Hefty portion of work-related injury costs not paid for by workers’ comp, others picking up the tab

Nearly 40 percent of work-related injuries and illnesses seen in U.S. emergency rooms are not billed to workers’ compensation—the insurance program that’s designed to cover them.    An increasing number of patients suffering from injuries or illnesses caused by exposures at work are using their private insurance, paying out of pocket or billing Medicaid or Medicare, instead of filing the appropriate claim to their employers’ workers’ compensation insurer.  Those are the findings of a new study published in the journal Health Services Research by researchers with CDC’s National Institute for Occupational Safety and Health (NIOSH).

The analysis involves four years of data from the National Hospital Ambulatory Medical Care Survey (NHAMCS), a representative sample of U.S. emergency room visits.   An estimated 458 million emergency department (ED) visits occurred between 2003-2006, based on the representative sample of 146,296 cases.  The researchers specifically examined the subset of emergency room visits which were coded as a work-related injury or illness.  They used the “expected source of payment” data field to determine what proportion of these work-related cases were expected to be paid for (or not) by a workers’ compensation insurer.  They identified 3,881 work-related cases with complete information in the “expected payer” field.   The reasons for the ED visits included fractures, lacerations, burns, amputations and musculoskeletal disorders.  Twenty-five percent of the cases involved a patient reporting “severe” pain and 14.9 percent arrived at the ED via ambulance.

Of the 3,881 cases identified as work-related, 39.65 percent were not expected to be paid by workers’ compensation insurance.   For work-related injury cases, an estimated 37 percent were not expected to be paid by workers’ compensation, and for work-related illness cases, the estimate was a whopping 47 percent.   Instead, for 21.4 percent of the cases the expected payer was private health insurance.  Another 11.4 percent were listed as self-pay, and 3.5 percent and 1.7 percent were expected to be paid by Medicaid and Medicare, respectively.

The proportion of work-related injury cases not expected to be paid by workers’ compensation insurers did not differ significantly by injury type (e.g., amputations, burns, lacerations, sprains.)  For work-related illness cases, in contrast, certain conditions were more likely not to be paid by workers’ compensation than others.  For example, “only” 28.9 percent of work-related disorders of the eye and adnexa were not expected to be paid by workers’ compensation, compared to 40.7 percent of musculoskeletal disorders and 64.9 percent of skin diseases which were not expected to be paid by workers’ compensation.  The authors also noted that the proportion of non-WC visits increased significantly over the four year period, from 32.1% in 2003 to 44.9 % in 2006.

“Each year during the period 2003-2006, the odds that a given work-related ED visit would be a non-WC visit increased by 19 percent, a trend that was statistically significant.”

Granted, not all workers are covered by workers compensation.  The self-employed and domestic workers don’t have work comp coverage.   Most States also exempt agricultural employers from carrying workers’ compensation insurance.  Some States don’t require employers to carry workers’ compensation insurance if they have fewer than five employees (e.g., Missouri, Tennessee) or fewer than three employees (e.g., Michigan, Wisconsin).    The National Academy of Social Insurance estimates that 125 million U.S. workers are covered by workers’ compensation, out of the current U.S. labor force of about 155 million.  But even with these exceptions, there’s likely more going on to explain why a hefty share of work-related injuries and illnesses are not captured in the workers’ compensation system.

Researchers who’ve studied the system provide some hints about why some injured workers would rather use their private insurance or pay out-of-pocket than file a claim with their employers’ workers’ compensation carrier.   Azaroff and colleagues note that some workers may “risk disciplinary action, denial of overtime or promotion opportunities, stigmatization, drug testing, harassment, or job loss,” for reporting an injury.  In a survey of 400 workers who used the system, Strunin and Boden write that a majority of respondents found it to be “cumbersome, frustrating, and demeaning.”    Speiler and Burton explain

“… for many workers, the workers’ compensation system is dizzying and frustrating in its complexity and apparent irrationality. While the rules may be understandable to repeat players—particularly insurers and third party administrators of claims—they are obscure to many workers who are caught up in the delays and denials.  Some say it is no accident that Franz Kafka worked in a workers’ compensation bureau: the term Kafkaesque is fitting for the experience of many injured workers.”

