Self-insured employers and workers’ compensation insurers will be prohibited from negotiating with hospitals over services provided to claimants under a ruling in September by the state Workers’ Compensation Commission (WCC). The ruling contradicts longstanding practice in Connecticut, not only the workers’ compensation field but also in the general healthcare arena.

The decision came in response to several cases brought by two hospitals in the WCC’s Second District, which covers most of eastern Connecticut.

Standard practice in Connecticut has been for self-insured employers and insurers to negotiate hospital bills in workers’ compensation cases through third-party auditors. The auditors analyze providers’ published cost figures for medical services, and based on its data, issues a recommendation for appropriate charges for services provided.  

Despite the requirement in the state Workers’ Compensation Act that hospitals be reimbursed only for their actual costs, the commissioner held that in the absence of a prior agreement by the hospital to accept a reduced fee, insurers and self-insured employers must pay the full amount billed by the hospitals.

Should the ruling stand, it will likely increase medical payouts in workers’ comp cases, which in turn will drive up the cost of doing business in a state where costs are already very high.

However, employers and insurers involved in the Second District cases are planning to appeal the decision to the Commission Review Board. If they are unsuccessful, the matter may be appealed to the Connecticut Appellate Court and possibly the Connecticut Supreme Court.

Costs likely to rise

Medical payments account for 50% of total workers’ compensation benefit costs, according to the National Council on Compensation Insurance. As hospital payments alone account for 33% of total medical payments for workers’ comp benefits in Connecticut, they comprise an estimated 16.5% of total Connecticut workers comp benefit costs.

For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or bonnie.stewart@cbia.com.