With the on again, off again, drama of Illinois workers comp reform, many wanted to know what the reforms were about, what they actually meant, questioned the future impact of the reforms and questioned whether the reforms were far too little or far too great or in the wrong direction? It seems that everyone had a suggestion and a strong opinion on what needed to be done. From what I see, your position and your opinion depend on where you sit and the view from your perspective. Myself, I have never seen so many differing proposals or so much sponsored workers comp legislation.
Let me start off by saying that before the 2005 reforms, Illinois had no medical fee schedule in place for workers compensation. Doctors and hospitals would charge what they considered to be the "usual and customary" rates in any given area. Those rates varied greatly by provider and injured employees were allowed their own choice of 2 doctors for work injury care. Both factors made estimating or controlling the medical costs or medical reserves for employers and insurance carriers difficult. Many employers accused employees of doctor shopping for a favorable opinion. Some of that was certainly true and much of it was guided by the advice of an experienced Illinois workers compensation attorney. Of course workers always have their own network of favorable doctors by word of mouth.
The 2005 Medical Fee Schedule introduced certainty on medical costs and medical inflation by placing caps on doctor and hospital medical fees but they did not limit outpatient services and did not limit the choice of doctor for the injured worker. In 2009 the Illinois workers compensation fee schedule was extended to cover all outpatient facilities like physical therapy and ambulatory surgical centers but the 2005 reforms failed to regulate pharmacy, medical hardware or medical implants. These caps provided some reliability on what the doctors and hospitals could charge for procedures but they did not control all associated medical expense. The caps also failed to address out of state medical providers except to limit payment to 76% of actual charges.
Importantly, the 2005 medical reforms capped rates of medical inflation and tied increases in the fee schedule to the increase in the consumer price index for urban areas (CPI-U) but our schedule was criticized as the 2nd highest workers comp reimbursement rates for hospitals and doctors in the nation (I should point out for those states that have a fee schedule since some states still don't).
Attempts at limiting medical care with Utilization Review under the 2005 reforms were largely ineffective in limiting the number of visits to physical therapy, number of chiropractic visits or the number of visits for ongoing pain management because the UR reports (Utilization Review) although granted by statute were largely held to be hearsay documents and therefore not admissible into evidence. The insurance carriers can blame themselves for UR reports not being admitted into evidence. If they had used local in-state, Illinois doctors, surgeons, physicians and chiropractors as suggested for their Utilization Review programs for assessment of proper reasonable medical care, the depositions of the certifying doctor denying care could have been available to the opposing attorneys and then their opinions could have gone into evidence in the form of a deposition but subject to cross examination rights by the injured workers' attorney.
If I were the judge, even if the UR reports did come into evidence, I don't know that I would ever believe some out of state doctor from New Jersey on what remained reasonable and necessary medical care in Illinois on a cold review of medical records either, especially when that doctor had never examined the patient. Nonetheless, UR might have worked far more effectively for insurance defense carriers and attorneys if they had used Illinois doctors for their reports.
Recently, in this unrelenting recession, our Illinois employers were loudly demanding cuts in high workers compensation costs. Our Illinois Senate spent the last 7 months reviewing options and holding public hearings throughout the state. Multiple reform measures were introduced by multiple parties but none could be agreed upon politically, largely because in any reduction in workers compensation costs, it would have to be borne by someone invested in the system-- either by reduced benefits for the injured workers, the doctors, the lawyers, the hospitals or the insurance carriers. There was very little agreement on who should give up money or any rights and while the haggling persisted, some of our major Illinois employers threatened to leave the state.
Governor Quinn promised to deliver Illinois business a new package of Illinois workers comp reforms and Michael Madigan and the Illinois Democrats in the House were able to deliver and pass the reform legislation on 5/31/11 after much haggling and fighting. The legislature passed these reforms in the name of attracting new JOBS.
