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Refiguring workers' comp in Indiana

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Most stakeholders agree Indiana needs to provide better benefits to workers injured on the job. But a bill that would do just that also would reduce and cap the amount hospitals receive to treat people covered by workers’ compensation insurance.

Hospitals say they’re being squeezed, but insurance and industry officials say a proposal to pay health care facilities 125 percent above Medicare reimbursement rates on workers’ comp claims is more than generous and years overdue.

comp“There’s still going to be a lot of heavy lifting in the Senate on that issue,” said Rep. Matt Lehman, R-Berne, whose House Bill 1320 passed the House after its hospital reimbursement provision was increased in committee. As introduced, the bill would have paid hospitals 75 percent more than Medicare pays.

“The initial discussion during the summer study committee was, should we be using some sort of commercial rate, or do we use a Medicare-plus system,” said Lehman, a partner in his hometown firm of Bixler Insurance Inc., and chairman of the House Insurance Committee.

More than two-thirds of states have adopted a workers’ compensation hospital reimbursement schedule based on Medicare rates, plus a defined percentage. In Indiana, hospitals currently bill workers’ compensation their chargemaster rates – the amount paid by uninsured people and not subject to disclosure – unless the employer or insurer is large enough to negotiate rates independently.

“When it comes to reimbursement, our hands are tied,” Lehman said. “We don’t have any cost containment built into our system.”

Indiana Worker’s Compensation Board Chairman Linda Hamilton said it’s up to the Legislature to decide an appropriate level of hospital reimbursement, but it’s clear a cap is needed. She has been pushing for caps for about seven years as the costs of reimbursement steadily climbed.

“When you compare Indiana to others states, the cost of providing medical care to injured workers is very high,” she said. “We’re one of the top four or five states in the nation for that.”

Ed Roberts, a lobbyist and vice president of the Indiana Manufacturers Association, said industry has sought for decades to rein in workers’ comp care costs. He said previously about a third of a workers’ compensation premium paid for health care costs. Now, that figure is more than 80 percent. That leaves very little to provide direct benefits to workers.

“They are preposterous to say the least,” Roberts said of hospitals’ workers’ comp reimbursement rates. He acknowledged HB 1320 would cut reimbursement hospitals receive under workers’ comp, but said the proposed level of pay “is so high as to make it unworkable.

“It’s several times more than what is appropriate or fair,” Roberts said. Hospitals use workers’ comp reimbursement, he explained, to shift costs and cover unpaid care.

Employers walk a fine line, he said. They want to ensure

workers receive the best care possible and that hospitals are paid adequately for their service so they don’t opt out of providing workers’ comp service. “That doesn’t require us to provide (hospitals) leather couches, parking garages, marble lobbies and original paintings on the walls,” he added.

But Tim Kennedy, a partner at Hall Render Killian Heath & Lyman P.C., said critics aren’t in a position to determine the level of reimbursement hospitals need to treat those covered by workers’ compensation policies. Kennedy represents about 130 member health care facilities as a lobbyist for the Indiana Hospital Association.

“We think the public policy of Indiana should be that hospitals be reimbursed under workers’ compensation at the rates paid in the commercial market,” Kennedy said. “Hospitals should not reap a windfall on workers’ compensation reimbursement; they also should not have to take a loss.”

Kennedy said a working group of hospitals that provide a large volume of workers’ compensation service concluded that the level of 125 percent above the Medicare rate the House passed “is not sufficient to get hospitals to commercial rates.

“We have some figures in mind, but we’re going to be working with the Senate on what that might be,” he said, declining to divulge a figure.

Marty Wood, president of the Insurance Institute of Indiana, said studies have shown that efficiently managed hospitals can break even or run with a slight profit on Medicare reimbursements. The institute supported HB 1320 as it was introduced with reimbursement at 75 percent above Medicare rates, but he said paying hospitals 125 percent over Medicare would make Indiana an outlier among states that have adopted such models.

Other states typically assure hospitals reimbursement at a rate of 35 to 75 percent above Medicare, Wood said. Among neighboring states, only Illinois reimburses at a rate higher than proposed in HB 1320. Other next-door states provide far less – 34 percent to 44 percent above Medicare.

Wood said the question for lawmakers is how much statutory profit they decide to write into the law for hospitals taking workers’ comp insurance.

“There is no middle ground,” he said. “Either the hospitals are going to lose, or the payor side is going to lose, and we both have known that all along. For years, we’ve been trying to come up with a solution that would be a middle ground.”

The legislation also would establish a $2 fee on every workers’ compensation insurance policy to help pay the board’s costs in administering disputes over health provider reimbursement.

Meanwhile, workers’ nonmedical benefits would receive a boost for the first time in several years if HB 1320 becomes law.

The maximum benefit capped at $325,000 in 2009 would increase $15,000 annually beginning in 2014, maxing out at $400,000 in 2018.

Likewise, the proposal includes an escalator for the average weekly wage used to determine nonmedical temporary total or partial disability, as well as total permanent disability.

Since 2009, the average weekly wage basis was $975. HB 1320 proposes to raise that by $45 annually beginning in 2014 until the average weekly wage rises to $1,200 in 2018.

Lehman said the study committee determined that caps on hospitals should be accompanied by increases in the amount of nonmedical benefits injured workers were entitled to under formulas the state uses to compensate workers’ comp payments.

“I think it was the right time” to raise workers’ benefits, Lehman said. “We were in the 40s (of the 50 states) when it came to reimbursement levels.

“This brings it up to where we’re in the middle of the pack, so to speak,” he said.•

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  1. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  2. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  3. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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  5. Some in the Hoosier legal elite consider this prayer recommended by the AG seditious, not to mention the Saint who pledged loyalty to God over King and went to the axe for so doing: "Thomas More, counselor of law and statesman of integrity, merry martyr and most human of saints: Pray that, for the glory of God and in the pursuit of His justice, I may be trustworthy with confidences, keen in study, accurate in analysis, correct in conclusion, able in argument, loyal to clients, honest with all, courteous to adversaries, ever attentive to conscience. Sit with me at my desk and listen with me to my clients' tales. Read with me in my library and stand always beside me so that today I shall not, to win a point, lose my soul. Pray that my family may find in me what yours found in you: friendship and courage, cheerfulness and charity, diligence in duties, counsel in adversity, patience in pain—their good servant, and God's first. Amen."

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