Dover, DE – The State Senate passed Workers’ Compensation legislation this afternoon to stop the large workers’ compensation rate increases that are burdening Delaware businesses.  HB 373 was developed by incorporating recommendations of the Delaware Workers’ Compensation Task Force over the last 18 months. It passed the House earlier this month.

Workers’ compensation rates have been a major concern for Delaware employers for a number of years.  House Bill 373 will make the system more efficient and will result in relief for Delaware businesses that have had to endure such significant premium increases over the past few years.

“I applaud the Lt. Governor’s work on this extremely important issue for Delaware’s business community,” said Governor Markell. “His leadership ensured the task force acted swiftly and effectively to address the high rates that have burdened our employers.  The bipartisan reform represents the culmination of a great deal of work, commitment and compromise by everyone involved with the task force.”

The Workers’ Compensation Task Force was created on January 30, 2013 by the Delaware General Assembly and the Governor, and charged with an expedited review of Delaware law relating to workers’ compensation, the impact that the 2007 amendments to that law had upon workers’ compensation premiums, the reasons for recent increases in workers’ compensation premiums, and whether any additional changes to statutes, regulations, or practices are required to control growth in premiums. As detailed in the task force’s prior report, Delaware’s workers’ compensation premiums had risen by calendar year 2006 to be the third most expensive in the country.

The task force delivered its first set of recommendations in May 2013 and those were consolidated into House Bill 175, which passed the Delaware House of Representatives and Delaware State Senate unanimously.  Among the provisions of House Bill 175 was one that continued the existence of the task force through June 30, 2014.  Its second set of recommendations was released with a report for the General Assembly in May 2014, and House Bill 373 was a result of those findings and suggestions.

The recommendations for House Bill 373 focused almost exclusively on medical costs, as they make up 65% to 70% of every dollar spent on workers’ compensation premiums in Delaware, and make up 100% of the increase in premiums.  The most substantial provision in this bill is a significant reduction in the reimbursements paid to health care providers for treatment of workers’ compensation patients.  The task force has revealed that reimbursements for treatment of workers’ compensation patients in Delaware has evolved to be among the highest in the country – in some cases three, four, or even five times the reimbursement for exactly the same procedure than what is allowed in other states.

Broadly, the recommendations fall into three areas:

Heightened Oversight of Insurance Carriers, including consolidating the Data Collection Committee and the Health Care Advisory Panel into a single committee and a Ratepayer Advocate to be hired and overseen by the Workers’ Compensation Oversight Panel, with staff support to be provided by the Department of Labor.

Stricter Control on Medical Costs, including directing the Workers’ Compensation Oversight Panel (WCOP) to create a new medical fee schedule, using multipliers of medical codes used by the Centers for Medicare and Medicaid Services, which results in a 33% reduction in reimbursements to health care providers for treatment of workers compensation patients, to be phased in over a three year period.  It also calls for reimbursements starting in 2017 for individual procedures to be capped at specific percentages of what the Medicare program pays for identical procedures, though it has a provision allowing the legislature to re-examine the impending Medicare caps in 2016 to determine whether they should be adjusted given the experience in 2015.  Finally, there is a  recommendation that the General Assembly (through the WCOP) monitor both the rate impact of these recommendations and their impact upon providers as the recommendations are phased in, and make statutory adjustments in the fee schedule if appropriate.

Consideration of New Rating Organization, recommending that DOI undertake a formal assessment of whether there should be a change in the rating organization used by Delaware insurance carriers, and include members of the task force who have expressed concerns about the current situation in that formal assessment.

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