SD14 - Medical Care Costs Containment Proposals


Executive Summary:
In response to Senate Joint Resolution 92, from the 1994 Session, the Workers' Compensation commission undertook the study of various means of controlling medical costs in workers' compensation cases without interfering with the physician/patient relationship.

The resolution pointed out the unprecedented increases in medical costs in these cases in recent years and the trend towards cost containment in health care coverage outside the workers' compensation system. It was noted that the use of managed care, care utilization review, or peer review is an effective strategy and that there was no such strategy formalized within the workers' compensation system.

The Commission initially met informally with representatives of the Virginia Manufacturers Association, the Virginia Retail Merchants Association, labor, and the insurance industry to discuss the organization and staffing of a study committee. It was decided that one representative of each interest group would be designated by that group to represent its interests on the study committee. The study committee was subsequently assembled consisting of Dr. Robert T. C. Cone, Vice President of Operations, Trigon Administrators, for the employers; Mr. Daniel G. LeBlanc, President of the Virginia AFL-CIO, for the employees; Ms. Marie Kinietz, Director at the National Council on Compensation Insurance (NCCI), for the insurance industry; Dr. Clarke Russ, orthopedist, Virginia Medical Society, for physicians; and Ms. Katharine M. Webb, Senior Vice President, Virginia Hospital Association, for hospitals. The three members of the Workers' Compensation Commission represented the agency.

Three meetings were held at the Commission offices to review the various studies on this subject currently available. These consisted primarily of an exhaustive "worst-case" study by NCCI and a somewhat shorter study by the American Insurance Association (AIA). In addition, a review of various studies nationwide was presented by the AFL-CIO.

These studies reviewed managed care or preferred provider organizations in various states. Utilization review, treatment protocols for various specific injuries, and the use of pain clinics were discussed. The possibility of developing a medical fee schedule was considered.

The committee also considered recommending a pilot project in Virginia which would direct injured employees to a managed care group or facility or a preferred provider organization in lieu of, or in addition to, the current panel of physicians provided by the employer. The committee reviewed the Joint Legislative Audit and Review Committee (JLARC) study of the Commission conducted in 1989, as it pertained to medical costs, and the report by the Governor's Commission on Workers' Compensation, 1993.

The committee also reviewed a managed care program being operated by Trigon Administrators (formerly Consolidated Risk Management). In addition, the committee received a report from the Lynchburg Health Care Coalition. Each of these proposals was discussed in detail and the concerns of the various interest groups reviewed.

The committee then conducted a public hearing on Friday, October 7, 1994, at the General Assembly Building. Approximately 35 people attended this hearing, including 15 people who registered and spoke. Several speakers presented written proposals and reports for review by the committee.