Let’s talk a bit about “skinny,” “lean,” or “narrow” networks, and how injured workers can and often do end up with less than the best of medical care.
One example in the recent media is Dennis Whedbee, a former oil industry worker from Pennsylvania. After he lost his arm on the job in North Dakota, his doctor recommended a prosthesis with a movable hand. His insurer then sent him to a doctor in Minnesota who recommended a prosthesis with a metal hook. “’I lost a hand,’ Whedbee pleaded with the insurer to no avail. ‘I didn’t lose a hook.’”(See full story here: http://www.propublica.org/article/the-demolition-of-workers-compensation.)
If workers compensation insurance works efficiently -– in the balanced interests of workers and employers –- the provider network would be comprised of physicians who provide high quality care at a good value. But because of the low reimbursement rates that work comp insurance offers, and doctors’ ability to opt out of the network, injured workers are often left with doctors who are less experienced and less qualified as a patient who has another kind of insurance.
Everyone can understand the business need to manage costs, but the fact is that employers are paying the lowest rates for workers’ compensation insurance in 40 years. State Compensation Insurance Fund – California’s largest provider of workers’ compensation insurance – for example, had a $6.4 billion surplus last year. (Highlights from SCIF’s 2014 annual report are here: http://content.statefundca.com/news/News2015/032615-AnnualReport2014.asp.)
Interestingly, work comp insurers pay hospitals often ten times what they pay to ambulatory surgery centers and doctors in private practice who perform identical services. This is largely because of hospitals’ high volume of patients, and their resulting leverage over insurance companies to pay higher reimbursement rates (and to allow hospitals’ bundling of services, which masks the stark cost differential). If you want to explore the gritty financial details of how and why these vastly different reimbursement rates exist, you can read the details in this excellent independent report: http://www.rand.org/content/dam/rand/pubs/technical_reports/2011/RAND_TR979.pdf
Compounding the low reimbursement rates for physicians outside the hospital setting is the fact that recommended care is so often denied by workers comp insurers. The double-whammy of not being able to effectively treat their patients, along with the relative financial loss that work comp patients represent, is so frustrating that many doctors have opted out of the system entirely, leaving injured workers with fewer and fewer viable options for care.