25 Oct 2018

What the Latest RAND Study on Workers’ Compensation Won’t Tell Us

Researchers Omitted Perspectives From Key Stakeholders

A recent report, published by the RAND Corporation, entitled “How Can Workers’ Compensation Systems Promote Occupational Safety and Health?: Stakeholders Views on Policy and Research Priorities,” by Michael Dworsky and Nicholas Broten, finds, inter alia, that inadequate coverage, less than adequate benefit levels, problems in the delivery of medical treatment, uneven methods of disability determination, and inadequate injury prevention programs prevent America’s existing state-oriented workers’ compensation system from serving the purposes for which it was originally created. The RAND report, building on findings of the Department of Labor’s October 2016 report, which was itself replete with criticism of the nation’s state systems, gives voice to the viewpoints of a group of important stakeholders. The report is likely also to draw criticism from other stakeholders, such as attorneys, whose views the researchers chose to ignore.

Report is Response to NIOSH Request

As a contextual background for the lengthy report (100 pages, including appendices and references), the researchers noted that in recent years workers, employers, and other stakeholders have questioned the extent to which state workers’ compensation systems serve to promote occupational safety and health (OSH) and the well-being of injured workers. In addition to the concerns offered by such stakeholders, officials at the National Institute for Occupational Safety and Health (NIOSH) have had additional queries of their own. Given those disparate questions, NIOSH requested RAND to explore the beliefs and priorities of key workers’ compensation stakeholder groups to determine the most pressing challenges and priorities for workers’ compensation systems. NIOSH also asked RAND to integrate those perspectives into helpful suggestions for further research and policy analysis.

Literature Scan and Stakeholder Conversations

Initially, the RAND researchers performed a literature scan to identify published criticisms of current workers’ compensation systems. Utilizing findings from that scan, RAND then engaged in a series of stakeholder conversations with selected representatives from five key stakeholder groups:

Workers
Employers
Claims administrators
State agency leaders
Occupational health care providers

RAND indicated the choice of workers and employers was obvious, noting that any system must strike an appropriate balance between the interests of workers and employers to remain politically sustainable. It chose the other three stakeholder groups because RAND had concluded they were crucially important to setting and shaping policy, in managing day-to-day operations of the systems, and in providing medical care to injured workers.

Findings of the Research Scan

RAND’s research literature scan identified numerous problems with current workers’ compensation systems, including the following:

Coverage remains less than universal
Benefits are often insufficient
Significant problems exist in determining levels of permanent disability
Medical treatment, while improved in recent decades, still is not always adequate
Safety programs have reduced some types of injuries, but they may also create complex claiming incentives
Overall, the “system” is too complex

The researchers’ literature scan noted that there are important headwinds that could inhibit efforts to improve the system (from the injured worker’s perspective), not the least of which is current imbalance of political power between workers and employers. Indeed, the current political climate in many states many short-term reform efforts difficult, perhaps even impossible. The researchers posit, however, that in spite of these political constraints, many are still committed to improving the system.

Stakeholders Criticisms of the System

According to the RAND researchers, while stakeholders generally affirmed the accuracy of many of the published criticisms noted above, the stakeholders also pointed out that new approaches to injury prevention and disability management are required. Stakeholders added that while universal coverage was the system’s ideal, there had been erosion in overall coverage in recent years primarily due to two factors:

Alternative work arrangements, and
Higher standards for causation and attempts to limit employer exposure to preexisting conditions or non-work disability

Stakeholders further indicated that the system was plagued by inefficient claim management and dispute resolution processes that tend to drive up costs and harm workers. Stakeholders also allowed that health care provided to injured workers was too fragmented and not designed to reward positive worker outcomes. Additional strides in scientific evidence on causation are also badly needed, according to the stakeholders consulted by RAND.

Policy Priorities and Research Needs

Gleaning additional insights from the stakeholders groups, the RAND researchers identified a two-pronged research agenda that could improve workers’ compensation policies. First, noting that stakeholders had, for the most part, agreed with the published critiques, the researchers observed that the stakeholders had generally placed a greater emphasis on concerns about health care delivery, return to work, and injury prevention than had many of the published critiques. Second, the stakeholders indicated additional, sophisticated scientific evidence on causation was required in order to assist the workers’ compensation systems in handling occupational disease claims and claims involving preexisting conditions.

Suggestions/Recommendations

The stakeholders offered a host of suggestions and/or recommendations that, if implemented, could improve worker safety and economic security for American workers, both through injury prevention and by improving outcomes for workers after injury and illness. For example, virtually all stakeholder groups said state policy experimentation should be encouraged by federal investments and support for rigorous, independent evaluations. Stakeholders also saw NIOSH’s focus on translation of knowledge into practice as something that could be leveraged at the state level.

