Workers’ Comp Insurance Rates May Rise In 2013

HARTFORD — Many employers may pay higher workers’ compensation insurance premiums in 2013, according to a report from the Connecticut Business & Industry Association (CBIA). Pending approval of the Connecticut Insurance Department, rates for policies purchased in the normal, or voluntary, market will increase by 7.1 percent overall, while rates for assigned risk policies will rise by 0.4 percent.

Costs for self-insured companies will likely increase as well, since their costs generally mirror those for insured businesses, the CBIA report states.

Workers’ compensation rates are on the rise in Connecticut due to several factors:

*An increase in lost-time claims, which may indicate a lack of available positions for injured workers to return to.

*Significant increases in the average medical cost per case, which may reflect both more severe injuries and increases in the cost of care.

*The rise in medical and indemnity benefits at a pace faster than wages.

*The rate changes are proposed by the National Council on Compensation Insurance Inc (NCCI), which analyzes and recommends workers’ comp rates for insurers in more than 40 states.

The proposed rates are “pure premium” rates, which do not include costs associated with administration, premium taxes, and other expenses — nor do they take companies’ claims experience into consideration. Rates will take effect for policies as they are purchased or renewed on or after January 1, 2013.

Workers’ Comp Negotiations

In related news, self-insured employers and workers’ compensation insurers will be prohibited from negotiating with hospitals over services provided to claimants under a ruling in September by the state Workers’ Compensation Commission (WCC). The ruling contradicts longstanding practice in Connecticut, not only the workers’ compensation field but also in the general health care arena.

The decision came in response to several cases brought by two hospitals in the WCC’s Second District, which covers most of eastern Connecticut. Standard practice in Connecticut has been for self-insured employers and insurers to negotiate hospital bills in workers’ compensation cases through third-party auditors.

The auditors analyze providers’ published cost figures for medical services, and based on its data, issues a recommendation for appropriate charges for services provided. Despite the requirement in the state Workers’ Compensation Act that hospitals be reimbursed only for their actual costs, the commissioner held that in the absence of a prior agreement by the hospital to accept a reduced fee, insurers and self-insured employers must pay the full amount billed by the hospitals.

Should the ruling stand, it will likely increase medical payouts in workers’ comp cases, which in turn will drive up the cost of doing business in a state where costs are already very high.

However, employers and insurers involved in the Second District cases are planning to appeal the decision to the Commission Review Board. If they are unsuccessful, the matter may be appealed to the Connecticut Appellate Court and possibly the Connecticut Supreme Court.

Medical payments account for 50 percent of total workers’ compensation benefit costs, according to the National Council on Compensation Insurance.

As hospital payments alone account for 33 percent of total medical payments for workers’ comp benefits in Connecticut, they comprise an estimated 16.5 percent of total Connecticut workers comp benefit costs.