Medical costs are untouched in Oklahoma's proposed workers' comp changes

Lawmakers pushing for workers' comp reform are focused on cutting benefits to injured workers and not on slowing down major increases in medical costs. But analysts say real savings will come by capping utilization and not prices.
BY ZEKE CAMPFIELD zcampfield@opubco.com Modified: April 6, 2013 at 1:22 am •  Published: April 8, 2013

Despite questions about their effectiveness, spinal fusion operations — in which two or more vertebrae are fused together — are among the most expensive and common procedures performed under Oklahoma's workers' compensation system.

They are also among the most protected procedures under both current and proposed reforms to the state's system.

Senate Minority Leader Sean Burrage is questioning why an earlier plan to limit medical reimbursements to 150 percent of Medicare costs — estimated to bring about $12 million in additional savings — was yanked from the proposed reforms and replaced instead with steeper cuts in payouts to injured workers.

“This is a group of people who have been quick to cap things like damages for people who have been in car wrecks, damages for people who have been burned in fires,” Burrage, D-Claremore, said. “They've been quick to cap things for other people; why not say doctors can make 150 percent of the Medicare reimbursement rate?”

But others say the steepening cost of treating injured workers has more to do with utilization than with price.

According to hospital discharge data compiled by the state health department, there were at least 1,756 spinal fusion procedures covered under workers' comp in 2010, a total claims payout of more than $121 million.

That reflects about a third of all medical claim reimbursements paid to physicians and hospitals over the course of a year — money paid by employers and their insurance companies for a procedure that at least one national study has indicated could make injured workers five times more likely to become permanently disabled than those with similar conditions who don't have the procedure.

Spinal fusion discharges made up about 40 percent of all inpatient treatment of workers' comp claimants over a year, according to the hospital data.

“What more do you need to know?” Burrage said.

Spinal fusions of the neck and lumbar comprised the top four most frequent surgical claims filed through the system in 2011, according to a list compiled by the National Council on Compensation Insurance.

Spinal cord surgeries made up three of the five most frequent anesthesia claims in 2011, and spinal X-rays or MRIs comprised 10 of the top 11 most frequent radiology claims, according to the council.

Medical claims make up about 45 percent of all payouts under the comp system in Oklahoma, which is far less than other states in the region. But at $969 million, total system costs in Oklahoma are about four times that of Arkansas.

A full two-thirds of all medical payments under the system are for inpatient procedures, compared with a national average of about 42 percent.

Mike Seney, a senior policy analyst with the State Chamber of Oklahoma, said the proposed cap on medical reimbursements was dropped because an anticipated reduction in claims under the proposed system would reduce the number of surgeries.

Treatment guidelines adopted in 2011 are no longer mandatory under the proposed system, but a switch from a court-based system to an administrative one would give its oversight commission the ability to adjust the fee schedule, Seney said.

“We believe that the new commission, through rule making procedures and the wider-spread usage of (treatment guidelines) across the board, is going to lower the costs across the board without having to be quote-unquote mandatory,” he said. “We're going to see a lot less surgeries done, too.”

Richard Victor, executive director of the Workers' Compensation Research Institute in Massachusetts, said medical costs for the workers' comp system in Oklahoma increased by 10.2 percent between 2009 and 2010, the highest cost increase in the nation.

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