Barriers, Obstacles, Opportunities and Pitfalls of

Implementing Medical Tourism into Workers’ Compensation

Richard Krasner, MA, MHA

Blogger-in-Chief

Transforming Workers’ Comp Blog

Introduction

Average WC medical cost per lost time claim was $26,000 in 2008 (6% increase from 2007)

As of May 2014, the preliminary medical cost was $28,800

Medical costs in 2008 were 58% of all total claims

40% of WC costs are associated with medical and rehabilitative treatment

In 1980’s & 1990’s, medical costs fluctuated, rose in 2000’s, and totaled $41.7 billion annually (as of 2002)

Average Medical Cost per Lost-timeWC Claim

Source: Legal Barriers to Implementing International Medical Providers into Medical Provider Networks for Workers’ Compensationhttps://app.box.com/s/77inqpo9pa91y6rxt133

Average Medical Cost per Lost-time WC Claim, cont’d.

Source: NCCI2013p – Preliminary figure based on data valued as of 12/31/13

Six major barriers, obstacles, and pitfalls to implementing medical tourism into workers’ comp:State Regulations, Rules and StatutesOther Legal BarriersLaws that have not caught up with the timesLawyers, the Courts, and WC BoardsPoliticians, Health Laws, & Misc.Workers’ Compensation and other issues

Barriers, Obstacles, and Pitfalls

“…aged statutes and old case law” Licensing of Physicians — Medical providers must be

licensed in state to practice medicine Treating doctors must be within 50 miles of claimant’s home Managed Care Networks — different states have different

rules for vetting and credentialing of physicians However, Oregon and Washington allow injured workers to

go out of state or out of the country with approval by state

State Regulations, Rules and Statutes

US & State laws intended to protect consumers, instead increase costs and reduce convenience

US & State regulations restrict public providers from outsourcing certain medical procedures

US laws that inhibit collaboration State licensing laws preventing certain medical

tasks performed by providers in other countries Foreign physicians lack authority to order tests,

initiate therapies, and prescribe drugs

Other Legal Barriers

Source: Legal Barriers to Implementing International Medical Providers into Medical Provider Networks for Workers’ Compensationhttps://app.box.com/s/77inqpo9pa91y6rxt133

Illegal for physician to consult with patient online without initial face-to-face meeting

Illegal for physician outside the state and has examined patient in person to continue treating via Internet after patient goes home

Illegal (in most states) for physician outside that state to consult by phone with the patient residing in that state if physician is not licensed to practice there

Laws that have not caught up with the times

Source: Legal Barriers to Implementing International Medical Providers into Medical Provider Networks for Workers’ Compensationhttps://app.box.com/s/77inqpo9pa91y6rxt133

Plaintiff Attorney/Abogado demandante objections

Defense Attorney/Abogado defensor objections Workers’ Compensation Legal/Administrative

bodies may not allow medical tourism State courts will not authorize surgery abroad

Lawyers, the Courts, and WC Boards

State Legislators Health and Medical Laws — Medical Malpractice,

Liability, patient privacy and medical records laws (including HIPPAA, ERISA, and PPACA)

Entrenched interest groups wishing to avoid competition with low-cost providers

Other vested interest groups, such as Claims Adjusters, Insurers, Third Party Administrator’s staff (including Medical Directors), Local Physicians and Hospitals, etc.

Lack of knowledge about quality of medical care abroad (“Third World medicine”)

American attitudes towards medical care abroad and “American Exceptionalism”

Politicians, Health Laws, & Misc.

Opioid Abuse Disability Ratings certifications – physicians

must be certified by each state to issue impairment ratings• Temporary total disability (TTD)• Temporary partial disability (TPD)• Permanent partial disability (PPD)• Permanent total disability (PTD)• Maximum Medical Improvement (MMI)

Immigrants unaware of workers’ comp Free trade agreements — do they help or

hinder? NAFTA

Workers’ Compensation and other issues

Three key areas of opportunities for implementing medical tourism into workers’ compensation: Workers’ Compensation and Mexico

Cross-border WC in CA NAFTA and Workers’ Comp Conflict

WC Statutes/Alternatives to WC/Legal/Insurance Employee/Employer Choice of Physician Opt-out Programs View from the Bench Demand for Bundling Financial/Health Care Reform

Immigration Reform

Opportunities

Cross-border Workers’ Comp in CA Insurance Company of the West (ICW)Writing WC policies for San Diego/Imperial Valley

area insured clients to provide cross-border work comp

Employers/Employees have option to choose Mexican HMO SIMNSA (only HMO licensed in CA)

