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The Affordable Care Act has received a great deal of publicity over the past few years. As a result, consumers are coming to understand the benefits to which they are entitled. While this is important, it is equally essential that small business owners gain knowledge about how the ACA will affect the workers’ compensation insurance they offer to their employees.

To grasp the impending changes, you need to know that health care can be either capitated or fee-for-service. In the former model, doctors are paid a set amount per patient, whereas the latter offers payment based on the specific services that are provided. Workers’ compensation coverage is based on the fee-for-service standards. With the implementation of the ACA, formation of Accountable Care Organizations is encouraged. These providers will be rewarded for both the quality and the cost-effectiveness of the care they furnish to their patients and require that doctors and hospitals share the financial responsibility for the provision of medical services. They operate on a per capita model, which means that doctors receive the same financial reimbursement for never treating a patient as they do for seeing her weekly. For physicians, it is much more financially lucrative to provide fee-for-service care. For that reason, the cost of many injuries may now be shifted over to workers’ compensation. In the end, this shift could cost insurers tens of millions of dollars.

This change could be particularly noticeable for soft tissue injuries. If one of your employees breaks her arm while on the job, the injury is clearly work-related and there is generally no difficulty determining that it is a workers’ compensation case. However, the same cannot be said for soft tissue injuries such as knee, back or shoulder difficulties, the cause of which is not always so straightforward. In the past, the cost for treatment of these injuries was frequently not borne by workers’ compensation. However, that could change now that it is more financially lucrative for providers to make these types of claims, particularly in states like Michigan and Massachusetts where many consumers are still using capitated plans.

What will this mean for you as a business owner? In some ways, the jury is still out. However, it stands to reason that if more patients make workers’ compensation claims because their physicians receive a financial incentive to direct them towards these benefits, the cost that you as an employer will pay for your group benefits package will rise in response. Just how much and how quickly this will happen remains to be seen. But be ready for what might possibly be a bit of a rough ride in the next few years.

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