Republicans in the House would not support the workers compensation reform package largely because medical rates for doctors and hospitals were to be cut by 30% off the current fee schedule in the 2011 reforms. These drastic cuts of 30% in reimbursement payments were fairly severe for anyone's operating budget and several hospitals testified they would be forced out of business. But, I have never seen Republicans not want to cut costs for Illinois business. It seems that the House Republicans wanted Illinois workers comp reform but they didn't want to severely cut medical costs by 30%.
It should be noted however that Illinois House Republicans were willing to cut medical payments in Illinois workers comp payments by 20% but they were dealt the severe blow of 30% reductions in payments as to what is considered "reasonable" payment for medical. Those cut rates still far exceed Blue Cross payments, Medicare or Public Aid payments but now some of our best doctors in Illinois may elect to opt out of Illinois workers comp and not accept the new reduction in payments, especially if they don't need to.
In private conversations with insurance specialists, there is some talk among workers comp insurance professionals that they are willing to pay a higher workers comp premium rate over the now allowed Illinois workers comp medical reimbursement rates for exceptional operative results and outstanding surgical outcomes. The carriers after all save far more money when the permanent injuries are limited by talented doctors and a worker can return to work. Those workers comp payment rates can be governed by a contract for workers compensation medical care and a provider contract will control over the current Illinois workers comp medical fee schedule reimbursement rates.
I suppose its much like the old saying that "you get what you pay for". Discounted prices will usually lead to higher frequency of visits on discounted medical rates for services and in the real world, the best results cost money.
In the new 2011 Illinois workers comp reforms, PPO plans have now been introduced to limit the choice of doctor by the injured worker to a PPO network (for participating employers with contractual PPP agreements with providers) with limited exceptions for choice of outside medical provider for the injured worker.
The 2011 compromise package is somewhere in the middle between the previous rights of injured workers to choose their own medical care and the full list of demands by Illinois business groups for slashing workers compensation costs. These new 2011 Illinois workers comp reforms represent the most major reforms in decades, and in my view, probably the largest reforms since 1975. Greg Baise, president of the Illinois Manufacturers’ Association has said “We have been fighting for this kind of reform since 1975.” as quoted in the Insurance Journal.
For the 1st time in my career, the injured worker's choice of doctor is very limited whenever an employer participates in a new approved PPP plan. UR reports will now be admissible into evidence but telephone depositions will be available to cross examine out of state physicians, surgical hardware and surgical implant costs will be regulated to a cost plus basis, costs for prescriptions that are dispensed outside of a pharmacy or through a doctor's office will be regulated, presumptions exist against a compensable accident in cases with blood alcohol intoxication of .08 or with any evidence of drug impairment and many other numerous changes have transpired including a hugely dramatic change of all Commission staff by terminating all the Hearing officers of the current administration. Of course, some of the best and most experienced arbitrators and Commissioners are expected to be reappointed but not all will be reappointed and a fairly large reduction is expected in the number of hearing sites and downstate arbitrators. (see our subsequent post on reduction of downstate hearing sites)
No, these new 2011 workers comp reforms do not meet all the demands by Illinois business groups for complete control of medical care, and no they don't severely slash workers benefits all the way back to the days of the company store but they do meet half way in the middle somewhere by introducing PPO plans, by introducing AMA Guides as a reference point for arbitrators in permanency awards and in cutting the length of workers' wage differential awards for injured workers with partially reduced earnings due to injury.
Going forward with these new reforms, Illinois will be a much more "business friendly" place to encourage job growth and to encourage companies to locate here. But, there is no question that these cost reductions were borne by cutting rights of injured workers to choice of medical care and by cutting payments to doctors and hospitals by 30% in order to lower the workers compensation costs for the employers. Was the compromise worth it ?? Will there be enough savings ?? Will there be the promise of new jobs or just higher profits by insurance carriers ?? I say yes there will be savings but exactly how much will sort of depend on whether the employer participates in the new PPO preferred medical provider programs or not and on the profit margins of the insurance carriers. There are some new major changes in place to monitor profitability of insurance companies and to keep an eye on the Illinois insurance market. I am sure that insurance carriers aren't happy with these new reporting restrictions on them either but they are still lucky that their profits weren't capped as well like some of the other states. Everybody invested in the system had to "have some skin in the game" to share a portion of the cuts to quote Kwame Raoul.
