Group Warns Bills Pending in N.Y. Could Make Workers’ Comp More Costly

A New York-based business association warns that two bills currently before the State Legislature could rollback cost savings created in the 2007 workers’ compensation reforms.

According to The Business Council of New York State, S.3749-C/A.5183 would allow an injured employee to utilize any pharmacy that matched the state’s “published prices,” regardless of whether such pharmacy was in an employer’s network and offered “volume discounts” often significantly below published prices.

The authorization of these pharmacy networks is one of the few parts of the system reform that was showing modest cost-savings of between 10 percent and 20 percent. The Council said this legislation would largely negate any benefit from the reform, by eliminating the basis on which networks would provide discounts.

The Council said another pending legislation, S.3741/ A.6294, would also rollback savings realized in the 2007 reforms. It would prohibit any New York State Medical Treatment Guideline adopted by the Workers’ Compensation Board from being applied to injuries that occurred before the guideline’s adoption date.

The guidelines were adopted in 2009 after a three year process involving input by a joint business/labor medical advisory committee and extensive public review and comment by all categories of medical professionals. They are the new standards of care, identifying specific medical treatments that are considered appropriate and effective.

The Business Council argues that standards of health care are neither prospective nor retroactive, and any legislated arbitrary timeframe is completely contrary to evidence-based medical principles.

Workers’ Comp Rates Continue to Rise in New York

But the Business Council noted that regardless of the outcome of these two bills, workers’ compensation rates continue to rise in New York.

The amplified cost is driven by increases in maximum benefits indexed to increases in the state’s average weekly wage, and to the “extremely slow pace and inefficient implementation” of key system reform measures, according to the Council.

For example, in October 2011, the New York State Insurance Department approved an average rate hike of 9.1 percent, on the heels of a 7.7 percent increase in 2010.

All told, between 2009 and 2012, rates have risen by 32.9 percent. Additionally, Workers’ Compensation Board assessments — essentially a tax on workers’ compensation premiums — have increased by 10.4 percent and 27 percent, respectively for the last two years. The Council said employers are paying nearly 50 percent more of their compensation dollars in assessments to fund the system than they did three years ago.

The Council warned that these recent cost increases to the workers’ comp system do nothing to help improve the state’s economic competitiveness and hurts New York-based businesses’ ability to create private-sector jobs.

Source: The Business Council of New York State

Topics New York Workers' Compensation