Testimony to New York State Assembly Committees on Insurance and Labor Workers’ Compensation Board Proposed Medical Fee Schedule

Presented by
Lev Ginsburg, Esq.
Director of Government Affairs
December 19, 2014

My name is Lev Ginsburg. I am Director of Government Affairs for the Business Council of New York State and a public member of the New York Compensation Insurance Rating Board’s Board of Governors. On behalf of the Business Council’s more than 2,500 members – businesses large and small all across the state – I wish to submit these comments into the record as part of today’s hearing.

As the state’s leading business organization we begin our testimony by thanking the Workers’ Compensation Board for its efforts in redesigning the Medical Fee Schedules in order to continue progress toward better treatment models for injured workers, greater efficiency and a more affordable system for New York’s employer community. Concurrently, the new fee schedules increase payments to many health providers and results in increased access to medical care for injured employees.

The current fee schedule does not reflect the realities in the healthcare system and for years has extremely overcompensated some providers and services, relative to the healthcare system at large, while leaving others, typically those in the primary care practices, undercompensated. The Board’s proposed use of a resource-based relative value scale, essentially a realignment of its fee schedule to the benchmark of the Medicare fee schedule with a conversion factor of approximately 30%, helps achieve this goal.

From the beginning of the process of re-evaluating the fee schedules, the Business Council has advocated for overall cost savings measures and cost-neutrality in the new fee schedule. To its credit, the Board devised a new schedule, which earlier this year, was priced at an overall savings to the workers’ compensation system of one percent by the New York Compensation Insurance Rating Board’s actuaries, an outcome beneficial to employers and workers alike.

The new medical fee schedule is a good first step in guaranteeing more access to care for injured workers and controlling costs. Unfortunately, medical costs are miniscule in comparison to the costs of indemnity payments in New York’s workers’ compensation system. The significant issues facing New York’s employers are not only medical costs, but a comp system that remains deeply troubled, and more expensive than ever.

In addition to the increases in comp costs based on increased medical costs, New York’s workers’ compensation rates have dramatically risen over the last seven years, driven by increases in maximum benefits indexed to the state’s average weekly wage, growing scheduled loss of use awards, endless litigation and what was, until very recently, a slow and inefficient implementation of reform measures meant to curb these costs.

Your Committees and the Assembly as a body of the Legislature must act to help rein in the costs of New York’s comp system, one of the greatest impediments to economic growth state-wide. The opposition by this House, of the administration’s proposed repeal of mandatory payments to the state’s aggregate trust fund, imposed only on commercial carriers, which was estimated to save $150 million and would have sped up the classification process, has only furthered upward pressure on costs.

We urge these Committees to reexamine the system by which scheduled loss of use awards are determined. The process currently utilizes injury recovery assumptions, many of which are over thirty-years old and statutory lost-time calculators that are just as old. Making such determinations based on very old and out of date medicine, coupled with a maximum weekly benefit, now over $800, is a major factor in explosive system costs.

Common sense approaches, taken in many other states, such as the use of Preferred Provider Organizations (PPO) for extended periods of time in work-related injuries have both greatly improved the experiences and care of injured workers and have dramatically reduced lost-time, needless litigation and expense.

New Yorkers desperately need their elected representatives to concentrate on meaningful, cost-cutting worker’s comp reforms to control the year-to-year increases in this excessively expensive system. In any decision-making, we urge your Committees to look at the comp system in its entirety, as it impacts both employers and employees, and resist calls for moving the fee schedule away from a clear, cost neutral and stable pricing benchmark.

Thank you for your consideration and we hope that this hearing signals a new effort in the Assembly to reform the real cost drivers in the workers’ compensation system.