(c) 2017 Jon L Gelman, All Rights Reserved.

Monday, November 19, 2012

Workers’ Compensation May Indeed Fall Off the Fiscal Cliff

The US Congress Challenged By The Fiscal Cliff
As Congress comes closer to the looming deadline of year’s end to determine the financial destiny of the United States, workers’ compensation future’s economic integrity continues to be questioned.

 Mandatory federal spending cuts are in place to go into effect on December 31, 2012 unless a bargain can be reached between the Obama administration and the US Congress.

Negotiations have failed in the past between the Democratic Administration and the Republican controlled Congress.

Benefits paid through the Centers for Medicare and Medicaid Services (CMS) may be on the table for discussion. Those benefits are intricately intertwined with economic integrity of the nation’s patchwork of workers’ compensation systems. They include reimbursement for Medicare conditional payments under the Medicare Secondary Payer Act (MSP), future medical benefits through set-aside agreements (WCMSA), and permanent disability offsets in those states that still have “reverse offsets”. A reverse offset state is one where the workers’ compensation carrier may take the offset required under federal regulations limiting the total indemnity paid to an injured worker not to exceed a percentage of the workers’ average current earnings (ACE).

The Obama administration and the US Congress must balance the pain between providers of medical care and beneficiaries. The balance is integrated into the Workers’ Compensation system through the delivery of medical care and through Social Security offset regulations.

Congress may look to limit Social Security beneficiaries’ benefits by raising the age of retirement, capping medical payments, and/or establishing higher levels of deductibles for medical care. All of these actions will have an economic impact upon the workers’ compensation process.

Folded into the discussion is the question of whether or not medical providers will be limited and restricted on medical fees. The limitations may include a 27% cut in what is known to be the “doc fix.” Increased or decreased, this uncertainty makes it difficult for Worker’s Compensation carriers to predict rates for medical care, especially where reimbursement is required. Some state workers’ compensation medical fess schedules following Federal pricing.

Workers’ compensation systems throughout the United States have been strained for lack of premiums already. The state system provide for medical treatment, temporary  disability benefits, and indemnification for permanent loss. Stressors to the system include: a major recession, lack of jobs, and uncertainty of medical costs.

CMS has not yielded jurisdiction to the states on issues of medical treatment pricing due to be reimbursed by mandatory recovery procedures. This becomes most problematic where the workers’ compensation carrier has denied medical treatment and Social Security becomes the responsible secondary payer of medical benefits at nebulous rates that are solely under federal control.

Workers’ compensation carriers base premiums upon the certainty of payouts including, statistical variances for medical treatment and permanent partial disability payments. If Congress fails to act to avoid the fiscal cliff, or modifies the social network with additional uncertainty, it may be difficult for the nation’s workers’ compensation systems to sustain the uncertainty and that compounding factor may produce further major economic instability to the nation’s already fragile workers’ compensation program.

Jon L.Gelman of Wayne NJ is the author NJ Workers’ Compensation Law (West-Thompson) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thompson).