aggregate and
i n d i v i d u a l c o s t i n c r e a s e s . These g o a l s may be a t c r o s s purposes
�u n l e s s s p e c i f i c mechanisms a r e i n p l a c e and operate w e l l . N e i t h e r
p o s i t i o n addresses i s s u e s such as p r e v e n t i o n , care o f i l l o r
i n j u r e d w o r k e r s , q u a l i t y o f c a r e , consumer i n f o r m a t i o n , q u a l i t y
improvement, o r e f f i c i e n c y o f care.
T h i s debate i s b o t h m i s t i t l e d and m i s d i r e c t e d . The o p t i o n o f a
s i n g l e n a t i o n a l system, t o i n s u r e u n i v e r s a l access, s t o p c o s t
s h i f t i n g and reduce a d m i n i s t r a t i v e c o s t s , i s n o t b e i n g s e r i o u s l y
considered.
The access problems which a r e g a i n i n g much p u b l i c
a t t e n t i o n a r e t h e r e s u l t o f m i s a l l o c a t i o n o f r e s o u r c e s and a
m e d i c a l c a r e f i n a n c i n g mechanism which cannot s u p p o r t u n i v e r s a l
access.
I n f a c t , i t can be argued t h a t u n i v e r s a l access w i l l have
the same e f f e c t as t h e i m p l e m e n t a t i o n o f Medicare and M e d i c a i d ,
which f u e l e d t h e p r e s e n t b u i l d u p o f s p e c i a l i s t and t e c h n o l o g y
i n t e n s i v e care and l a i d t h e groundwork f o r a f i n a n c i n g system which
is i n t r i n s i c a l l y inflationary.
Medicare and t o a l e s s e r e x t e n t
M e d i c a i d have supported t h e development o f a g r e a t d e a l o f new
t e c h n o l o g y , expanding t h e scope o f p h y s i c i a n and h o s p i t a l s e r v i c e s ,
r a i s i n g p h y s i c i a n n e t income and s u p p o r t i n g a g r e a t expansion o f
h o s p i t a l s and now ambulatory f a c i l i t i e s . W i t h o u t d e f i n i t i v e a c t i o n
t o change t h e s t r u c t u r e o f t h e m e d i c a l care i n d u s t r y , u n i v e r s a l
access ( p a r t i c u l a r l y i f i t i n c l u d e s l o n g term care) w i l l r e s u l t i n
a new c o s t s p i r a l t h a t may be worse t h a n t h e c u r r e n t one.
The debate about access should be c l a r i f i e d .
Access i s n o t j u s t
f i n a n c i a l , b u t s h o u l d i n c l u d e geographic and t e m p o r a l a v a i l a b i l i t y ,
access t h r o u g h a p r i m a r y care p r o v i d e r , and access t o t h e r i g h t
k i n d o f s e r v i c e . One might a l s o ask, "Access t o what?" T h i s opens
the
discussion t o include consideration of the e f f i c i e n c y ,
e f f e c t i v e n e s s and a p p r o p r i a t e n e s s o f c a r e , r a t h e r t h a n assuming
q u a l i t y or value.
C e r t a i n key p o i n t s about t h e " h e a l t h c a r e c r i s i s " must be
recognized a t t h e outset.
The debate s h o u l d n o t be e x c l u s i v e l y
about access.
The debate s h o u l d be about access i n a l l i t s
dimensions, q u a l i t y , and v a l u e i n p r e s e r v i n g and p r o m o t i n g h e a l t h .
The f o l l o w i n g l a y s t h e groundwork f o r our recommendations:
•
" H e a l t h c a r e " r e f o r m i s a misnomer. N i n e t y seven t o n i n e t y
n i n e p e r c e n t o f m e d i c a l care o u t l a y s a r e spent on acute o r
c h r o n i c i l l n e s s c a r e . Yet over h a l f o f i l l n e s s e s and i n j u r i e s
c o u l d be p r e v e n t e d o r postponed t h r o u g h e f f e c t i v e h e a l t h
p r o m o t i o n and d i s e a s e p r e v e n t i o n . F u r t h e r , p r e v e n t i o n i s up
t o 10 t i m e s more c o s t e f f e c t i v e t h a n acute o r c h r o n i c care i n
many cases. However, about h a l f t h e g o a l s i n H e a l t h y People,
p a r t i c u l a r l y those r e l a t e d t o f a m i l y h e a l t h , v i o l e n c e , and
w o r k s i t e i s s u e s , were n o t achieved, most l i k e l y due t o l a c k o f
f o c u s and s u p p o r t . There i s v e r y l i t t l e f u n d i n g f o r h e a l t h
p r o m o t i o n , and most i n s u r a n c e does n o t cover h e a l t h p r o m o t i o n
or p r e v e n t i v e s e r v i c e s , even though t h i s was an o b j e c t i v e o f
H e a l t h y People. Since i t was n o t a c h i e v e d , i t i s s t i l l an
o b j e c t i v e i n H e a l t h y People 2000.
