1. Barriers, Obstacles, Opportunities
and Pitfalls of Implementing
Medical Tourism into Workers’
Compensation
Richard Krasner, MA, MHA
Blogger-in-Chief
Transforming Workers’ Comp Blog

2. Introduction

3.  Average WC medical cost per lost time claim was $26,000 in 2008 (6%
increase from 2007)
 As of May 2014, the preliminary medical cost was $28,800
 Medical costs in 2008 were 58% of all total claims
 40% of WC costs are associated with medical and rehabilitative
treatment
 In 1980’s & 1990’s, medical costs fluctuated, rose in 2000’s, and totaled
$41.7 billion annually (as of 2002)
Average Medical Cost per Lost-time
WC Claim
Source: Legal Barriers to Implementing International Medical Providers into Medical Provider Networks for Workers’ Compensation
https://app.box.com/s/77inqpo9pa91y6rxt133

4. Average Medical Cost per Lost-time
WC Claim, cont’d.
Source: NCCI
2013p – Preliminary figure based on data valued as of 12/31/13

5.  Six major barriers, obstacles, and pitfalls to implementing medical
tourism into workers’ comp:
 State Regulations, Rules and Statutes
 Other Legal Barriers
 Laws that have not caught up with the times
 Lawyers, the Courts, and WC Boards
 Politicians, Health Laws, & Misc.
 Workers’ Compensation and other issues
Barriers, Obstacles, and Pitfalls

6. “…aged statutes and old case law”
 Licensing of Physicians — Medical providers must be licensed in state
to practice medicine
 Treating doctors must be within 50 miles of claimant’s home
 Managed Care Networks — different states have different rules for
vetting and credentialing of physicians
 However, Oregon and Washington allow injured workers to go out of
state or out of the country with approval by state
State Regulations, Rules and
Statutes

7.  US & State laws intended to protect consumers, instead increase
costs and reduce convenience
 US & State regulations restrict public providers from outsourcing
certain medical procedures
 US laws that inhibit collaboration
 State licensing laws preventing certain medical tasks performed
by providers in other countries
 Foreign physicians lack authority to order tests, initiate
therapies, and prescribe drugs
Other Legal Barriers
Source: Legal Barriers to Implementing International Medical Providers into Medical Provider Networks for Workers’ Compensation
https://app.box.com/s/77inqpo9pa91y6rxt133

8.  Illegal for physician to consult with patient online without initial
face-to-face meeting
 Illegal for physician outside the state and has examined patient in
person to continue treating via Internet after patient goes home
 Illegal (in most states) for physician outside that state to consult by
phone with the patient residing in that state if physician is not
licensed to practice there
Laws that have not caught up with
the times
Source: Legal Barriers to Implementing International Medical Providers into Medical Provider Networks for Workers’ Compensation
https://app.box.com/s/77inqpo9pa91y6rxt133

9.  Plaintiff Attorney/Abogado demandante objections
 Defense Attorney/Abogado defensor objections
 Workers’ Compensation Legal/Administrative bodies may not
allow medical tourism
 State courts will not authorize surgery abroad
Lawyers, the Courts, and WC Boards

10.  State Legislators
 Health and Medical Laws — Medical Malpractice, Liability,
patient privacy and medical records laws (including HIPPAA,
ERISA, and PPACA)
 Entrenched interest groups wishing to avoid competition with
low-cost providers
 Other vested interest groups, such as Claims Adjusters,
Insurers, Third Party Administrator’s staff (including Medical
Directors), Local Physicians and Hospitals, etc.
 Lack of knowledge about quality of medical care abroad
(“Third World medicine”)
 American attitudes towards medical care abroad and
“American Exceptionalism”
Politicians, Health Laws, & Misc.

11.  Opioid Abuse
 Disability Ratings certifications – physicians must be
certified by each state to issue impairment ratings
• Temporary total disability (TTD)
• Temporary partial disability (TPD)
• Permanent partial disability (PPD)
• Permanent total disability (PTD)
• Maximum Medical Improvement (MMI)
 Immigrants unaware of workers’ comp
 Free trade agreements — do they help or hinder?
 NAFTA
Workers’ Compensation and other
issues

12.  Three key areas of opportunities for implementing medical tourism into
workers’ compensation:
 Workers’ Compensation and Mexico
 Cross-border WC in CA
 NAFTA and Workers’ Comp Conflict
 WC Statutes/Alternatives to WC/Legal/Insurance
 Employee/Employer Choice of Physician
 Opt-out Programs
 View from the Bench
 Demand for Bundling
 Financial/Health Care Reform
 Immigration Reform
Opportunities

13.  Cross-border Workers’ Comp in CA
 Insurance Company of the West (ICW)
 Writing WC policies for San Diego/Imperial Valley area insured
clients to provide cross-border work comp
 Employers/Employees have option to choose Mexican HMO
SIMNSA (only HMO licensed in CA)
 If employee is injured, sees CA primary physician, any future
treatment through SIMNSA, w/follow-up visits on routine basis
w/primary physician
Workers’ Compensation and Mexico
Source: Cross-border Workers' Compensation a Reality in California

