Change in Law to Help Lower Workers’ Compensation Medical Costs

On July 6, 2015, Governor Hassan signed into law Senate Bill 133, which makes significant changes to RSA 281-A:24 (Payment for Reasonable Value of Services), the statute that governs the manner in which disputes over the reasonable value of medical services are decided in workers' compensation claims.

Under the old version of RSA 281-A:24, an employer or carrier was required to "pay the full amount of the health care provider's bill unless... [it] can show just cause as to why the total amount should not be paid." This language provided employers, carriers, and their representatives little leverage in a dispute about the cost of medical procedures. "Just cause" was never defined, but suggested a heightened burden of proof the carrier had to reach to overcome the assumption that the full amount of the bill was to be paid.

Concerns over the rising cost of medical care - particularly medical care in workers' compensation claims - have been present in New Hampshire for some time. In September of 2014, the Governor and New Hampshire Legislature created a commission to study the issue, noting that medical costs had grown to nearly 75% of total workers' compensation dollars spent in New Hampshire (versus 60% nationwide) and that the average workers' compensation surgical procedure in New Hampshire was 83% more expensive than similar procedures in the region and more than twice as expensive as they are nationally. The report produced by the commission, released in December of 2014, noted that medical costs for procedures performed for a workers' compensation injury were 107% to 263% higher than identical treatments for similar injuries not caused at work.

With that in mind, the legislature crafted a change to RSA 281-A:24 to address the high cost of medical care in workers' compensation claims. Effective September 4, 2015, RSA 281-A:24 is changed in relevant part below:

(a) The employer or the employer's insurance carrier shall pay the reasonable value of medical services provided under this chapter.

(b) The health care provider shall have the burden of establishing that its bill for services is reasonable.

A carrier need no longer pay the "full amount" of the bill, and now need only pay the "reasonable value" for the services provided. More importantly, the carrier no longer has the burden of showing "just cause" as to why the total amount should not be paid; health care providers have the burden of showing a charge is reasonable when a carrier objects to the amount of a medical bill. This burden shifting levels the playing field by forcing providers to present evidence that charges are reasonable, rather than placing that onus on the carrier to show why a bill is unreasonable. This change will hopefully counteract the continued rise of medical costs in workers' compensation claims as referenced above, and in turn lower the costs of workers' compensation insurance across the state.
The full text of the bill can be found here.

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1) http://www.governor.nh.gov/media/orders/documents/eo-2014-07.pdf
2) http://www.governor.nh.gov/media/news/2014/documents/2014-12-19-workers-compensation-report.pdf