Group health v workers comp

One of the frequent questions from potential investors, regulators, and interested parties is why the group health payers are not doing more in workers comp. With the notable exception of Aetna and Wellpoint, the big group health players’ work comp activity is minimal (and in the case of Wellpoint, just a bit over that threshold).
Many group health execs consider entering into the comp business, figuring that if their company can do so well in group, they should be able to clean up in comp – which is in many ways still in the Dark Ages when it comes to medical management.
Superficially, they are right – but only superficially.
The primary difference is that in comp, the payer cares about the claimant’s functionality – if the injured worker can’t work, the payer is ‘on the hook’ for lost wages as well as medical care. This is not the case in group, where the payer couldn’t care less if the claimant returned to work or is sitting home.

In group, the financial liability is for that plan year, and (almost always) ends after claims incurred during that year. Comp also covers claims incurred during that year, but covers bills for that claimant until the claim is closed.
Confused?
That may be because a ‘claim’ in group refers to a medical bill, while a comp ‘claim’ is the event or incident that causes the injury or illness. Comp claims can stay open for years or even decades – making reserving for future costs a critical aspect of WC.
Comp’s ‘benefit design’ is ‘first dollar, every dollar’ – there are no deductibles, copays, or coinsurance for any treatment that is focused on the disabling condition (although in many cases a comp payer will cover bills for a medical condition that is preventing the injured worker from returning to work). This puts a premium on Utilization Review, clinical guidelines, and the ability of the payer to work with the treating physician(s).
Group (or individual health) benefits are controlled by the insurer’s (or employer’s) benefit plan; comp benefits are completely state regulated – and can vary greatly across the states. In some states, employers can require injured workers to go to specific providers while in others this is illegal.
Medical, hospital, pharmacy, and ancillary fees in WC are subject to a state-set fee schedule in many states; again this fee schedule can vary from quite lucrative (CT) to very low (MA).
In some ways, the big health plans are right – medical management in comp is outdated and ineffectual. But what they fail to consider is that comp medical management is focused on return to work, on productivity, and not just the termination of care.
Health plans would be well served if they considered the impact of their treatment recommendations, provider profiling, and medical management programs on productivity. Because that’s what employers want, and need.