Workers’ Comp Could Spur Jobs, But Cuts Benefits

By Beacon Staff

HELENA – If there is one primary “jobs bill” Republicans are promoting above almost all others in the current session, it is likely carried by Bigfork Rep. Scott Reichner. His bill to lower workers’ compensation insurance rates passed the House Feb. 24 on a party line vote, 67-31, and will arrive in the Senate with significant momentum behind it.

“We are making broad, broad steps to support business,” Reichner said, arguing that his bill could do more to increase hiring than any other bill in the Legislature, by making it less expensive for employers to take on more workers.

The formula determining workers’ comp rates is inherently complicated, balancing the interests of employees, businesses, insurance companies and medical providers. But Reichner cites statistics showing Montana’s workers’ compensation premium rates are the highest in the nation, a big disincentive to hiring.

Why Montana’s workers’ comp rates, which provide care for employees injured on the job, are so high is unclear. Part of it is certainly due to the hazardous nature of some of the state’s major industries, like logging and mining. Montana workers are injured more often than many other states. But medical charges are in line with other states, according to providers, which doesn’t account for Montana’s high medical costs.

Part of the cost, Reichner said, stems from permanent, partial disabilities. He cites a study from the National Council on Compensation Insurance showing that while permanent partial disability claims make up only 9 percent of Montana’s total workers’ comp claims, they account for 69.4 percent of the cost.

“They get in; there’s no incentive to get out,” Reichner said of injured workers in the current system. “So we provide these tremendous benefits.”

Reichner says his bill could cut costs by as much as 44 percent in the first year. He achieves this primarily by closing out claims after five years, though that doesn’t include those who are totally disabled and unable to return to work, and workers requiring prosthetics.

“We’re only talking about people that have some sort of disability but can go back to work,” Reichner said.

His bill would also raise the level of impairment where injured workers can collect payment for lost wages, and limit the physicians a worker could go to for treatment to a state-approved list. Reichner said this would save money by preventing patients who “shop the system” from going to multiple doctors.

“These are the three components that are new but they all save money,” he said.

Reichner also emphasized that he reached out to the medical providers while drafting the bill, which would split physicians into two categories: “treating” and “non-treating.” Treating physicians would receive a 10 percent increase in payments for working more quickly on claims, while non-treating physicians will receive a 10 percent decrease, but won’t be obligated to manage the paperwork and other obligations required by workers’ comp claims.

Reichner’s plan, particularly regarding the treatment of medical providers, differs from another work comp bill carried by Sen. Ryan Zinke, R-Whitefish, that would have limited payments to no more than 165 percent of what Medicare pays for the same operation. Zinke’s bill, which was tabled Feb. 11, was the product of four years of work by the Labor Management Advisory Committee (LMAC).

Zinke said his bill took its savings primarily from cuts to medical providers, whereas Reichner’s bill, influenced by insurance companies and medical providers, “takes all the savings out of labor in the form of benefits.”

“We’re going to take Scott Reichner’s bill as the base and shape it into a reasonable bill,” Zinke said. “I want a bill that is fair for all sides.”

“Workers’ comp law stands among the most complex in Montana code and you have to be really careful not to have unintended consequence,” Zinke added.

But Reichner is critical of Zinke’s bill, which he refers to as the LMAC bill, for one key reason: Its fiscal note estimates a cost savings of 1 percent to 2 percent, with the potential to raise rates.

“The LMAC bill is a labor bill. It doesn’t reduce rates at all,” Reichner said. “It actually raises rates.”

“What sounds more like a labor bill and what sounds more like a business bill?” he added.

Additionally, under the LMAC bill as many as a dozen medical clinics across Montana were prepared to withdraw from the workers’ compensation system entirely and refuse to handle claims, over cuts in payments, according to Reichner.

“The LMAC committee didn’t reach out to them at all,” he said. “We kept that relationship intact.”

With his bill the sole remaining vehicle for the GOP’s workers’ compensation reform, Reichner said one big obstacle remains: “The governor, that’s it.”

When asked about workers’ compensation, Gov. Brian Schweitzer, a Democrat, spoke favorably of the LMAC bill as one that managed to “trim a little bit of money from all sides of this thing and make this a more sustainable program.”

Republicans, Schweitzer said, “threw that in the garbage,” and went on to criticize Reichner’s bill for its concessions to medical providers.

“We pay more for a couple of reasons and the main one is that we pay, per procedure, more to our doctors than all but six other states,” the governor added. “Well, Reichner has said we’re taking that off the table. We’re going to continue to spend more money on doctors and just cut benefits, and when I say ‘benefit,’ what is that? Somebody who has been injured on the job.”

“I don’t get it,” Schweitzer concluded. “So that’s not acceptable.”

Where that leaves the GOP’s workers’ comp efforts remains to be seen.

“We are working with the governor to try to find a happy medium,” Reichner said. “Stay tuned.”

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