Florida again reformed its workers’ compensation laws in an effort to cut costs and related litigation expenses. Effective this fall, one of the newest regulations concerning medical services allows only one physician change per injury. Previously, employees were allowed one change per specialty, i.e., orthopedics, neurologists, etc. Anticipated results include cost savings by significantly reducing “doctor shopping.”
While employers may welcome the latest changes, many are considering if these changes are sufficient or if the time has come to opt out of Florida Managed Care Arrangements (MCAs). Mandatory participation ended in October 2001, and thus far more than 400 companies have opted out and reported positive results. Others are debating their options.
“Physician costs may contribute to high medical costs in Florida. Although the state’s Physician Fee schedule is relatively low, there could be high utilization of physician services or a relatively expensive mix of services provided. Florida does NOT have unusual types of injuries that would explain higher costs.”
NCCI, March 6, 2003, Prepared for the House Select Committee on Workers’ Compensation
Pre-approved MCAs offer Florida employers a variety of benefits: contracts with certified medical providers, discounted fees, monitored compliance with Florida’s utilization laws, mandatory pre-certification of procedures, and grievance procedures.
At the same time, the MCA system has been criticized for high fees for network services that negated any significant medical cost savings. Mandatory pre-certification of medical services often has delayed medical care. Some network medical providers are not considered the best choices for quality care and/or willingness to communicate with the employer or claims administrators on issues such as early return to work and treatment within Florida’s approved practice parameters.
When considering whether or not to opt out of state-approved MCA programs or trying to cut workers’ compensation expenditures, employers with Florida-based operations should be asking themselves the following questions:
- What will be more effective for my organization — a standard MCA or should I customize the MCA to meet my company’s needs?
- Is it better to opt out of the program entirely?
- Will my insurance carrier let me opt out?
- Should I think about “carving out”the company’s own workers’ compensation network within an approved MCA?
- What type of program will lower my lower workers’ compensation costs while achieving positive medical outcomes for my employees?
“Attorney involvement is significant in Florida and also helps explain costs drivers. When attorneys are not involved the difference in claim costs between Florida and countrywide is minimal. When attorneys are involved, the difference in claim size between Florida and countrywide is nearly 40 percent.”
NCCI, March 6, 2003, Prepared for the House Select Committee on Workers’ Compensation
Some executives have concluded that the state-approved MCAs not only failed to deliver significant cost savings, but also resulted in higher litigation expenses. Larger employers have complained they could not effectively control the claims process.
Employers should carefully review their current managed care arrangements versus the alternatives of either opting out or "carving out" the best possible network and weigh the pros and cons of each plan before making a decision. The following services can help companies determine which workers’ compensation programs will be most effective and help reduce costs.
Workers’ Compensation Diagnostic/Benchmarking — Analyze and compare workers’ compensation data using Dimensions, a proprietary data system that helps measure the total cost of risk and validates the effectiveness of loss control and claim handling interventions.
Workers’ Compensation Gap Analysis — Understand the primary workers’ compensation cost drivers in the workplace, identify potential gaps in processes, compare financial performance against peers’, benchmark against industry standards, and prioritize efforts to reduce costs.
Managed Care Impact Assessment — Develop a clinically-based audit to assist in measuring and improving medical treatment and case management protocols. Studies have shown that targeted early intervention is key to reducing claim costs.
Training and Communications — Implement an online workers’ compensation training program to ensure a consistent approach to the workers’ compensation process — particularly relevant for companies with high employee turnover and multiple locations.
Claims Management Process Re-engineering — Evaluate current processes for reporting, administering, medically managing, and closing workers’ compensation claims, both internally and externally, and determine more efficient and cost-effective workflows.
Vendor Compliance Evaluations — Conduct audits and develop metrics and performance scorecards for claims administrators and service vendors to measure compliance with special handling instructions.
Return-to-Work Program — Build an effective return-to-work program, a key element in reducing time loss associated with workers’ compensation. The program can help boost employee morale by demonstrating concern for employees’ well being.
Behavioral Risk Improvement — Help eliminate employee risk taking and minimize injuries through a behavior-based process that is economical, efficient, and sustainable.
Ergonomics Risk Assessment — Identify and prioritize ergonomics exposures and define actions to help eliminate them.
Marsh consultants can work with you to determine what type of workers’ compensation program will be the most cost effective and efficient for your organization: state-approved managed care or a customized self managed program.
In response to these disappointing results and the compelling arguments of some of its largest employers, Florida passed a law that provided employers the choice to opt out of managed care. Thus far, more than 400 employers have exercised that option and many others are considering it.
If you have any questions or would like additional information, please contact us.