14.  NAFTA and Workers’ Comp conflict
 Porteadores Del Noroeste S.A v. Industrial Commission of AZ (2014)
 April 2010, truck driver hauling diesel fuel from Phoenix to Nogales,
Mexico, fell asleep behind wheel, ejected from cab of truck, taken
to hospital in Nogales, then transferred to hospital in Tucson
 Driver requested determination of disability and benefits from
Instituto Mexicano del Seguro Social (IMSS), went outside of IMSS
network, IMSS refused to pay all his bills
 Driver filed claim under AZ work comp system seeking payment of
$17,000 for care and additional compensation
 Sept 2010, filed injury report w/Industrial Commission of AZ
WC and Mexico, cont’d.
Source: Comunicación No Es Médicamente Necesario
http://daviddepaolo.blogspot.com/2014/06/comunicacion-no-es-medicamente-necesario.html

15. NAFTA and Workers’ Comp conflict, cont’d.
 Employer argued ICA did not have jurisdiction because it was a foreign
company and its activities in US governed by NAFTA, not AZ work comp
law
 Administrative Law Judge decided subject matter jurisdiction over
claim existed, and determined accident was compensable under AZ law
 AZ legislature amended workers’ comp laws — workers who have a
claim in AZ and a claim in a foreign country for same injury are entitled
to full compensation which the worker is due under AZ law
 If the worker receives compensation in the other country, then
employer or carrier will be required to pay worker add’l compensation
WC and Mexico, cont’d.
Source: Comunicación No Es Médicamente Necesario
http://daviddepaolo.blogspot.com/2014/06/comunicacion-no-es-medicamente-necesario.html

16.  Unanimous AZ Court of Appeals panel ruled Mexican firms sending
employees into US became subject to same work comp laws
domestic employers are subject to
 Court held that NAFTA did not pre-empt AZ work comp statutes and
that Porteadores could face liability in AZ for add’l compensation
that one of its workers claimed he was due
 Court said unambiguous language of NAFTA provides that only US
can challenge a state law as conflicting w/terms of the agreement
between US, Canada and Mexico
WC and Mexico, cont’d.
Source: Comunicación No Es Médicamente Necesario
http://daviddepaolo.blogspot.com/2014/06/comunicacion-no-es-medicamente-necesario.html

17.  Employee/Employer Choice of Physicians
 State WC laws recognizes 9 categories of choice:
 Employee choice of physician
 Employer choice of physician
 Employer/Carrier
 From a list maintained by the employer
 From a list prepared by the appropriate state agency
 From a Panel
 From Employer’s Managed Care Plan
 From a PPO
 Self Insured Employer
WC Statutes/Alternatives to WC/
Legal/Insurance
Source: WCRI , Workers’ Compensation Laws As of January 1, 2014, April 2014

18. Employee/Employer Choice, cont’d.
Source: WCRI , Workers’ Compensation Laws As of January 1, 2014, April 2014

19.  In the US there are two types of workers’ compensation programs:
 Statutory Workers’ Compensation (Subscriber program)
 Voluntary or Non-subscriber (also called an opt-out program)
 Only two states currently allow employers to opt-out of statutory
workers’ compensation:
 Texas
 Oklahoma (signed into law May 2013)
 Oklahoma law allows employers to choose an alternative to statutory
WC system under certain circumstances
 Texas only state where participation is truly voluntary
Opt-out Programs
Source: Opting Out of Texas Workers’ Comp Doesn’t Have to Mean Going Bare

20.  Employers more engaged in administration of their program, putting
them closer to their employees and it allows them to be more involved
with the claim and outcome
 Employers have some control over whether medical providers are
approved or not approved to provide services and get more
specialization and better doctors
 Industry sectors with highest percentage of non-subscribing employers:
 Arts/Entertainment/Accommodation/Food Services — 52 %
 Manufacturing — 37%
 Finance/Real Estate/Professional Services — 33%
 Health Care/Educational Services — 44%
 Wholesale Trade/Retail Trade/Transportation — 37%
 Agriculture/Forestry/Fishing/Hunting — 25%
 Other Services Except Public Administration — 42%
 Mining/Utilities/Construction — 21%
Opt-out Programs, cont’d.
Source: Opting Out of Texas Workers’ Comp Doesn’t Have to Mean Going Bare

21.  What does opt-0ut programs mean for Medical Tourism in Workers’ Comp?
 “…opt-0ut right now is rapidly transitioning from a marginal, obscure concept to
a viable, legitimate product in the employee benefits family with a compelling
value proposition for every state.”
 “it makes medical tourism viable for work-injury benefits, as employer has
largely unfettered discretion over selection of medical provider.”
 As more states enact opt-out programs for employers in their states, the
likelihood that an employer would chose to send employees abroad for medical
treatment increases
 Changing demographics of US labor force and rise of medical tourism
destinations in Latin America and the Caribbean, suggests this possibility is closer
to becoming a reality
Opt-out Programs, cont’d.
Source: Opt-out as a way in: Implementing Medical Tourism into Workers' Compensation

