By Evan Falchuk

Imagine there were a parallel health care system.

In this system, everyone has to be covered.  There are strict controls on how much insurers and providers can charge.  And there are strict limits to make sure doctors do only those tests and treatments that are medically appropriate.

Nothing like that could really exist in America, could it?  Actually, it has for the last 100 years.  It’s called workers’ compensation, and it’s the health care system Americans who have been injured on the job experience every day.

Does it work?

For the industry as a whole, medical claims are the biggest driver of expense.  Frequent conflicts over medical treatment often lead to litigation and dissatisfaction among insurers, patients, employers and doctors.  Financially, it is often a money loser.

But it’s not true for every insurer.  Some have built new approaches to workers’ compensation that improve quality and reduce unnecessary medical costs.  One of them is Safety National, based in St. Louis, Missouri.  Although Safety National has been around for almost 70 years, it is one of the country’s most innovative workers’ compensation companies (it’s also a client of my company, Best Doctors).

As part of my continuing series on “Real People, Real Reform,” I asked Mark Wilhelm, Safety National’s President, to tell me about how his company is changing American health care.

What are the biggest challenges facing workers’ compensation insurers and self-insured employers today?

Self-insured employers and insurers today are definitely struggling with the rising costs of medical treatment. Medical cost inflation continues to be higher than inflation in other parts of the economy.

In addition, many employers are finding it difficult to provide modified duty work because of the economic conditions. This impacts their claims costs and ultimately the carrier’s expenses.  So, I think one of the biggest challenges is trying to find the right balance and rate level to offset increasing medical costs and benefit expansion in what is still a competitive market.

How does the recession impact things? I’ve heard it said that fewer people report claims in tough times, but also that there’s more fraud.  Is that true?

Despite the fact that the economy has created a situation where people are working less, it is important to maintain business as usual.  Employer payrolls are lower, but we know that eventually, they will bounce back.  Fortunately enough, a lot of our payroll is in industries that have not been as affected by the downturn.  But it’s a misconception that despite there being lower premiums that are offset by lower claims frequency that there is an upward trend in fraudulent claims.  The data doesn’t support that.

Still, we believe it is important not to lose sight of long term goals due to short term problems with the economy. Workers’ compensation is a long tail business, especially in the excess market. We try to maintain our focus on long-term cost management.  Safety National continues to invest in other cost containment strategies, such as Best Doctors.  While some carriers are reducing client services, we are increasing them as a way to help our policyholders contain costs.

Is there a difference in the quality of care that injured workers can get through workers’ compensation coverage as compared to their regular health coverage?

It’s comparable, however, there are some issues that make things more difficult in the workers’ compensation market.  Some excellent medical providers prefer not to accept workers’ compensation patients due to increased documentation requirements, disability ratings and the cost containment components of workers’ compensation claims.  However, there are also providers that will not accept Medicare patients because of low reimbursement rates and red tape.

But getting an accurate diagnosis can be an issue in both the group medical and workers’ compensation market. It’s extremely important that injured workers receive the correct diagnosis as quickly as possible. This allows for proper medical care to be provided in a timely manner, which aids in the recovery process.  That is why we think our partnership with Best Doctors is so important. It allows us to achieve the best possible clinical outcomes on some of the most challenging and costly workers’ compensation claims.

How do workers’ compensation managed care laws affect that?

Managed care laws can vary greatly depending on the jurisdiction.  Often times, the laws intended to assist in managing medical costs contain loopholes. For example, a procedure can be denied by utilization review, but a judge can overrule the utilization review decision and allow the disputed treatment.

Also, in many jurisdictions it is difficult for the employer or carrier to ensure the injured worker receives quality care.  If the employee has full choice of medical provider, the employer/carrier is often left only with the option of obtaining an independent medical exam to try and influence the choice of a quality medical provider.