07 May 2018

Affordable Care Act’s Impact on Workers’ Compensation Claims in California

A new study finds some impacts of the ACA on California workers’ compensation claims, but perhaps not as much as expected.

By Roger Rabb, J.D.

The Affordable Care Act (ACA) took effect in January 2014 and the numbers for California indicate that by 2015 2.5 million additional California workers had acquired health insurance coverage either through the ACA or through the expansion in Medicaid. This expansion in health insurance coverage for workers should have some effect on workers’ compensation claims, if only because newly-insured workers now have an option to filing a workers’ compensation claim for a condition that may or may not be work-related. But others aspects of workers’ compensation could be affected as well.

In a new study by WCIRB California, “Impact of the Affordable Care Act on California Workers’ Compensation,” researchers Tim Basuino and Julia Zhang, PhD, have taken a look at this ACA impact by comparing workers’ compensation claims data from 2013, the last pre-ACA year, with numbers from 2014 and 2015. For purposes of the study, employers were categorized into groups based on whether they were expected to be substantially impacted by the ACA or not. For example, small employers were expected to be substantially impacted by the ACA, while large employers were not. Similarly, industries were segregated depending on whether they had lower or higher levels of coverage prior to the ACA, as industries with lower levels of pre-ACA coverage were expected to show greater impact from the ACA. This research focused on four general topics, as described below.

Access to Care

The first research issue was whether the ACA has impacted injured workers’ access to medical care, given that the ACA might have increased demand for medical providers due to a larger population of insureds. This study found no noticeable impact. Measured by the time from the date of first injury to the first physician visit, the average injured worker both before and after the ACA had their first physician visit about three days after the date of injury, with a median time of one day for the first visit both before and after the ACA.

Physician Fees

The second research issue was whether an increased demand for medical care providers has resulted in an increase in workers’ compensation medical costs by way of reduced medical fee schedule discounts. This study found no consistent result, although determining the impact of the ACA in this area was trickier to assess as California implemented changes to its physician fee schedules beginning in January 2014 that generally increased fees in the categories of Evaluation and Management and Medicine, while generally decreasing fees for Anesthesia, Radiology, and Surgery.

Nonetheless, with that caveat, this study found that median medical fee schedule discounts among primary care providers increased between 2013 and 2015 (thus resulting in lower costs) in the categories of Acupuncture (12% change), Physical Medicine (0.5% change), and Other Medicine (5% change). Conversely, fee schedule discounts declined (resulting in higher costs) for Chiropractic (-3.4% change) and Psychotherapy (-3% change). There was no observed change in the categories of Evaluation and Management or Radiology and Surgery.

Among specialists, Acupuncture (6% change) and Evaluation and Management (5% change) showed increased discounts in 2015, while Chiropractic (-3.4% change), Physical Medicine (-3.1% change), and Radiology (-5% change) showed reduced discounts. In addition, outpatient surgeries performed at a hospital showed a 1% increase to the median fee discount from 2013 to 2015, while outpatient surgeries performed at ambulatory surgical centers showed a -1.7% reduction to the median fee discount.

Claim Frequency

The third research issue was whether the availability of ACA health care benefits has affected the frequency of workers’ compensation claims, and more specifically whether the frequency of claims for employers that traditionally offered less health insurance prior to the ACA has decreased relative to other employers who traditionally offered more health insurance prior to the ACA. For these purposes, the researchers identified Hospitality, Retail, and Construction as examples of employer groups that traditionally offered less health insurance before the ACA, and Information and Manufacturing as examples of groups that traditionally offered more. This study found that in industries with less pre-ACA health coverage, claim frequency decreased by 4.6% from policy year 2013 to policy year 2015, while in industries with more pre-ACA health coverage, claim frequency decreased by 5.6%.

The study also looked at this issue by employer size rather than industry type, finding that small employers with less than 50 full-time employees showed a decrease in claim frequency of 1.7%, while larger employers with more than 250 full-time employees showed a noticeably greater decrease in claim frequency of 7%. Examining the employer size factor within a single industry that traditionally offered less employer-based health insurance, the restaurant industry, the study found that claim frequency among smaller employers matched the 1.7% decrease found for small employers generally, while the decrease in claim frequency for large employers was only 3% compared to the 7% for large employers generally.

These results were contrary to what the researchers expected to find, as they expected groups that traditionally offered less health insurance, by industry type or size, to see a relatively greater decline in workers’ compensation claims frequency after implementation of the ACA than groups that traditionally offered more health insurance coverage, as some claims that might have been made under workers’ compensation previously by persons with little or no health insurance coverage could be made under standard health insurance after the ACA. The authors noted that other factors, such as improved workplace safety and migration to less hazardous industries, could have impacted their results on this topic.

As part of this research issue, the study also looked specifically at soft tissue injuries, such as sprains and strains of the shoulder, knee, or back. The authors noted that these injuries may not always be identifiable with a specific workplace event and may therefore be less likely to fuel a workers’ compensation claim as the worker’s level of health care coverage outside of workers’ compensation increases. The numbers supported that conclusion. Workers’ compensation claims with soft tissue injuries in industries traditionally providing less health insurance coverage before the ACA decreased by 12% from 2013 to 2015, while such claims increased by 17% over that period in industries that traditionally provided more pre-ACA coverage. Among small employers of all industry types, such claims decreased by 1.9%, while among large employers these claims rose by 4.5%. Looking at just the restaurant industry, claims with soft tissue injuries rose for both small and large employers, although small employers had a much smaller increase of only 4.5% compared to 21.8% for large employers.

Comorbidities

The final research issue was whether the ACA has had any impact on treatment through the workers’ compensation system of chronic health conditions such as hypertension, obesity, and diabetes, as greater availability of health insurance would provide a larger alternative avenue for treating these conditions. While the workers’ compensation data on these comorbidities was limited, the study found that workers’ compensation claims with comorbidities decreased by 3.6% from 2013 to 2015 in industries traditionally providing less health insurance coverage before the ACA, with no recorded change in industries that traditionally provided more pre-ACA coverage.

However, by employer size among all industries, while both small and large employers experienced a decrease in such claims, large employers actually experienced a slightly greater decrease, 7.7% compared to 6.3% for small employers. Similarly, for restaurants alone, large employers experienced a greater decline in claims with comorbidities than small employers, 33.3% to 20%. Given the limited data and these apparent inconsistencies, the study results on this issue were inconclusive.