HCOs Bring Benefits to Workers’ Comp Claims

Higher workers’ compensation prices threaten the health of many small and mid-size companies. But you have several options, and the smart thing is to act before things get worse.

The key is to manage the treatment given to the ailing worker as best you can--at the moment, not easy to do--and hang on in the hope the Legislature makes things easier for you later this year.

Premiums for workers’ comp insurance have risen 20% or more since last summer, with no end in sight. Insurers want to stop losing money on the risk, and the Legislature looks ready to increase the benefits payable to ailing workers, which rank among the lowest in the country.

Any increase in benefits, of course, pushes premiums upward, but the word in Sacramento is that the Legislature may soften the blow by giving employers a key weapon in fighting runaway costs in workers’ comp claims--long-term control over the treatment given an ailing worker.

State law allows you to control treatment for only 30 days unless you contract with a health-care organization, or HCO, to oversee who does what for your injured employee, in which case you get control for as long as a year. Business and insurance industry lobbyists in Sacramento hope to persuade the Legislature to extend the 30-day period of control, whether or not the individual employer brings an HCO into the picture.

The question for employers in the meantime is what to do now to put a lid on the workers’ comp mess--even if only to survive long enough to see the Legislature act.

One option is to hook up with an HCO. Authorized by the Legislature five years ago, HCOs seek to bring the cost-containment benefits of managed care to workers’ comp. HCOs licensed to do business in California include Priority CompNet, Torrance; MedEx Health Care, Santa Monica; Medical Group at City Center, Oakland; CompPartners, Irvine; CorVel Corp., Gold River; Kaiser Foundation Health Plan, Oakland; and Sierra Health & Life, Las Vegas.

But HCOs aren’t for all small to mid-size businesses. There are, for one thing, some obstacles to overcome in contracting with an HCO--starting with the question of whether your workers’ comp insurer even knows about HCOs, much less whether it does business with one of them.

The State Compensation Insurance Fund, for example, from which more than 70% of California’s small businesses and more than half of its mid-size companies obtain workers’ comp insurance, doesn’t contract with HCOs to handle workers’ comp cases and has no intention of doing so any time soon, said Lisa Middleton, who oversees claims and rehabilitation services for the state fund in San Francisco.

Instead, it has its own preferred-provider network and contracts with Kaiser Permanente to offer coordinated care for workers’ comp cases statewide, Middleton said.

As for the private-sector insurers selling workers’ comp coverage in California, not all know about HCOs. Among those that do, not all promote the idea--some because they offer preferred-provider and case-management services of their own and some because their agents don’t want to saddle their business-owner clients with the paperwork involved in contracting with an HCO.

The paperwork is not overwhelming, however, and it might prove a minor irritant if it helps solve your workers’ comp problem. The paperwork mirrors that of a typical group health plan: You must gather and report data on your employees--name, address, age--and update it as your payroll changes. You must also set aside time to educate your employees on the ins and outs of workers’ comp under an HCO. Once a year, you must offer them a 30-day open-enrollment period.

In any case, ask your insurance broker about HCOs--and keep asking until you get a definitive answer from your insurer as to whether it contracts with HCOs and what’s involved in signing on. Ask about premiums too; some insurers cut them for employers that opt for HCOs.

Also, find out what kind of case-management and workplace-safety services your insurer offers and make use of them, focusing particularly on getting your injured employee to physicians and other medical professionals who understand that the object is to get the worker well and back on the job as soon as possible.

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Recent Financing and Insurance columns are available at http://ukobiw.net./finin. Juan Hovey can be reached at (805) 492-7909 or at [email protected].