Thursday, May 11, 2006

Unintended Consequences

At the end of the 2005 Idaho legislative session, Sen. John Goedde (R- CdA) introduced a bill to implement a physician fee schedule governing payment to physicians treating injured workers in the work comp system. The bill attracted little attention in the last few days, and it passed both houses unanimously. No legislator asked the Idaho Industrial Commission, the state’s work comp regulatory agency, to comment on the bill.

The new law required the Commission to implement the fee schedule no later than April 1, 2006. Most states take three to five years to produce such a schedule, but the Commission was given only one, which is warp speed for a state agency, especially with such a complex task. To make matters worse, the Commission’s lead employee for medical fee issues was on an extended leave for all of 2005.

The point of the bill was to control medical costs in the workers’ comp system, and thereby control or reduce WC premiums. The fiscal note to the bill states “In theory, workers compensation premium rates could be reduced 2% by passage of this bill.” Everyone supports managing health care costs, but the need for such quick action was not clear.

According to the Commission's 2005 Annual Report, the The Idaho State Insurance Fund is the state's largest WC insurer with $207,507,830 of earned premium, about 54% of all comp insurance in Idaho.

(Side note: The State Fund's website says it has been "Serving workers' compensation needs since 1917", but according to the Idaho Dept of Insurance, the State Fund has been licensed since January 1, 1918. Close, but not correct.)

The Commission produced a proposed fee schedule, held public hearings, took testimony, revised the rule a couple times, and published the rule which took effect on April 1, 2006. The rule only affects doctors, not hospitals or drugs.

There is a lengthy back story to the involvement of the Idaho Medical Association and certain sub-specialties, but the end state is that Idaho now has a fee schedule and some doctors aren't happy.

A few doctors are now refusing to treat injured workers, and several others have made the same threat. Whether this is a bluff remains to be seen, but some patients (injured workers) are in fact currently being turned away. If this spreads to smaller communities it could spell a real problem for an injured worker. I believe we will see The Law Of Unintended Consequences play itself out in the next few months, with injured workers caught in the middle.

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