Workers’ Compensation Program -- The Texas Model This article highlights some important aspects of the non-mandatory workers’ compensation program in the state of Texas.
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The state-regulated insurance program Workers’ Compensation can be properly administered only with the availability of accurate and reliable medical records. It is only through a careful review of these documents usually provided by medical record review companies that the injury of the worker and its extent can be clearly understood. In other words, without medical records there is no documentation of the injury. Employers in U.S. states are required to have workers’ compensation insurance. In Texas, though, most private employers are not required to have workers’ compensation insurance. Private employers who work on public projects must have workers’ compensation for employees who are working on those projects. The “Non-subscribing” Model Employers who opt out of the workers’ compensation program are non-subscribers. They are required to do the following:
File an annual notice with the DWC
Post notices in their workplaces and personnel offices
Inform each new employee in writing that they don’t have workers’ compensation
Employers can offer workers’ compensation in the following ways.
Self-insure
their
workers’
compensation
claims
provided
they
meet
the
requirements and are certified by the Division of Workers’ Compensation (DWC)
Buy a workers’ compensation insurance policy from a licensed insurance company
Join a self-insurance group approved by the DWC
Employers with workers’ compensation are protected from most lawsuits filed by injured employees. With such employers, employees can sue only after the dispute has been through the DWC’s dispute resolution process. The court will take the DWC’s recommendations into consideration and will address only those issues that were part of the DWC’s dispute process. Attorneys’ fees and other defense costs are paid by the employer’s workers’ compensation insurance company. Report Favoring the Texas Opt-out Model A report “The Lone Star State Model for Helping Injured Workers,” recently released by the Texas Public Policy Foundation, a research and advocacy group that promotes free enterprise and favors the Texas workers’ compensation opt-out model, says that more states may try to follow the opt-out model.
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The competition between the state’s regulated workers’ comp system and its nonsubscription system has resulted in advantages such as improved claims handling, cost control and better return-to-work rates.
The report points out that around 78% of Texas employers representing 82% of the state’s private sector employees are covered by the state’s regulated workers’ comp system. 5% of employers are not covered by workers’ compensation or alternative injury benefit plans.
As per the report, the opt-out system allows non-subscribers to set up alternative injury benefit plans outside of workers’ comp that can limit or expand coverage since they are not subject to statutory workers’ compensation rules. Workers’ compensation program often fails in cost containment because employees who file a claim through this program, unlike employees who file a claim through group health insurance, have no strong incentive or requirement to use an employer-designated medical provider.
19 of 49 states that have mandatory compensation systems do not allow the employer to have input into the initial choice of treating physician (even if the employer/insurer has a managed care arrangement for workers’ compensation).
This has led to corruption, kickbacks and increasing issues with over prescription of opioids painkillers.
An increasing number of elected officials across the country are learning how employees and employers in Texas have benefited from the availability of alternatives to statutory workers’ compensation. Therefore, the report emphasizes that more U.S. states could try to adopt opt-out models for workers’ compensation. Other Factors in Favor of the Texas Model Proponents of the non-subscriber model hold that traditional workers’ compensation model is flawed and the Texas model may be an ideal solution for other states.
The many disincentive effects associated with traditional workers’ comp systems keep workers off the job for too long. Eventually, they become dependent on the SSDI system.
Often, obvious injuries that demand immediate medical attention are not the reasons for workers’ comp claims. These claims are usually for musculoskeletal disorders such as latent low back pain that develops from an injury.
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Researchers from the University of Massachusetts – Lowell and the Center for Disability Research have found significant differences in the cost and length of disability based on states’ workers’ comp provisions. o
Medical costs for injured workers were slightly lower in states that allowed employers to choose the initial healthcare provider for the injured worker.
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Higher wage replacement rates were also associated with higher medical costs.
Most non-subscriber employers in Texas offer wage replacement rates of 85 to 100%. Workers’ comp systems cap benefits at a lower rate.
In the Texas model, 97% of employees returned to work within 6 months, as against 83% in the state’s traditional workers’ comp insurance.
Another factor in favour of the Texas model is its 24-hour reporting period with a “good faith” clause that allows employers to provide workers medical treatment at the beginning of the known injury, and rectify a potentially unsafe environment quickly. The 30-day reporting period in traditional workers’ compensation may be problematic for the employer because unawareness about a potential unsafe situation in the work environment may lead to another employee becoming injured.
Texas Model Not Necessarily an Opt-out Model, says AIA As providers of medical review services for the insurance sector, we always keep in touch with all recent developments in the workers’ compensation industry. In this regard, a statement issued by the Southwest Region Vice President for the American Insurance Association (AIA) merits attention. The statement pointed out that the above mentioned report inaccurately describes the Texas workers’ comp system as an “opt-out” system. This statement asserts that Texas has an “opt-in” model where employers have the option to opt into the system. The Texas workers’ compensation marketplace is robust and stable because of the reforms enacted in 2005. It is true that both the Texas system and opt-out are models of a non-mandatory workers’ compensation system. However, proponents of a non-mandatory system must consider certain policy questions such as the following when assessing its merit.
Uniform protection of workers and the employers
Compensation for a work-related injury must be uniform, regardless of the employer
No cost shifting to public benefit programs or other benefit programs
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Broad coverage of diseases and injuries with no anatomical or categorical exclusions
Uniform adjudication of disputes
Incorporating incentives for workplace safety
Ensuring payer solvency and benefit security.
Opt-out system may cause instability. Any workers’ compensation system must include state supervision while also reaffirming employers’ basic obligation to their employees, and opt-out does not do this.
www.mosmedicalrecordreview.com
(800) 670 2809