Shifts caused by changes from proposed health care reform could be felt among workers’ compensation insurers and actuaries, an industry expert said.

Joseph Paduda

Speaking at the Casualty Actuarial Society (CAS) annual meeting, Joseph Paduda, principal of Health Strategy Associates and author of the Managed Care Matters blog, said that with or without health care reform, changes in the medical landscape will have a major impact on workers’ compensation insurers.

Paduda said changes in drug pricing will adversely affect workers’ compensation. The U.S. is the only developed country where the government does not negotiate drug prices with pharmaceutical manufacturers, but this could change under several reform bills under consideration.

“The impact on workers’ comp, if the Department of Health and Human Services negotiates for drug prices, is uncertain but not positive,” Paduda said.

“Cost shifting is a distinct possibility. If one of the biggest payers of pharmaceuticals is suddenly paying them less, they’re going to want to make up their revenues from somewhere else, like workers comp,” Paduda added.

Pre-reform measures have already taken their toll on worker’s compensation insurers, he said.

“The stimulus bill, the American Recovery and Reinvestment Act, included funding for development and implementation of Electronic Health Records (EHR),” Paduda said. “EHR supports clinical decision making, physician order entry for scripts or for imaging, and clinical data capture and sharing.  Providers will all have access to the same amount of information instantly.”

Paduda explained that the funding will improve the quality and depth of the data available, and pointed out that the use of electronic health records in workers’ compensation would be ultimately beneficial for actuaries practicing in that field.

The stimulus bill also calls for an estimated $1.3 billion investment in various agencies and research to evaluate the effectiveness of specific procedures and the impact of medical care on functionality, outcomes and quality of life.

Paduda said Medicare reimbursement policies will be affected, and over time, this research will influence private pay and workers’ compensation.

“In my view this is a strong positive for workers’ comp,” he said. “A lot of medicine is more of an art than a science so adding more science to medicine will dramatically improve outcomes and potentially reduce costs.”