8
�I t must be r e c o g n i z e d i n t h i s d i s c u s s i o n t h a t some p r e v e n t i v e
measures which have been shown t o have a major impact on
h e a l t h s t a t u s , such as g e n e r a l and h e a l t h e d u c a t i o n , and
improvements i n n u t r i t i o n , housing,
and employment, and
r e d u c t i o n s i n v i o l e n c e , substance abuse, and h i g h r i s k s e x u a l
b e h a v i o r , a r e n o t medical i n n a t u r e . However, t h e y must be
addressed i n t h i s debate because t h e y a r e c l e a r l y a s s o c i a t e d
w i t h lower h e a l t h s t a t u s and i n c r e a s e d c o s t s f o r p r e v e n t a b l e
m e d i c a l problems. I f a comprehensive s o c i o m e d i c a l package i s
n o t enacted, t h e c o s t o f care f o r a v o i d a b l e i l l n e s s and i n j u r y
w i l l continue t o increase.
A broad p e r s p e c t i v e i s needed.
Again, t h e m a j o r i t y o f t h e g o a l s i n H e a l t h y People f a m i l y
p l a n n i n g , r e d u c t i o n s i n v i o l e n c e and i t s consequences, ,
n u t r i t i o n , t o x i c exposures and w o r k s i t e h e a l t h and s a f e t y were
n o t achieved, p r o b a b l y because o f l a c k o f a t t e n t i o n and
support.
A number o f s t u d i e s have shown t h a t t h e work p l a c e i s perhaps
t h e most c o s t e f f e c t i v e s i t e f o r t h e d e l i v e r y o f i n t e g r a t e d
preventive,
primary
care
and r e h a b i l i t a t i v e
services,
e s p e c i a l l y i f t h e c o s t s o f l o s t t i m e from work a r e i n c l u d e d i n
t h e a n a l y s i s . However, these s e r v i c e s a r e not c u r r e n t l y funded
by t h e b e n e f i t s f i n a n c i n g system, b u t a r e p a i d f o r s e p a r a t e l y ,
c r e a t i n g some redundancy and r e s i s t a n c e t o f u r t h e r expansion.
We have a medical care i n d u s t r y r a t h e r t h a n a h e a l t h care
system i n t h i s c o u n t r y .
There i s no c e n t r a l o r r e g i o n a l
p l a n n i n g o r b u d g e t i n g as t h e r e would be i n a t r u e system.
There a r e a l s o no u n i f o r m c r i t e r i a f o r access, s e r v i c e ,
e f f i c i e n c y , or effectiveness. I f the i n t e n t i s t o create a
system, s u b s t a n t i a l s t r u c t u r a l changes w i l l be needed.
T h i s i n d u s t r y i s t h e l a r g e s t s e c t o r i n t h e American economy.
I t was t h e o n l y one t o grow d u r i n g t h e r e c e n t r e c e s s i o n , and
i s s t i l l growing.
M e d i c a l care p r o v i d e d over h a l f a m i l l i o n
new j o b s i n t h e l a s t s e v e r a l y e a r s .
However, many o f these
were a t r e l a t i v e l y low wage l e v e l s .
I f changes which reduce
demand o r m e d i c a l l y unnecessary care a r e made, a t t e n t i o n must
be g i v e n t o redeployment o f many o f these s u p p o r t workers as
w e l l as excess s p e c i a l i s t s t o a v o i d economic d i s l o c a t i o n .
Our method o f p r o v i d i n g medical care i s based on t h e use o f
h i g h c o s t f a c i l i t i e s such as h o s p i t a l s , advanced t e c h n o l o g y ,
and s p e c i a l i s t c a r e , o f t e n t o " r u l e o u t " obscure diagnoses, a t
low y i e l d , o r t o p r o v i d e care f o r t e r m i n a l l y i l l p a t i e n t s .
These p u r s u i t s d e f l e c t a major amount o f f u n d i n g from much
h i g h e r y i e l d p r e v e n t i v e and p r i m a r y care s e r v i c e s .
