Vote sets the stage for higher workers' compensation premiums

In a surprising move this week, the South Carolina Workers’ Compensation Commission voted 4 to 2 to support a regulatory change that is opposed by both business and the insurance industry.   On August 15^th, I and a slew of folks appeared at the Commission’s public hearing on this matter.  My testimony can be found here.

Given the overwhelming opposition to the proposed regulatory change, I thought it was very unlikely that the Commission would vote to move forward.  Obviously I underestimated the influence of the special interests that were driving this issue.

While the regulatory change is cast in a positive light of just giving the Commission flexibility, the reality is that the change will make it easier for this or another Commission to make future changes that will add significant costs to the workers’ compensation system—that means higher premiums.

A detailed explanation of the regulation will make your eyes glaze over.  Here is the over-simplified explanation. 

The Commission sets compensation levels for healthcare providers for the work they do with injured workers under our workers’ compensation system.  To set the compensation level, the Commission uses a widely accepted medical cost system from Medicare.  The Commission sets a single conversion factor (a multiplier) to adjust the compensation scale upward for provider services for the injured workers, an acceptable practice.  This process is established in our regulations approved by the General Assembly.

But not all health care providers are happy with this system.  Some insist that they should be paid more.  But for the Commission to carve out more compensation for some healthcare providers under the system than others, the regulation must be changed with the approval of the Legislature.

That in essence is what the Commission has voted to do.  If it can get the Legislature to change the regulation that requires the Commission to use the Medicare scale with one single conversion factor, down the road the Commission can hand out higher compensation to surgeons or hospitals with a simple vote—cutting out any oversight by the Legislature.

In voting to change the regulation, Commission Chairman Scott Beck said, “Changing the regulation only has the effect of creating flexibility within the Commission to look at alternative cost saving methodologies.” 

Finding ways to reduce workers’ compensation costs is not what drove the Commission’s vote.  This regulatory change can only have one result—making it easier for the Commission to raise costs through higher healthcare provider compensation. 

Now it is up to the Legislature to stop this forerunner of higher workers' compensation premiums.