The Dept. of Insurance expects up to 10% reductions on employer insurance premiums mainly due to the 30% cuts in medical fees but I expect that savings will be much greater in the 15% or even higher range generated by the new PPO plans, especially when it comes to the construction trades and total loss of medical choice to PPO plans. New pilot programs are yet to be set up for handling workers comp rights through the collective bargaining agreements but these changes are coming. The savings on medical payments will be fairly immediate starting in September 1, 2011 when the 30% medical fee cuts kick in but savings through PPO plans and other regulations will take time for full integration and acceptance by the industry at large and time to track and report the changes.
A pilot program is being approved by the Dept. of Labor for 2 construction trade unions that are allowed to negotiate away worker's choice of doctor in collective bargaining agreements for complete employer control of medical choice restricted only to PPO plans and will now allow for alternative dispute resolution such as going through binding arbitration, mediation or union grievance procedures instead of the Workers Compensation Commission. Details are still in formation.
Here is our short list of the major reform package of 2011. Its not intended to be all-inclusive list but only an overview of major 2011 Illinois workers compensation reforms. 16 Major Illinois Workers Comp Reforms 2011 (slow loading .pdf)
We will try to update or modify the summary as needed and as more details become available.
Thank the Governor and the Democrats in the House and a bipartisan effort in the Senate for significantly cutting our Illinois workers compensation costs and for trying to attract new jobs and bring new business to Illinois. See Rich Miller's political description from the Capitolfax.com blog. He tracked the constant progress of reforms and other legislative efforts this session. As the legislative effort unfolded, I kept a constant eye on Capitolfax.com and Illinois.StatehouseNewsonline.com . Let me give a shout out to both for excellent coverage.
There are many ways to cut costs in our system but its complicated, someone's interests will always get cut. Someone's Ox will always get gored. There is no doubt that these reforms lower Illinois workers compensation costs for employers, there is no doubt that they reduce medical provider fees by 30% and there is no doubt that they restrict the rights of injured Illinois workers to choice of medical care. Our medical providers still remain the 2nd highest paid workers comp reimbursement rates in the nation so they cannot scream too loudly about the cuts but, some of our best doctors may decide to stop treating injured workers.
The number of claims has been dwindling by 40% due to much higher safety standards and safety enforcement but employers have continued to see a rise in premium costs. The new insurance reporting should soon tell us where and why those costs continue to go up as claims go down. Employers should soon see premium savings from their carriers. It will take some time for some of these changes to start showing up with significant savings but the Department of Insurance will request new premium advisory rates based on these changes and reforms to be announced fairly soon by September.
For questions on changes or how it will effect employers, Illinois medical providers or injured Illinois workers, it would be wise to consult an Illinois workers comp atttorney or experienced risk manager or experienced broker or maybe even all three for a conference. If not us, then consult at least someone experienced in Illinois workers compensation. These are very significant changes despite the heavy background drum beat by the pessimists and the naysayers. Some of the new rules and forms have yet to be implemented but if they don't produce some savings, expect some heads to roll and some much heavier insurance regulation. Some of the changes require the Dept. of Insurance and the Illinois Workers Compensation Commission to adopt new rules, forms and procedures.
Several prominent workers compensation lawyers will be giving seminars and webinars. Some of the dates for certain changes in the new provisions are staggered. Governor Quinn signed the workers comp reform bill into law on June 28, 2011.
While we don't have a crystal ball on the subject, the structure and outline of the actual major workers compensation reform package is set out in HB1698 which recently passed Illinois House approval on May 31, 2011.
Chicago Workers Compensation Attorney -- 6-08-11