The
s p e c i a l i s t r g e n e r a l i s t r a t i o i n the United States i s i n v e r t e d
compared t o any o t h e r i n d u s t r i a l i z e d n a t i o n . S p e c i a l i s t s a r e
t r a i n e d t o pursue unusual diagnoses
and t o use t e c h n o l o g y
r a t h e r than c o g n i t i v e s k i l l s t o a g r e a t e r e x t e n t than
generalists.
I n t e r e s t i n g l y , s t u d i e s o f g e n e r a l i s t s show a
�r e f e r r a l r a t e t o s p e c i a l i s t s of 1-6%, s u g g e s t i n g t h a t t h e h i g h
t e c h approach i s n o t needed i n most cases. Compared t o o t h e r
c o u n t r i e s , t h e r e i s an a t y p i c a l emphasis on h i g h t e c h n o l o g y .
T h i s i s due i n p a r t t o t h e c u r r e n t reimbursement system, i n
p a r t t o t h e r e l a t i v e number of s p e c i a l i s t s and i n p a r t t o
u n c o n t r o l l e d reimbursement f o r new t e c h n o l o g y w i t h o u t p r o o f o f
c o s t e f f e c t i v e n e s s or even e f f i c a c y i n some cases.
There i s a s i g n i f i c a n t o v e r s u p p l y of h o s p i t a l beds, t e c h n o l o g y
and s p e c i a l i s t s .
The average h o s p i t a l has 35 t o 40% o f i t s
beds unoccupied on a t y p i c a l day.
Of t h e 200 new drugs
i n t r o d u c e d i n t h e l a s t 8 y e a r s , o n l y 14 were c l a s s i f i e d
1-A,
or t r u l y new t h e r a p e u t i c a l l y . We have s e v e r a l f o l d more
l a b o r a t o r y and imaging machinery t h a n any o t h e r i n d u s t r i a l i z e d
c o u n t r y ; most of i t i s not used f u l l t i m e .
The average
surgeon works t h e e q u i v a l e n t of two days per week, y e t makes
much more t h a n g e n e r a l i s t s .
P r o c e d u r a l i s t i n t e r n i s t s are
s i m i l a r l y u n d e r u t i l i z e d , or b r i n g t h e i r s p e c i a l t y p e r s p e c t i v e
and p a t t e r n s of resource use t o p r i m a r y care problems. I t i s
e s t i m a t e d t h a t t h e r e are as many as 100,000 t o o many
p h y s i c i a n s i n t h e U.S.,
almost a l l i n suburban areas There
are shortages i n i n n e r c i t i e s and r u r a l areas. The number of
a c t i v e p h y s i c i a n s i s s t i l l i n c r e a s i n g . I f t h e r e were more mid
l e v e l p r a c t i t i o n e r s t o assume t a s k s a t t h e i r s k i l l l e v e l s , a t
lower c o s t , t h e s u r p l u s would l i k e l y be much l a r g e r .
A d m i n i s t r a t i v e c o s t s , i n c l u d i n g overhead, c l a i m s submission,
c l a i m s p r o c e s s i n g , and m a r k e t i n g , consumes between 14 and 21%
of h e a l t h care d o l l a r s compared t o 2 t o 4% i n Medicare and
s e v e r a l s i n g l e payer systems such as Canada and t h e
U.K.
These funds are t h e n u n a v a i l a b l e t o p r o v i d e c a r e . Much o f t h e
i n c r e a s e d c o s t i s due t o m u l t i p l e i n c o m p a t i b l e c l a i m s systems,
l a c k o f a u t o m a t i o n , i n c o m p a t i b l e i n f o r m a t i o n systems, slow
payment r e s u l t i n g i n r e s u b m i s s i o n
of c l a i m s , and
major
e x p e n d i t u r e s on m a r k e t i n g among over 1000 competing i n s u r e r s
and p l a n sponsors, many p h a r m a c e u t i c a l and supply vendors, and
some d e l i v e r y systems.
F u r t h e r , by some e s t i m a t e s , t h e
process o f care i t s e l f i s h i g h l y i n e f f i c i e n t , w i t h l e s s t h a n
h a l f o f o u t l a y s f o r "care" g o i n g t o a c t u a l p a t i e n t care
related tasks.
Employment based i n s u r a n c e p r o v i d e s t h e m a j o r i t y o f f u n d i n g
f o r t h e under-65 p o p u l a t i o n and an i n c r e a s i n g p r o p o r t i o n of
r e t i r e e s s i n c e p r i v a t e coverage became p r i m a r y over Medicare.
Yet a t l e a s t t h i r t y f i v e m i l l i o n Americans do n o t have t h i r d
p a r t y f u n d i n g f o r p r e v e n t i v e or acute c a r e .
