Alaska Workers Comp Board Seeks to Reduce Costs

June 25, 2013

The Alaska Workers’ Compensation board sought public input on rising costs in the last week.

Board members held meetings in Anchorage, Fairbanks, Kenai and Juneau seeking ideas on ways to stem rising costs.

A study conducted by the state of Oregon has determined Alaska has the highest insurance premium rates in the country. Costs last year were $270 million and continue to rise despite a 3 percent drop in premiums, the Alaska Journal of Commerce reported.

Rising insurance costs are not related to incident rates, which have dropped from more than 30,000 reported workplace incidents in 1994 to less than 20,000 last year, Division of Workers’ Compensation Director Mike Mongale said. During that same period, employment grew by nearly 90,000 jobs.

Employment’s going up, (incident) frequency rate is going down. This frequency rate is really important because it’s the only thing that has been keeping Alaska’s premium rates in check,” Mongale said.

Nearly 75 percent of “total lost costs” last year were associated with medical costs. The year before, about 60 percent of the $260 million paid was for medical benefits.

Nationwide, that figure is 59 percent of the total costs. Lost work time accounts for the remainder.

“Today, in all states, medical is the big cost driver,” Mongale said, noting these costs cover three areas: fees, overutilization and prescription drugs.

Alaska has a disproportionately high rate of specialty medical costs, like treatments at physical therapists and chiropractors, he said.

Some states have cut costs by implement a fee schedule, which regulates what clinics and hospitals can charge.

Alaska has a fee schedule, but didn’t follow the trend of other states that saw lower costs after implementing it. He said high treatment costs and high insurance premiums go hand-in-hand.

He declined to offer specific suggestions for regulatory measures to cut premium costs, but said other states have looked at ways to curb expensive treatments.

“Most states are moving towards utilization guidelines,” he said. “For example, for this diagnosis, this is the recommended treatment.”‘

He also said many doctors haven’t been trained in workplace injuries. They may tell someone to take several weeks off to heal a broken ankle when that person could receive an air cast and return to work in a different job, thus saving thousands of dollars.

Prescription drugs account for 20 percent of medical benefits paid in compensation claims and prescription painkillers account for about 40 percent of all drug costs in Alaska, he said.

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