Lawmakers
still weighing
workers’ comp
fee increases

Doctors say they need higher
reimbursement while auto
insurers cite the effect on policies

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By Tim Ruel
Star-Bulletin

THE LEGISLATURE is still considering a controversial increase in workers' compensation medical fees that has drawn the support of Hawaii's doctors and dissent from several groups, including auto insurers.

A House version of the measure last week passed the Consumer Protection and Commerce Committee. While the committee declined to specify an exact amount of increase in the medical fees, it left the door open to potential increases later in the session.

The Senate's version of the bill calls for adopting the federal workers' compensation fee schedule, which could effectively increase workers' comp rates by 14 percent to 24 percent, according to Insurance Commissioner Wayne Metcalf, who cited a recent report from state actuary Martin Simons.

Metcalf said such a drastic increase comes at a bad time for Hawaii's employers, who already face the threat of declines in the mainland and Japanese economies.

Doctors, however, are pressing for the increase because they say they can no longer afford to treat patients with workers' comp claims because fees paid to doctors are too low. The doctors point to a 1995 law that cut their fee schedule 54 percent by locking it to a formula based on 110 percent of the Medicare fee schedule.

Nationally, the average is 162 percent of the Medicare schedule, according to Dr. Linda Rasmussen of the Windward Orthopedic Group, who testified before the committee.

Rasmussen said she is losing $25 for every patient who comes in with a workers' comp claim. She has had to reduce workers' comp cases to just 5 percent of her business, as opposed to 40 percent when she began her practice seven years ago.

Rasmussen said she can at least break even on workers' comp cases if the Legislature approves increasing the fee schedule to 130 percent of the Medicare schedule.

However, that would drive up the workers comp rate by about 4 percent, which is still a worry for employers, Metcalf said.

Hawaii's auto insurers are also concerned about any increase, since their fee schedule is tied directly to that of workers' comp, said Paul Ables, who is a consultant to the Hawaii Insurers Council. Although individual policies vary, any increase in the fee schedule would affect the specific coverages of personal injury, bodily injury, uninsured motorist and underinsured motorists, said Alison Ueoka, executive director of the insurers council.

Hawaii's auto insurers, facing pressure by Metcalf, have been cutting rates for the past several years, but that's going to end if the fee schedule is raised, Ables said.

Hawaiian Insurance and Guaranty most recently announced it will lower rates by an average of 9.8 percent when policies are renewed.

Auto rates would stop falling under an increase in the medical fee schedule, but probably wouldn't rise overall, said Metcalf.

The bill is now in the hands of the House Finance Committee, which must pass the measure back to the House by April 6. The committee has not yet scheduled a hearing on the matter.

Committee members have the option of passing the bill without specifying a rate, which would keep the measure alive and allow legislators to come up with a compromise later in the privacy of a conference committee.