Counterintuitive Findings of North Carolina Workers’ Compensation Study Highlight Dangers of Simple “Policy Solutions”

June 19, 2012, by Michael A. DeMayo

Fixing the North Carolina workers’ compensation system is a top priority, not only for policymakers but also for insurers, employers, employees, and everyone else concerned about the quality of care delivered in our state.

Good intentions are one thing. Hard data is another.

To that end, a recent study conducted by the Workers’ Compensation Research Institute (WCRI) is pretty telling. Let’s dive into the details and try to extract lessons that might be meaningful, if you or somebody you care about has been recently injured in a workplace accident, and if you might need help from a North Carolina workers’ compensation law firm, like DeMayo Law.

The WCRI looked at the initial impact of something called an outpatient fee schedule reduction — a policy attempt to reduce the hospital costs of outpatient stays. Prior to summer 2009, the reimbursement rate was around 95% for most NC hospitals – that fee schedule changed dramatically down to 79%. The study looked at eight months after that fee schedule reduction.

Unsurprisingly, the payment to charge ratio went down (from 82% to 72%). But surprisingly – shockingly, even – the average charge for outpatient services spiked by 17% over the rate for a controlled period prior to the enactment of the new fee schedule.

To summarize: the overall percentage of reimbursement was lower, but the costs of services on average was higher – possibly negating the savings.

If you or somebody you love is struggling to make a claim, deal with an unfair employer, or battle your way through the thicket of an insurance company’s bureaucracy, these findings may not seem like much to you. But the lessons here are pretty broad. They suggest that “quick fixes” to problems at the level of NC policy – or even at the level of your own life – can often backfire… or at least lead to very different outcomes.

In other words, it confirms the hypothesis we proposed in another recent blog post – that the trajectory towards a workers’ comp “win” is often far from straightforward, even if your claim is simple, and even if you know precisely what you want and how you want to get it.