It probably shouldn’t surprise me that individuals try to avoid using the workers’ compensation system.   But that has consequences.   One of those consequences has to do with our understanding of the impact of work-related injuries and illnesses.  Because the U.S. doesn’t have a comprehensive surveillance system for work-related injuries and illnesses, data from workers’ compensation cases helps to fill the knowledge gap.   If the trend reported in this paper continues—a 19 percent increase in the odds that a given work-related ED visit would not expected to be paid by workers’ compensation—-that’s a hefty portion of work-related injuries missing from the workers’ comp data sets.

Another consequence is shifting the cost of work-related injuries from the parties responsible (i.e., employers and workers’ compensation insurers) to other payment sources.   In this study, the NIOSH researchers’ representative sample translates to about 12,132,000 work-related ED visits over the four-year period.   The proportion of work-related cases that were expected to be paid by Medicaid and Medicare was 5.2 percent.  Let’s say that half of those work-related cases actually should have been paid by a workers’ compensation insurer, and the typical ED cost per case is $500.   That’s $157 million paid out of public coffers.  Imagine the hundreds of millions in cost-shifting if a large share of those cases billed to private insurers (21.4 percent) belonged in the workers’ comp system.

Comments

  1. #1 Jockaira
    May 30, 2013

    More troubling perhaps than who pays the bill is that these work injuries and illnesses are not reported to Workman’s Compensation Boards and to OHSA, which allows the employer to continue unsafe practices without official intervention. In effect the employer gets a free ride at taxpayers’s expense and on the backs (literally) of injured employees.

  2. #2 Jason
    May 30, 2013

    Not to mention the businesses that circumvent the system also gain an unfair advantage when bidding due to low exp. mod. rates and ultimately lower operating costs.

  3. #3 Mark
    Columbia, MD
    May 30, 2013

    Glad to see the reference to Franz Kafka, who worked in a workers’ compensation bureau in Bismark’s Germany Kafkaesque is certainly a good description of WC system.

  4. #4 Johanna
    Chicago
    May 31, 2013

    The number of emergency room visits not being paid is shocking enough — but the biggest ripoff, of the workers and the “public” alike, is the wholesale dumping of disabled workers onto Social Security Disability. Technically an employee who’s found “permanently and totally disabled” is entitled to collect workers comp for life — but in practice the insurance companies starve them out, wait till they qualify for SSDI, and then pay a paltry cash settlement. The biggest and most complicated part of workers comp settlements these days is the “Medicare set-aside” — a pot of spend-down money that must be carved out of said paltry settlement to protect Medicare from claim-related medical costs, at least for the first few years. The injured worker gets less money, and SSDI gets soaked. It’s criminal.

  5. #5 Mary
    Minneapolis
    June 1, 2013

    Kafka worked in Bohemia, which was at the time part of the Austria-Hungarian Empire. Much as Bismarck might have liked to control that area, he did not, and he was dead by the time Kafka took the work comp insurance job.

  6. #6 Steve Cattolica
    United States
    June 6, 2013

    Not having read the entire study and before coming to any hard conclusions about this situation, I believe it is very important to find out of those ER services billed to another source other than the workers’ compensation carrier or self-insured employer, did those other sources eventually subrogate their costs to the responsible carrier or employer. ER physicians and department do not want to deal with the problems of the comp system. As a practice, it is my experience that the ER physician group and the hosptal will purposefully bill another source just to be paid more timely and without the hassles inherent in the comp system. However, services provided by providers downstream of that initial ER visit are likely to “do the right thing” once the carrier becomes known and the claim accepted. This leaves the non-comp health care plan/insurer that paid the ER bill holding the bag or subrogating to the comp insurance carrier for reimbursement. The number of subrogated claims must be accounted for prior to coming to any conclusions about the initial ER billing.

  7. #7 Kelly Connelly
    Pacific Northwest
    June 10, 2013

    I think individual employees should insure themselves for job related injuries not the employer. There has been way too much president and consequence put on the backs of the employers and not enough on the individual employee for job related injury incidents. That way when employees get hurt they can suffer their own consequences by paying their own higher premiums because of their own actions. I would bet the farm that you would see waaaaay less on the job injuries if it wasn’t all on the employers back. People tend to be more careful when they know its their own hide that will take the bite.

  8. Kelly,
    This study suggests that employers’ workers’ comp insurance premiums aren’t being affected by on-the-job injury incidents because they aren’t being billed to workers’ comp. 11.4% of the workers paid out of pocket and 21.4% used their private health insurance (which probably had deductible and/or co-pay). Sounds like workers’ hides are already taking the bite.