The researchers noted that NIOSH, of course, was not the only federal research funder that might expand research on workers’ compensation policy and occupational health. In as much as the Centers for Medicaid and Medicare Services (CMS) and the Social Security Agency (SSA) bear the brunt of cost spillovers from workers’ compensation systems, stakeholders felt those agencies might profit from research and demonstrations that would leverage the strengths and specialties of existing workers’ compensation delivery systems. The researchers also noted that additional study related to causation, latency, apportionment, and occupational disease presumptions would be helpful.

Limitations

The researchers acknowledge some limitations inherent in the report. For example, the researchers drew from only a small number of stakeholder participants. While diversity was sought, the researchers admitted they had not attempted to select a representative sample of stakeholders. Nor were the choices random. Invitation lists were made up largely of contacts of RAND and NIOSH staff, participants in NIOSH’s councils, and from referrals by initial invitees.

The researchers also acknowledged that other system participants, such as attorneys and vocational rehabilitation professionals, had not been consulted at all. Such groups might also have constructive viewpoints on the challenges faced within the workers’ compensation system. In spite of the fact that the researchers (a) acknowledged the current burden borne by CMS and SSA, and (b) subsequently identified both CMS and SSA as potential sources of funding for advanced research, officials from those important agencies were not interviewed as stakeholders.

Commentary

This is an Important Report

The RAND report easily ranks as one of 2018’s most important workers’ compensation reports. Its scope is broad. Its discussion is detailed. Its researchers are obviously well-funded. Some of its suggestions are even quite provocative. For example, it makes a strong point, among many, that is often overlooked—that although state workers' compensation systems provide strong incentives for cost control, they do not necessarily incentivize safety or good worker outcomes [see pp. 13-14]. The result: incentives based on workers' compensation costs or injury rates often have unintended consequences.

Drawing on feedback from stakeholders, the researchers also cogently note that cost-containment efforts can sometimes backfire, citing evidence that cost containment expenses paid to intermediaries (such as utilization review contractors), ironically, have become problematic cost drivers in their own right [see pp. 18-19].

Some RAND Report Observations Seem Obvious

The report also offers its share of dog-bites-human statements. For example, few readers will be surprised by its observation that many stakeholders think the comp system has become too complex. Stakeholder concerns over inadequate health care, over-treatment, and delivery of inappropriate care [see pp. 21-22], while certainly based in fact, are echoes of concerns often published elsewhere. That sort of criticism can, of course, be directed to any report, such as this, which leans so heavily on a literature scan.

The report appears to give an even-handed description of the concerns from those stakeholder groups with whom the RAND researchers were engaged. My concern with the RAND report relates not so much to what is contained therein. It provides detailed insight into the views held by a number of important stakeholder groups. My concern is what isn’t found within the report.

Why Omit Lawyers and CMS From the Mix?

Why did the RAND researchers choose not to engage two important groups of stakeholders—attorneys (both claimant and defense), and officials at CMS/SSA? Did the researchers determine that attorneys have no special insights that would not be reflected in the stakeholders they represent? Did they think attorney discourse might skew the results of their inquiry, one way or another? The report is silent on these questions. What are claimant and defense-oriented attorneys associations to make of this omission? Are their views irrelevant to the ongoing debate? The researchers did indicate some concern about the costs associated with broadening the study to include other stakeholder groups. While one can certainly understand that point, does the omission of attorney perspectives significantly weaken the report? I think so. Moreover, can the decision to exclude officials at CMS and SSA be justified?

Why Not Also Consult the Stakeholding Public?

My take on this—others can easily disagree—is that the RAND study repeats an erroneous presumption found in much of the today’s discussion concerning the workers’ compensation “grand bargain.” The presumption: that the goals of the workers’ compensation system are appropriately met when the interests of workers and employers are balanced. For example, in the RAND report’s summary, researchers stressed:

Workers and employers are the core stakeholders of a workers’ compensation system, and every system must strike an acceptable balance between the interests of workers and employers to remain politically sustainable [p. viii].

There is an important third party at the bargaining table, however. The injured worker and the employer certainly have a stake in the issues, but so does the public at large. It has such an interest because, among other things, if the “bargain” is inappropriately weighted toward the employer, then it (i.e., the public) will find itself in an untenable position—to allow the injured worker to fend for herself or to provide some measure of supplemental benefits to make up the difference.

That is why the RAND report should have included CMS and SSA (and perhaps even other agencies) as stakeholders. The researchers acknowledge that both agencies bear the brunt of cost spillovers from workers’ compensation systems [see p. 39]. Any solution to the current quandary will require significant input from CMS, SSA and others.

RAND Report is Important to Ongoing Discussion

I see it the RAND report as “Chapter 2” to the important discussion launched in October 2016 by the U.S. Department of Labor in its seminal work, “Does the Workers’ Compensation System Fulfill its Obligations to Injured Workers? That report, which was hypercritical of the state-oriented workers' compensation system laid important groundwork for an appropriate discussion of the future of the state-oriented workers’ compensation programs. In spite of the important limitations and concerns stated above, the RAND report provides some additional momentum to keep the issues before us.

Any information or opinions contained in this commentary are not necessarily endorsed by LexisNexis® or its affiliates.