Will the Affordable Care Act Shift Claims to Workers' Compensation Payers?

This paper focuses on a particular aspect of the Affordable Care Act (ACA)—growth of Accountable Care Organizations (ACOs), which increasingly will integrate care from all providers under one capitated payment for the patient. These provider organizations therefore will receive one fixed payment regardless of the treatment of the patient. This provides strong incentives to classify patients’ injuries as workers’ compensation cases where possible since workers’ compensation payers almost always reimburse on a fee-for-service basis. By contrast, under fee-for-service group health contracts, the provider and health care organization are paid for each new service rendered. Hence, when a patient covered by a capitated group health insurance plan is treated, the doctor and the health care organization to which that doctor belongs face very different financial incentives about key decisions, compared with treating a patient covered by a fee-for-service plan. In this paper, we investigate the extent to which the move to “capitated” health arrangements (or ACOs) under the ACA leads cases that previously would have been paid under group health insurance to end up being paid under workers’ compensation? The amount of uncertainty about the cause of the medical condition provides the opportunity for the financial incentives to influence the decision. For some types of medical conditions, the cause of the condition is more certain (e.g., fractures, lacerations, contusions), and for others it is less certain (e.g., back pain). This analysis relies on workers’ compensation and group health medical data coming from a large commercial database, Truven MarketScan®. It includes individuals employed by mostly large employers and insured or administered by one of approximately 100 group health plans. The database is unique in that, for a given employee, it shows whether a given medical encounter (visit) was paid for by group health or workers’ compensation. To estimate the relationship between coverage by a capitated group health plan, as opposed to fee-for-service group health plan, and the likelihood of an injury to be classified as work-related by the treating provider, the difference-in-differences specification was employed. In this specification, workers with soft tissue conditions (less certainty about work-relatedness) belonged to the treatment group, while workers with injuries by trauma (more certainty about work-relatedness) belonged to the comparison group. Therefore, the injuries by trauma control for other non-financial differences shaping the likelihood of an injury to be work-related between workers with capitated and non-capitated plans. In this analysis, we found that a patient covered by a capitated group health plan was 11 percent more likely to have a soft tissue injury (e.g., back pain) called work-related than a similar patient covered by a fee-for-service group health plan. For patients with conditions for which causation is more certain (e.g., fractures, lacerations, contusions), there was no difference between the patients covered by capitated or fee-for-service group health insurance plans—hence no evidence of case-shifting. Additionally, case-shifting was more likely in states where a higher percentage of workers were covered by capitated group health plans.