If employee is injured, sees CA primary physician, any future treatment through SIMNSA, w/follow-up visits on routine basis w/primary physician

Workers’ Compensation and Mexico

Source: Cross-border Workers' Compensation a Reality in California

NAFTA and Workers’ Comp conflict Porteadores Del Noroeste S.A v. Industrial Commission of

AZ (2014)April 2010, truck driver hauling diesel fuel from Phoenix to

Nogales, Mexico, fell asleep behind wheel, ejected from cab of truck, taken to hospital in Nogales, then transferred to hospital in Tucson

Driver requested determination of disability and benefits from Instituto Mexicano del Seguro Social (IMSS), went outside of IMSS network, IMSS refused to pay all his bills

Driver filed claim under AZ work comp system seeking payment of $17,000 for care and additional compensation

Sept 2010, filed injury report w/Industrial Commission of AZ

WC and Mexico, cont’d.

Source: Comunicación No Es Médicamente Necesariohttp://daviddepaolo.blogspot.com/2014/06/comunicacion-no-es-medicamente-necesario.html

NAFTA and Workers’ Comp conflict, cont’d. Employer argued ICA did not have jurisdiction because it was a

foreign company and its activities in US governed by NAFTA, not AZ work comp law

Administrative Law Judge decided subject matter jurisdiction over claim existed, and determined accident was compensable under AZ law

AZ legislature amended workers’ comp laws — workers who have a claim in AZ and a claim in a foreign country for same injury are entitled to full compensation which the worker is due under AZ law

If the worker receives compensation in the other country, then employer or carrier will be required to pay worker add’l compensation

WC and Mexico, cont’d.

Source: Comunicación No Es Médicamente Necesariohttp://daviddepaolo.blogspot.com/2014/06/comunicacion-no-es-medicamente-necesario.html

Unanimous AZ Court of Appeals panel ruled Mexican firms sending employees into US became subject to same work comp laws domestic employers are subject to

Court held that NAFTA did not pre-empt AZ work comp statutes and that Porteadores could face liability in AZ for add’l compensation that one of its workers claimed he was due

Court said unambiguous language of NAFTA provides that only US can challenge a state law as conflicting w/terms of the agreement between US, Canada and Mexico

WC and Mexico, cont’d.

Source: Comunicación No Es Médicamente Necesariohttp://daviddepaolo.blogspot.com/2014/06/comunicacion-no-es-medicamente-necesario.html

Employee/Employer Choice of Physicians State WC laws recognizes 9 categories of choice:

Employee choice of physician Employer choice of physician Employer/Carrier From a list maintained by the employer From a list prepared by the appropriate state agency From a Panel From Employer’s Managed Care Plan From a PPO Self Insured Employer

WC Statutes/Alternatives to WC/Legal/Insurance

Source: WCRI , Workers’ Compensation Laws As of January 1, 2014, April 2014

Employee/Employer Choice, cont’d.

Source: WCRI , Workers’ Compensation Laws As of January 1, 2014, April 2014

In the US there are two types of workers’ compensation programs:Statutory Workers’ Compensation (Subscriber

program)Voluntary or Non-subscriber (also called an opt-out

program) Only two states currently allow employers to opt-out

of statutory workers’ compensation:TexasOklahoma (signed into law May 2013)

Oklahoma law allows employers to choose an alternative to statutory WC system under certain circumstances

Texas only state where participation is truly voluntary

Opt-out Programs

Source: Opting Out of Texas Workers’ Comp Doesn’t Have to Mean Going Bare

Employers more engaged in administration of their program, putting them closer to their employees and it allows them to be more involved with the claim and outcome

Employers have some control over whether medical providers are approved or not approved to provide services and get more specialization and better doctors

Industry sectors with highest percentage of non-subscribing employers:

Arts/Entertainment/Accommodation/Food Services — 52 % Manufacturing — 37% Finance/Real Estate/Professional Services — 33% Health Care/Educational Services — 44% Wholesale Trade/Retail Trade/Transportation — 37% Agriculture/Forestry/Fishing/Hunting — 25% Other Services Except Public Administration — 42% Mining/Utilities/Construction — 21%

Opt-out Programs, cont’d.

Source: Opting Out of Texas Workers’ Comp Doesn’t Have to Mean Going Bare

What does opt-0ut programs mean for Medical Tourism in Workers’ Comp?

“…opt-0ut right now is rapidly transitioning from a marginal, obscure concept to a viable, legitimate product in the employee benefits family with a compelling value proposition for every state.”

“it makes medical tourism viable for work-injury benefits, as employer has largely unfettered discretion over selection of medical provider.”

