The deficit deal’s impact on workers comp

When Congress reaches agreement on a deal to increase the debt limit, there will almost certainly be parts that significantly affect workers comp. Medicare and Medicaid are on the table, with both likely to lose hundreds of millions in funding over the next ten years.
And as we all know, what happens in Medicaid and Medicare affects work comp via cost-shifting, fee schedule changes, reimbursement rules, and altered provider practice patterns.
It is not a question of ‘if’ these huge programs are cut, but rather “how much”. Accounting for 23% of the Federal budget, Medicare and Medicaid have to be on the table if there’s to be any measurable deficit reduction.
Here’s what may happen in the ultimate deficit reduction agreement. along with my assessment of potential impact on work comp
– Reductions in the amount Medicare pays hospitals for bad debts resulting from Medicare beneficiaries’ failure to pay deductibles and co-payments; right now CMS pays 70 percent of those debts after the hospitals make “reasonable efforts” to collect.
Impact – hospitals will look to increase reimbursement from work comp and other private payers; work comp is usually the most profitable payer for hospitals; I’d expect this to increase.
– Cuts to Medicare payments to teaching hospitals for physician training and other programs.
Impact – more incentive to seek additional reimbursement from work comp
– Allow or require CMS to negotiate directly with pharma for drug prices.
Impact – possible cost shifting to comp as pharma and other stakeholders seek additional funds to offset lower Part D reimbursement
– Reductions in Federal subsidies for Medicaid.
Impact – incentive for providers to cost shift; however Medicaid providers may not treat many work comp claimants so impact may be minimal.
– Give more power to the Independent Payment Advisory Board (IPAB) created by the Affordable Care Act; set a target of holding Medicare cost growth per beneficiary to GDP per capita plus 0.5 percent beginning in 2018.
Impact – possibly positive, as improvements in delivery systems, reimbursement, pay-for-performance, clinical guideline adoption and acceptance, and other tools/processes would help improve care and reduce errors.
– Reduce reimbursement for durable medical equipment (seen any scooter ads lately?)
Impact – lower margins for DME manufacturers and distributors will motivate cost-shifting, however fee schedules may mitigate those efforts. Watch for creative ways around fee schedules and ‘upselling’.
Public opinion will help shape the outcome; recent polls suggest the public is more willing to accept some reductions rather than a wholesale overhaul of Medicare and Medicaid. That said, the health industry’s various stakeholders are already hitting the phones hard to forestall – or more likely minimize – reductions to their favorite programs.
What does this mean for you?
We’re the mouse; CMS is the elephant; keep your head up, watch out for those big feet, and be nimble. Work comp will be affected by the ultimate deficit reduction agreement; success favors the aware and the well-prepared.