Workers’ compensation programs and health insurance plans have traditionally existed in separate lanes. Workers’ comp, which covers work-related injuries or illnesses, is a legal requirement of the employer in most states. Conversely, health insurance covers non-work-related injuries and illnesses, is not required by law in most states, and whether or not it’s offered can vary greatly based on the size of the firm and the state in which it operates.
Having to obtain medical care from two separate systems is a burden for employees, compounded by the direct and indirect costs associated with workers’ comp claims. Care providers tend to charge more to workers’ comp payers for the same services they provide for health plans due to the high-volume discounts they offer to insurers (which account for 98% of the total medical spend). Those same discounts do not apply to care obtained through most workers’ comp programs.
The current dual-system model is inefficient, wasteful, and inconvenient. There is a clear need to integrate workers’ comp and medical benefits programs to cut down on costs and alleviate the hassle of dealing with separate care silos. It’s possible, and its time has come.
Unions and employers working together
With more than 30 years of experience working with employers and labor unions on medical benefits and workers’ comp programs, I’m aware the state-supported workers’ comp system can be so slow and fraught with adversarial potential. Because of this, many unions and employers are now exploring integrated options that provide a more streamlined experience for members and quicker access to high-quality medical care, rehabilitation services and other ancillary services. This kind of supervised and medically directed guidance, necessary to help get members back to health and work more quickly, is missing from most workers’ comp programs.
By integrating workers’ comp into regular medical benefits, where state law allows it, members can enjoy a simpler process by having their workers’ comp and their regular medical claims managed under one umbrella. Applied broadly, this synergy results in better system efficiency, reduced costs, increased transparency, and massive savings in time and energy. Bringing preventive care, wellness, and disease management services together leads to more attentive care with less bureaucratic involvement and less time off the job for members.
The integrated model is a win for employers, where keeping members healthy and on the job is top-of-mind. For unions, streamlining member benefits and providing better value can lead to opportunities to expand benefits and improve the financial position of the union. Integration yields the best of both worlds.
Obstacles to integration, and how to overcome them
There are challenges to integrating, and maybe the most glaring is the variation in state laws that present a patchwork of different legal environments for workers’ comp arrangements. Some states limit what employers can do to manage workers’ comp claims. Other states prohibit or strictly limit self-insurance for workers’ comp, and most health insurers and/or PPO networks don’t offer workers’ comp coverage or services.
These gaps are an excellent opportunity for third party administrators (TPAs) and PPO networks to step in and help. Some of these partners may have expertise in both health plan management and workers’ comp programs and can take the lead in helping craft plans that are compliant with applicable laws. They also can negotiate with and educate providers about integrated programs.
How can self-insured workers’ comp programs thrive in a state that doesn’t permit them? A union-based captive solution may be an attractive option. In this arrangement, all employers contribute premiums into a union-based captive, which can be used for general liability and other coverages. Both parties benefit here – employers see savings created by the program through decreased future premiums and/or dividend payments, and unions benefit from more efficient use of health care contributions, ultimately returning savings to the members. Employers and their unions can essentially partner to create their own programs, select their own vendors, and control their own risks.
Integration offers a unique opportunity to create a better-functioning system and seemingly formidable obstacles to integration can be more easily overcome than many expect. Employers and unions owe it to their stakeholders to investigate how TPAs can provide these options, transforming an inefficient and bifurcated system into a single nexus that returns workers to health and work more quickly.
Photo: Dmitrii_Guzhanin, Getty Images