N.H. Senate workers’ comp compromise gets mixed reviews

Auto dealers help lead charge against Bradley’s attempt to find middle ground

The New Hampshire Senate Commerce Committee approved a bill Thursday that would discount and then freeze workers’ compensation medical costs for three years and require that they be “reasonable,” though they ditched the idea of imposing fee schedules.

But Sen. Jeb Bradley, R-Wolfeboro, who brokered what was termed a compromise, acknowledged that the measure would face a tough fight on the Senate floor next week.

“This is going to be a war,” he said. “Everything with workers’ compensation has been a war. That’s why we haven’t had any meaningful reform in 20 years.”

Indeed, even as the language was being finalized, a business coalition, pressing for fee schedules, fired off a press release denouncing the agreement as a “Band-Aid” that actually locks in place the “outrageous costs” of medical treatment

“This deal was struck with the people who write the bills, not the people who have to pay these bills,” said Dennis DiPaolo, owner of Seasonal Specialty Stores of Amherst, in the release.

Although workers’ comp rates have actually come down the last few years, thanks to lower indemnity costs, the percentage paid for medical costs in New Hampshire is among the highest in the nation.

Critics have pointed to a recent study that showed that medical providers charge much more for the same medical procedure under workers’ comp than other kinds of insurance policies. They also point to the fact that the current law enables providers to charge what amounts to be the sticker price, with no ability for an insurer to negotiate.

A coalition of 25 business groups and insurance companies, led by the New Hampshire Automobile Dealers Association, have backed a measure that would institute a fee schedule tied to Medicare.

The original Senate bill, SB 3, was one such effort, but it was bitterly opposed by medical providers and organized labor. In addition, the majority of the participants on the governor’s workers compensation commission recommended against fee schedules until it examined more data.

The Bradley compromise dropped the fee schedule. Instead, it would freeze rates at 85 percent of what they were at the end of last year for two years and then, during the third year, they would be tied to the rate of inflation in medical costs.

In addition, the costs would have to be “reasonable,” the bill says, with the state Labor Department as the arbitrator.

Also under the bill, it would be up to the provider to justify why the costs are reasonable, flipping the burden of proof as it is now.

Labor is not exactly thrilled with the deal, but it is preferable to fee schedules, said New Hampshire AFL-CIO President Mark MacKenzie. “This will reign in the cost without restricting too much access to workers, so we didn’t complain a whole lot.”

The New Hampshire Hospital Association supports the bill as well.

“It would provide a meaningful opportunity through the free-market negotiation between providers and plans,” said New Hampshire Hospital Association President Steve Ahnen.

On Wednesday, the Senate Commerce Committee unanimously precluded an alternative amendment proposed by Sen. Gary Daniels, R-Milford, that would have called for the state Insurance Department to set a fee schedule based on Medicare rates.

On Thursday, the commerce committee passed a new version with some technical fixes in the language. Only this time, the vote was 4-1. Sen. Sam Cataldo, R-Farmington, changed his vote, he told NHBR, “for 8500 reasons” – the number of businesses the coalition backing fee schedules claim to represent.

That coalition argues that the prices that will be discounted and frozen are “massively inflated in the first place,” said Peter McNamara, of the auto dealers group, and a spokesperson for the collation.

And, he said, providers could easily inflate those prices by upping increasing “utilizations” – more or longer appointments. And even with the burden shifted, reasonableness would be hard to challenge, given the myriad of medical billing codes that most businesses are unfamiliar with. It will be especially tough in front of the labor board, which often sides with workers, he said.

But Bradley argued that flipping the burden of proof would change all that. “That’s the biggest change. It will be huge.”

Bradley also said he has philosophical problems with fee schedules, which he said was akin to “government price controls.”

Yes, he said, you might drive down rates, but at such steep discounts that they were “not sustainable,” resulting in some doctors not taking workers’ compensation cases.

Yes, they take other patients for the same rates, but workers’ compensation cases are more expensive, and they don’t generate as much volume.

“It’s like comparing apples to oranges,” he said.

Even if the bill passes the Senate, it still has to go through the House, where another fee schedule bill has been retained in the House Labor Committee penned by majority leader Jack Flanagan, R-Brookline.

The Flanagan bill, as originally proposed, was softened for labor by increasing workers’ indemnity from 60 percent of their previous salary – one of the lowest in the nation – to the more common 66 percent.

Flanagan was ready to discard both parts of his bill, however, if he could be assured that another method produced the same savings.

“I’m moving away from fee schedules. Price control isn’t the be-all and end-all,” he said. “The goal is to reduce costs and rates.”

But Flanagan acknowledged that not everybody in his party feels the same way, and the issue will be contentious in the House, as well as the Senate.