NH workers' comp costs exploding
CONCORD — New Hampshire has some of the highest workers’ compensation costs in the country, according to an Insurance Department analysis presented Thursday morning to a special committee studying the issue.
Gov. Maggie Hassan announced the creation of a task force to reform the system hours after the study was released.
“As workers’ compensation medical payments soar higher for Granite State businesses, New Hampshire has become one of the most expensive states in the nation for workers’ compensation,” she said in a statement. “Employers and workers have done their part to increase workplace safety, but high workers’ compensation costs remain a burden on our businesses.”
One of the most significant reforms would be a mandated fee schedule that would set limits on what health care providers could charge for services billed to workers’ compensation insurance carriers.
New Hampshire is one of only six states nationwide without a such fee schedule, said Deb Stone, actuary and director of market regulation at the Insurance Department.
A fee schedule bill was introduced in 2011 and died in 2012. Another bill, HB255, which would have set up a statewide commission to study the problem and consider a fee schedule, died last week.
“I have supported legislation that would have created a commission to examine these issues and recommend solutions. But that legislation recently died, and I do not believe that we can wait until the next legislative session to begin working on solutions,” said Hassan. “That is why I will be creating a task force of workers, businesses, insurers and members of the health care community to make recommendations to reform the workers’ compensation system in order to reduce costs for our workers and businesses and to support their efforts to keep our economy moving forward.”
Using data from the National Council on Compensation Insurance, the state analysis claims that on average workers’ compensation surgical procedures in New Hampshire are 83 percent more expensive than in other New England states, excluding Massachusetts, which does not submit data to the NCCI.
The Insurance Department analysis is based on data from the 35 states that do cooperate with the NCCI. Within the pool of 35 states, surgical procedures in New Hampshire’s workers’ compensation program are twice as expensive on average.
The analysis included four categories of physician services: surgical, radiology, physical and occupational therapies, and doctors’ visits. Insurance Department actuaries found that medical costs in New Hampshire exceeded those in surrounding states and the nation by a substantial margin in all four categories.
“New Hampshire is more expensive, not only on average, but for every single individual physicians’ services procedure reviewed, save one,” said Insurance Commissioner Roger Sevigny.
A disturbing trend
Employers are required by law to provide workers’ compensation insurance so that people who are injured or disabled on the job do not have to cover medical bills related to their on-the-job injury. The program also provides for some income replacement during the period of disability.
The medical portion of the workers’ compensation payments has been steadily growing in recent years, to the point where 74 percent of workers’ comp costs in New Hampshire are medical and 26 percent covers lost wages, compared to 60 percent medical and 40 percent lost wages nationally.
“It is my belief, based on actuarial analysis, that the lack of limitation on what can be charged by medical providers and facilities is a major contributor to this trend,” said Stone.
If the trend is not slowed or reversed, officials fear that costs will force insurers out of the workers’ compensation market, create an unsustainable burden on employers and increase the likelihood that more employers will try to classify their workers as independent contractor to avoid workers’ compensation costs.
The employer premium for workers’ compensation insurance is a percentage of total payroll, which varies for different types of businesses. The lowest premiums are in clerical work, the highest in fields like high-steel construction. Premiums for construction companies in New Hampshire range from 15 to 30 percent of payroll.
“Some advocates are pushing for mandated fee schedules, which a lot of states have,” said Paula Minnehan, vice president of finance at the New Hampshire Hospital Association. “We do not believe rate-setting is an appropriate solution. We believe a more comprehensive solution for workers comp should be considered.”
Minnehah said hospitals and doctors don’t just charge what they want. They negotiate prices with the insurance carriers. “That’s how the free market works,” she said, “both in health insurance as well as workers’ comp.”
There may be some need for reforms, she said, which will require more study.
“We believe this is a good first step,” she said of the Insurance Department analysis. “We’re interested in reviewing more data and being part of further discussions with all stakeholders to determine the best approach for our workers’ comp system in New Hampshire.”