22.  David Langham, Deputy Chief Judge of Compensation Claims, Florida
article in Lex and Verum
 “Medical tourism is a reality. How far will it go?”
 Mentioned medical tourism as a possible solution to high cost surgeries,
 Article referred to domestic medical tourism from high cost states to
low costs states
 Medical tourism has an established foothold in the medical industry, but
stated that physicians in the US recommend against it
A View from the Bench
Source: A View from the Bench: Medical Tourism and its Implementation into Workers' Compensation

23.  They caution that treatments, implants, and medications provided outside
US may not be approved by FDA, and that follow-up care after surgery may
be substandard
 Verification of foreign surgeon’s qualifications may also be difficult
 Some states have statutory or regulatory restrictions that confine any
attempt to force insurance carrier to provide medical services outside of
state where injured worker lives, but these restrictions are limited to
injured worker, and does not preclude insurance carrier from voluntarily
providing such care and the travel costs associated with it
 “Possible such an opinion might be used by some party in some future case
or controversy…your analysis makes valid points and might well be a
persuasive argument. It is impossible to conjecture whether they would
carry the day in a particular case, but they are interesting and might be
persuasive.”
A View from the Bench, cont’d.
Source: A View from the Bench: Medical Tourism and its Implementation into Workers' Compensation

24.  More employers seek to integrate work comp into their benefit
packages, but range of market trends and regulations may be
responsible for slowing a natural fit
 Major barrier to offering an integrated product is the patchwork quilt of
state laws that prevent the use of narrow provider networks
 “Biggest impediment” “is a matter of bringing a product to marketplace
and making sure it is compliant with state work comp rules”
 Could be alternative in Oklahoma and Texas, and 10 other states
Demand for Bundling of WC &
Health Insurance
Source: Demand for Bundling of Workers’ Comp and Health Insurance Increases

25.  Outpatient Facility Costs Rising
 Rising Hospital Costs
 Employees Unprepared for Increased Health Care Costs
 Consolidation of US Hospitals Lead to Higher Cost and Reduces Quality
 Surgical Shenanigans: WC Charged More for Surgeries than Group
Health
 Physician Shortage and ACA
Financial/Health Care Reform

26. Immigration Reform

27.  Independent Insurance Agents & Brokers of America (IIABA) White
Paper
 11 to 12 million undocumented immigrants in the US, depending upon
how many “self-deported”
 Undocumented account for almost 1/3 of all foreign-born residents of
US, 80% from Mexico and other Latin American countries
 7.2 million (77%) are employed and account for around 5% of the
workforce
 Foreign workers skewed toward above average injury risk jobs
 24% of farm workers, 17% of cleaning workers, 14% of construction
workers, and 12% of food preparers
Immigration Reform and Workers’
Compensation
Sources: Immigration Reform on the Horizon: What it means for Medical Tourism and Workers’ Compensation, Immigration and Workers’
Compensation: Round Two

28.  These industries account for much of the claims filed under US work
comp system
 Undocumented workers comprise a higher percentage of more
hazardous occupations:
 36% of insulation workers, and 29% of all roofing employees are
undocumented
 Foreign born worker poses higher injury risk due to language barriers,
cultural miscues and poor health literacy
 Immigrant workers will likely sustain 20%, or one of every five work
injuries
 Most of these workers won’t know much about the US health care
system or workers’ comp
 Many won’t have primary care physicians
 Undocumented workers entitled to work comp benefits in 38 states
Immigration Reform and Workers’
Compensation, cont’d.
Sources: Immigration Reform on the Horizon: What it means for Medical Tourism and Workers’ Compensation, Immigration and Workers’ Compensation: Round
Two

29.  Barriers, obstacles and pitfalls do exist that currently prevent medical tourism
from being implemented into workers’ comp
 Yet there are opportunities for the medical tourism industry to offer medical
tourism as an option to employees, employers and insurers
 Workers’ Comp industry must be persuaded that medical tourism offers better
care and lower prices
 Convincing workers to consider medical tourism for expensive work-related
surgeries won’t be easy
 Medical tourism industry must work with physicians, employers and insurance
carriers to implement medical tourism
 Medical Tourism industry must take lead and go after the market; the market
will not come to you
Conclusion

30. Contact Info:
Richard Krasner, MA, MHA
+1 561-738-0458
+1 561-603-1685, cell
Email: richard_krasner@hotmail.com
Skype: richard.krasner
LinkedIn: https://www.linkedin.com/in/richardkrasner
Blog: richardkrasner.wordpress.com
QUESTIONS?