Workers' Compensation Joins Health-Care Reform Debate in Many States

`THIS previously out-of-control part of our budget is now under control,'' says Edward Gotgart, business manager of St. Mark's School in Southboro, Mass. He is referring to the school's workers' compensation costs.

Mr. Gotgart credits the school's use of managed care techniques for controlling its budget. Previously, ``the rate of increase we were experiencing in our workers' compensation cost was far greater than any other area, including health care,'' he says.

Consulting firm Towers Perrin estimates that workers' compensation costs will more than double to $150 billion by the year 2000. It now consumes 2.16 percent of a company's payroll on average, a 44 percent jump from 1.5 percent in 1989.

Spiraling workers' compensation costs (insurance payments companies make to cover job-related injuries), have prompted many employers to seek their own means for cost containment. Managed care, a process using oversight and group purchasing power, is becoming a larger part of the effort to reform the $60-billion-a-year workers' compensation field. Cost containment techniques include:

* Limiting employee choice of treatment to an employer-selected list of physicians and hospitals that meet cost targets.

* Coordinating administration of a company's workers' compensation with its group health plan.

* Auditing claims administration to maximize cost reductions.

* Using health-maintenance organizations or health-care networks.

* Reviewing invoices to reduce accidental or fraudulent double billing.

President Clinton intends to include workers' compensation in his broader health-care reform plan. ``They're going to include workers' compensation within the health care system, which makes a lot of sense,'' says Stuart Altman, dean of the Heller Graduate School at Brandeis University in Waltham, Mass. ``Generally, the feeling is workers' compensation has wound up paying more than the health-care system has for the same services.''

Experimentation with managed care in workers' compensation has varied widely because of state laws. Until recently, most legislation has limited or even prohibited managed care. Other common barriers to managed-care cost containment include laws requiring employees' unrestricted choice of physicians and no-deductible coverage requirements.

MANY states are working to remove these barriers, however. ``In Massachusetts and other New England states, ... recent changes in statutes are encouraging employers to utilize managed care techniques,'' says Linda Sullivan, a consultant with Towers Perrin in Boston. ``When [Massachusetts Gov. William] Weld came into office, they passed legislation that allows employers to direct employees to pre-selected medical providers.''

Not everyone is optimistic about managed care's ability to curb rising workers' compensation costs, however. Forces are lining up against the move to managed care, says Carol Telles, an analyst at the Workers' Compensation Research Institute in Cambridge, Mass. ``There are advocates of workers who see [employer physician selection] as a notable infringement on personal freedom to choose one's own physician.''

In many states, physicians and plaintiff's attorneys have a strong voice in shaping policy. ``You get all kinds of special interests in the workers' compensation arena,'' Ms. Telles says.

Changes in workers' compensation laws on the state level are increasingly common. Massachusetts enacted a law Oct. 1 that established a state-monitored treatment procedure for worker injuries. All insurers in the commonwealth must participate.

Michael Landman, a Cambridge, Mass., attorney says he is not confident the law will trim costs. ``Guidelines that must be followed for a particular injury for cost containment are OK in theory,'' he says, ``but I'm afraid the savings may be lost to increased litigation'' by people who want to see a doctor who is not part of their employer's plan.

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