Workers Compensation Rates are on the Rise

Gov. Andrew Cuomo and law makers are being asked by New York business groups to implement further worker’s compensation reforms. The New York Compensation Rating Board (NYCRIB) wants toincrease loss costs by 11.5%, effective Oct. 1.

New York director of the National Federation of Independent Business (NFIB), Michael Durant, said that there has been talk with Cuomo and leaders in the New York Assembly and Senate about former Gov. Eliot Spitzer failing to reduce costs. In an interview Durantstates, “Workers’ compensation costs are one of the things our members are very concerned about in New York.” He also says that they’re having conversations with both the executive and legislative branches trying to make some additional changes.

No specific changes have been called and all predicted further reforms would have to wait until 2013 during the New York Legislature session.

When Spitzer was running for governor in 2006, he made cutting business costs the center piece of his campaign. In March 2008 he resigned the post following reports he was a customer of a high-dollar prostitution ring operating in New York City, which was a year after he signed the workers’ compensation reforms into law.

Since 2007 and 2008, the New York State Insurance Department has approved loss-cost increases of 4.5% in 2009, 7.7% in 2012 and 9.9% in 2011. NYCIRB cited delays by regulators and the New York State Workers’ Compensation Board in implementing the state’s first medical treatment guidelines and a new set of impairment guides, which was inits most recent loss-cost filing. Both changes were called for by the Spitzer reforms and were considered key to imposing the state’s first duration caps for workers receiving permanent partial disability benefits.

SWCD implemented medical treatment guides covering injuries to the neck, shoulder, knee, and back on Dec. 1, 2010. They have yet to act on a set of guides covering carpal tunnel syndrome, which former insurance Superintendent James Wrynn sent to SQCB Chairman Robert Beloten on Sept. 7, 2011.

Medical costs totaled about $1.58 billion for policy year 2012 after being adjusted for current benefit levels and now account for 45% of all costs in the system, says Ziv Kimmel, the rating board’s director of actuarial research. It was also reported that prescription drug costs account for between 14% and 16% of medical costs.

Joe Paduda, president of the pharmacy benefit manager consortium Comp Pharma, said that the costs of workers’ compensation costs have come down since the reforms passed in 2007, but all over the country rates are going up. He also says that medical inflation is running 5% to 6%, and medical is the biggest part of workers’ compensation. But this doesn’t mean that the reforms were not adequate in dealing with these costdrivers.

Brian Sampson, executive director of Unshackle Upstate, told the newspaper that the coalition has complained to Cuomo about board delay in implementing the reforms. Sampson said,“We’re asking the governor’s office to start holding the Workers’ Compensation Board accountable for what it is doing.”

The Spitzer reforms require that injured workers use pharmacies selected by carried and self-insured’s. But, the legislation allows workers to use that pharmacy of their choice, as long as it follows that fee schedule published by SWCB.

It is estimated that the legislation could increase overall workers’ compensation costs between 0.1% and 0.3%, depending on how lawmakers draft the final wording of the bills.