Workers’ Comp Medical to be Federalized

And For Our April Fools Edition!

Joe Paduda

Posted 4/1/12 on Managed Care Matters

While all of Capitol Hill was focused on the hearings on ObamaCare at the Supreme Court, the Administration was quietly proceeding with plans to federalize the medical portion of workers’ compensation. The effort has reportedly been led by Assistant Deputy Secretary A. Pryl Pfuelle who has been working closely with the Executive Secretariat on policy implications and coordination efforts. Details on timing, rollout, reimbursement levels and other critical matters are still to be worked out, but the Secretariat is likely looking to FECA as the regulatory agency that will be tasked with oversight responsibilities.

There have been rumors about increased Federal involvement in workers comp circulating for some months, but this is the first clear indication of actual changes in the offing. Evidently the legal aspects have been addressed in the Zadroga Act and under the LibbyCare provisions of the Affordable Care Act. While these bills covered occupational disease, there is enough flexibility to allow them to extend to address occupational injury as well.

For now, this is likely to only affect the medical portion of workers comp; HHS’ Office on Disability had been involved in discussions for some time about including the disability/indemnity portion of workers comp in the program, but for not the move is “not on the table.”

While the deal isn’t “done”, reports are the planning is near complete. Evidently the move was initially brought up at a White House meeting last summer between Executive Office staff and several Fortune 500 CEOs. The execs, most of which had backed Obama’s 2008 campaign, pushed the White House to do more to help business and specifically the manufacturing and industrial sectors. Rising comp costs were specifically identified as a significant drag on hiring and a working group established to evaluate ways to reduce those costs. The group, whose members are not known, reportedly settled on utilizing the Medicare system and reimbursement mechanism as a relatively straight-forward way to reduce medical expense while also slashing work comp’s administrative costs.

At a follow up get-together early this year plans were presented to the “core group” and received a favorable response.

As most state fee schedules are based on Medicare’s RBRVS, and an increasing number of states are adopting the MS-DRG reimbursement mechanism for facility costs, the sense is this won’t be much of an issue for providers. Additional work will need to be done to refine the coding and reimbursement for comp-specific issues such as return to work planning, functionality assessment, and there will have to be some flexibility to accommodate state-specific reporting and documentation requirements.

What does this mean for you?

Time will tell.

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