Ohio ‘vastly’ overpaying for workers comp claims, according to whistleblower

Local News

COLUMBUS (WCMH) — A whistleblower claims that the Ohio Bureau of Workers Compensation (BWC) is sitting on a study that claims the state is ‘vastly’ overpaying for the BWC’s multi-billion dollar payout system.

The BWC spent nearly a million dollars to study the managed care organizations (MCOs) that handle all of the claims filed by hundreds of thousands of Ohio workers injured on the job each year.

The private consultant concluded that claims are down, but costs are not, and changes are needed. A year later, nothing has been done.

Over a decade, open claims in Ohio dropped dramatically, from 1.4 million in 2008 to about 600,000 in 2017. Some of that is due to automation in the workplace and Ohio’s improved worker safety standards.

As the number of claims dropped, payment to the managed care organizations remained steady. Over the same period of time, the MCOs consistently collected around $170 million per year.

According to the study, on the national level, for each dollar paid out for worker medical benefits, 14% goes to MCO administration fees. In Ohio, for each dollar paid out, MCOs rake in 27%.

So, why didn’t BWC act on its costly study?

The bureau told NBC4’s Colleen Marshall it’s all under review.

The contract was negotiated under the previous administration, and it’s currently in year 2 of a 3-year contract. I understand the previous administration negotiated a 5% reduction over the three years from approximately $170 million to $161 million through 2020.
As you know MCOs are used in Ohio – their use was legislated back in the 90s to help improve service to injured workers, and no one is disputing the quality of care. The new administrator will be reviewing the contract when it is time to review it (the new contract will begin Jan. 1, 2021).
The current contract with MCOs is 1/1/18 – 12/31/2020. The new contract begins on 1/1/2021. MCO contract reviews will happen next year for the contract year that begins 2021 calendar year.
I can tell you the percentages from the Executive Summary on page 4 comparing the 27% to the 14% is not an apples-to-apples comparison. The 14% figure includes premiums – they then compare it to a figure without premiums (this is noted on page 15 of 34 in the big report). It’s not apples-to-apples.

The whistleblower claims the BWC is trying to protect the MCOs and is even giving them the opportunity to draft their own rebuttal to the study, claiming its findings are flawed.

Critics say that’s like asking for fox to draft a study on security at the hen house.

BWC Director Stephanie McCloud started last January, a month after the report was given to the board. Her spokeswoman says the priority remains taking care of injured workers.

Our priority remains taking care of injured workers and getting them back to work as soon as possible. We continually review the work performed by MCOs – which by all accounts is very good. We are doing some further review, as the study recommended.”
BWC has given refunds of $1.5 billion dollars to Ohio employers this year following strong returns on the agency’s investments. The money goes to private and public employers, such as local governments and public schools.  This year’s dividend marks the fifth time since 2013 BWC has issued $1 billion or more to Ohio’s private and public employers covered by the agency. 

Kim Norris, Ohio BWC spokesperson

Aside from the cost, the study also concluded the MCOs are doing a good job of processing medical claims for injured workers and getting them back to work as soon as possible.

Tap here to read a summary of the study.

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