Under t h i s
u n w r i t t e n p o l i c y , employers o f f e r w i d e l y v a r y i n g l e v e l s of
coverage. Employers d i d not acquiesce t o t h i s de f a c t o p o l i c y
b u t p a r t i c i p a t e i n i t i n i t i a l l y t o i n c r e a s e t o t a l compensation
d u r i n g wage and p r i c e f r e e z e s , and now t o p r o v i d e a form of
compensation a t a lower net c o s t t h a n wages because o f t h e t a x
advantaged s t a t u s of b e n e f i t s , and t o compete i n c e r t a i n l a b o r
10
�markets.
However, these costs are now reducing the funds
a v a i l a b l e f o r cash wages, reducing workers' standards of
l i v i n g and perhaps causing f u r t h e r h e a l t h problems.
Medical
care costs are now equal t o over 50% of a l l corporate p r o f i t s ,
and are projected t o equal p r o f i t s by 2000.
Money spent on medical care through employment based b e n e f i t s
reduces the amount of funds a v a i l a b l e f o r cash wages,
e f f e c t i v e l y lowering the standard of l i v i n g of a l l American
workers.
There i s also a debate among economists about
whether r e a l wealth i s created through p a l l i a t i v e services.
Because coverage i s t i e d t o current employment, changes i n
employment and perhaps production e f f i c i e n c y are hampered.
Those without coverage may be less productive i f i l l , and are
c e r t a i n l y less productive w h i l e they take time t o seek care
f o r themselves or t h e i r dependents.
Caps and other l i m i t s on government medical care programs,
which c o n s t i t u t e the m a j o r i t y of funding f o r h o s p i t a l care and
a good deal of ambulatory care, have r e s u l t e d i n s h i f t i n g of
costs t o p r i v a t e payers.
Discounts and f i x e d fees granted t o
managed care organizations have exacerbated the problem. This
r a i s e s the t o t a l cost t o p r i v a t e payers by a s i g n i f i c a n t
amount.
The care provided t o those who become i l l or i n j u r e d a t work
i s i n many instances of low q u a l i t y .
"Quality" i n t h i s
context means a c c e s s i b i l i t y , appropriateness, value, and match
of impairment w i t h actual job d u t i e s . Inappropriate treatment
and absence serves no one. Workers compensation care has
become entangled i n a web of l e g a l and a d m i n i s t r a t i v e
maneuvering t h a t has l i t t l e t o do w i t h p r o v i d i n g appropriate
care and curing the presenting problem.
I n a d d i t i o n , costs
are s h i f t e d t o t h i s " l a s t of the 100% payers".
This separate
but unequal system serves n e i t h e r employers or employees.
One major defect i n the medical i n d u s t r y which has both fueled
i t s growth and d i s t o r t e d p r i c e s i s the d i s s o c i a t i o n of
purchase and payment through the insurance mechanism. The
p r i c e "seen" by the p a t i e n t i s t y p i c a l l y 10 t o 20% of the
t o t a l cost.
P r i c i n g i s not r e l a t e d t o cost or competition. I n f a c t , there
i s l i t t l e e f f e c t i v e competition i n medical care. I t almost
seems as i f a p u b l i c u t i l i t y model i s i n e f f e c t , guaranteeing
a c e r t a i n r a t e of r e t u r n .
There i s e s s e n t i a l l y no market
p r i c e feedback mechanism i n medical care. The most common
physician payment mechanism i s the "usual, customary, and
reasonable" approach based on community wide p r o f i l e s r a t h e r
than customer p r i c e r e s i s t a n c e or p r i c e competition. The base
f o r t h i s system was set a t an a r t i f i c i a l l y high l e v e l i n the
11
�mid S i x t i e s by the Federal government, and moves upward as
i n d i v i d u a l s and groups r a i s e t h e i r p r i c e s .
There i s no
r a t i o n a l basis t o set p r i c e s f o r new procedures other than
charge p r o f i l e s . I n some managed care systems, physicians are
paid on a per person per year, or c a p i t a t e d , basis.
This
creates both a budget and a c o n t r a c t u a l basis f o r a negotiated
price.
The
DRG
system,
which
reimburses
per
episode
of
h o s p i t a l i z a t i o n , i s used f o r Medicare. Some Medicaid programs
and a few managed care programs have introduced t h i s
methodology. The remainder of payers pay "charges", or a l l
remaining costs plus p r o f i t d i v i d e d by the number of p r i v a t e
payers, w i t h some discounts from t h i s moving f l o o r .
Again,
there has been l i t t l e market resistance t o charge l e v e l s .