As more states enact opt-out programs for employers in their states, the likelihood that an employer would chose to send employees abroad for medical treatment increases

Changing demographics of US labor force and rise of medical tourism destinations in Latin America and the Caribbean, suggests this possibility is closer to becoming a reality

Opt-out Programs, cont’d.

Source: Opt-out as a way in: Implementing Medical Tourism into Workers' Compensation

David Langham, Deputy Chief Judge of Compensation Claims, Florida article in Lex and Verum

“Medical tourism is a reality. How far will it go?” Mentioned medical tourism as a possible solution to high cost

surgeries, Article referred to domestic medical tourism from high cost states

to low costs states Medical tourism has an established foothold in the medical

industry, but stated that physicians in the US recommend against it

A View from the Bench

Source: A View from the Bench: Medical Tourism and its Implementation into Workers' Compensation

They caution that treatments, implants, and medications provided outside US may not be approved by FDA, and that follow-up care after surgery may be substandard

Verification of foreign surgeon’s qualifications may also be difficult Some states have statutory or regulatory restrictions that confine

any attempt to force insurance carrier to provide medical services outside of state where injured worker lives, but these restrictions are limited to injured worker, and does not preclude insurance carrier from voluntarily providing such care and the travel costs associated with it

“Possible such an opinion might be used by some party in some future case or controversy…your analysis makes valid points and might well be a persuasive argument. It is impossible to conjecture whether they would carry the day in a particular case, but they are interesting and might be persuasive.”

A View from the Bench, cont’d.

Source: A View from the Bench: Medical Tourism and its Implementation into Workers' Compensation

More employers seek to integrate work comp into their benefit packages, but range of market trends and regulations may be responsible for slowing a natural fit

Major barrier to offering an integrated product is the patchwork quilt of state laws that prevent the use of narrow provider networks

“Biggest impediment” “is a matter of bringing a product to marketplace and making sure it is compliant with state work comp rules”

Could be alternative in Oklahoma and Texas, and 10 other states

Demand for Bundling of WC & Health Insurance

Source: Demand for Bundling of Workers’ Comp and Health Insurance Increases

Outpatient Facility Costs Rising Rising Hospital Costs Employees Unprepared for Increased Health Care Costs Consolidation of US Hospitals Lead to Higher Cost and

Reduces Quality Surgical Shenanigans: WC Charged More for Surgeries

than Group Health Physician Shortage and ACA

Financial/Health Care Reform

Immigration Reform

Independent Insurance Agents & Brokers of America (IIABA) White Paper

11 to 12 million undocumented immigrants in the US, depending upon how many “self-deported”

Undocumented account for almost 1/3 of all foreign-born residents of US, 80% from Mexico and other Latin American countries

7.2 million (77%) are employed and account for around 5% of the workforce

Foreign workers skewed toward above average injury risk jobs

24% of farm workers, 17% of cleaning workers, 14% of construction workers, and 12% of food preparers

Immigration Reform and Workers’ Compensation

Sources: Immigration Reform on the Horizon: What it means for Medical Tourism and Workers’ Compensation, Immigration and Workers’ Compensation: Round Two

These industries account for much of the claims filed under US work comp system

Undocumented workers comprise a higher percentage of more hazardous occupations:

36% of insulation workers, and 29% of all roofing employees are undocumented

Foreign born worker poses higher injury risk due to language barriers, cultural miscues and poor health literacy

Immigrant workers will likely sustain 20%, or one of every five work injuries

Most of these workers won’t know much about the US health care system or workers’ comp

Many won’t have primary care physicians Undocumented workers entitled to work comp

benefits in 38 states

Immigration Reform and Workers’ Compensation, cont’d.

Sources: Immigration Reform on the Horizon: What it means for Medical Tourism and Workers’ Compensation, Immigration and Workers’ Compensation: Round Two

Barriers, obstacles and pitfalls do exist that currently prevent medical tourism from being implemented into workers’ comp

Yet there are opportunities for the medical tourism industry to offer medical tourism as an option to employees, employers and insurers

Workers’ Comp industry must be persuaded that medical tourism offers better care and lower prices

Convincing workers to consider medical tourism for expensive work-related surgeries won’t be easy

Medical tourism industry must work with physicians, employers and insurance carriers to implement medical tourism

Medical Tourism industry must take lead and go after the market; the market will not come to you

Conclusion

Contact Info:Richard Krasner, MA, MHA+1 561-738-0458+1 561-603-1685, cellEmail: richard_krasner@hotmail.comSkype: richard.krasnerLinkedIn: https://www.linkedin.com/in/richardkrasnerBlog: richardkrasner.wordpress.com

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