Technology and pharmaceuticals are introduced a t the top of
the p r i c e curve, but p r i c e s do not d e c l i n e w i t h a v a i l a b l e
improvements or increases i n supply.
There i s a serious lack of meaningful, usable, f a c i a l l y
n e u t r a l i n f o r m a t i o n about p r a c t i c e p a t t e r n s , d i a g n o s t i c and
treatment e f f i c a c y , and c l i n i c a l and production e f f i c i e n c y i n
medical and h e a l t h care.
This was made very c l e a r i n the
preventive area i n the recent assessment of the achievement of
the Healthy People goals, and i t c o n t i n u a l l y f r u s t r a t e s those
of us who wish t o benchmark and continuously improve the
q u a l i t y of care provided t o employees and dependents.
Because of t h i s lack of a meaningful i n f o r m a t i o n feedback
mechanism, the o f t e n heard statements t h a t American medical
care i s the best i n the world, or t h a t change i n the way care
i s financed or provided would decrease q u a l i t y are a s s e r t i o n s .
In p o i n t of f a c t , we r a r e l y know what q u a l i t y of care we
receive, and do not have the data t o continuously improve
quality.
Wide v a r i a t i o n i n the r a t e s of services and
procedures throughout the United States, and documented l e v e l s
of i n a p p r o p r i a t e use of these services and procedures would
suggest s i g n i f i c a n t issues about medical q u a l i t y . Rigorously
worded and widely used p r a c t i c e parameters would reduce t h i s
variance.
Many p a t i e n t s have delegated decisions about care t o
p r o v i d e r s , f u r t h e r d i s t o r t i n g t y p i c a l f r e e market mechanisms.
Even i f they had not, employees and dependents are a t a
s i g n i f i c a n t disadvantage i n determining medical necessity,
p r i c e and q u a l i t y of services since there i s l i t t l e h e a l t h
education i n the U.S. and a great imbalance of knowledge
between providers and consumers. The key issue i s the a b i l i t y
to determine value, defined as q u a l i t y / p r i c e .
Benefits
managers are a t a s i m i l a r but lesser disadvantage, i n p a r t
because there are few agreed upon measures of q u a l i t y and
12
�value, and because the data f o r these metrics i s t y p i c a l l y not
c o l l e c t e d i n an accessible manner.
One r e s u l t of access problems, lack of usable i n f o r m a t i o n , and
problems w i t h customer service i s the hidden cost of i l l
h e a l t h — l o s t time, unnecessary d i s a b i l i t y , and decreased
p r o d u c t i v i t y . This cost may w e l l be greater than the costs of
care.
Implementation- Issues
Coverage
More than 90% of present employer medical b e n e f i t s plans
exceed the proposed basic h e a l t h insurance packages.
However, the b e n e f i t s packages f o r 26 m i l l i o n people
would have t o be expanded t o meet minimum b e n e f i t s
requirements.
Financing The c u r r e n t l y proposed employer mandate would cause wages
t o f a l l i n some i n d u s t r i e s or businesses, would create
portability
problems,
and would
not include the
unemployed or many p a r t time workers.
13
�
Dublin Core
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Title
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Health Care Reform
Identifier
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2006-0810-F
Description
An account of the resource
<p>This collection consists of records related to Hillary Rodham Clinton's Health Care Reform Files, 1993-1996. First Lady Hillary Rodham Clinton served as the Chair of the President's Task Force on National Health Care Reform. The files contain reports, memoranda, correspondence, schedules, and news clippings. These materials discuss topics such as the proposed health care plan, the need for health care reform, benefits packages, Medicare, Medicaid, events in support of the Administration's plan, and other health care reform proposals. Furthermore, this material includes draft reports from the White House Health Care Interdepartmental Working Group, formed to advise the Health Care Task Force on the reform plan.</p>
<p>This collection is divided into two seperate segments. Click here for records from:<br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0810-F+Segment+1"><strong>Segment One</strong></a> <br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0810-F+Segment+2"><strong>Segment Two</strong></a></p>
Provenance
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Clinton Presidential Records
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William J. Clinton Presidential Library & Museum
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Dublin Core
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Briefing Book on Workers' Compensation [6]
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Health Care Task Force
General Files
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2006-0810-F Segment 1
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Box 56
<a href="http://clinton.presidentiallibraries.us/items/show/36144" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/12090749" target="_blank">National Archives Catalog Description</a>
Provenance
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Clinton Presidential Records: White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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Adobe Acrobat Document
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5/5/2015
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42-t-2194630-20060810F-Seg1-056-007-2015
12090749