In an effort to promote workers' compensation reform being pushed by Gov. Frank Murkow-ski, an Alaska Department of Labor employee said reform is needed to ensure the health of Alaska's economy.
"The cost is really impacting jobs for Alaskans," said David Donley, chief of adjudications for the Department of Labor and Workforce Development Workers' Compensation Division at Tuesday's Alliance luncheon in Kenai.
Donley was speaking on behalf of Greg O'Claray, commissioner of labor for the state, who was unable to attend.
He said on average, workers' compensation premiums have increased by 30 percent in the last two years. A 12 percent increase is predicted this year, he said. Donley pointed out that these are averages, and the increases are much higher for some companies.
He said workers' compensation premiums have become too costly and too complicated, slowing the process and making it difficult to understand.
"It's an important first step toward stemming the increase in rates," he said in an interview, adding that this legislation is a way to start dealing with the issue.
The workers' compensation bill passed in the Senate and now needs to pass in the House of Representatives. It was introduced at the request of the governor and has been tagged as one of his top priorities.
Donley cited Central Peninsula General Hospital as an example. Its annual premiums have increased by more than $500,000 in four years, he said. Currently the hospital's premiums are just shy of $1 million.
He said costs are simply overwhelming for many businesses some have to close their doors as a result.
The bill, SB 130, calls for reducing health care costs incrementally. Under the legislation, the current maximum reimbursement level will be set at 2004 levels. A panel of experts will be formed to look at long-term solutions to rising costs and complications in the system, he said.
The bill also requires doctors to treat workers' compensation patients according to certain guidelines. Physicians may only deviate from the guidelines with proper approval.
It allows generic drugs to be used unless a name brand is medically necessary and aims to prevent abuse of prescription drugs.
Currently, appeals on workers' compensation claims go to an Alaska Superior Court. The bill provides a special panel of workers' compensation experts to deal with appeals. Then the panel can set precedents with their rulings.
Donley said this would reduce the amount of time it takes to resolve appeals.
The bill also creates a pool of money to assist employees whose employers cheat them out of coverage. The bill would make cheating on crimes punishable with civil charges, he said.
Donley's presentation was just one stop on a tour by the commissioner to promote this legislation. Donley said O'Claray has been traveling around the state promoting it.
"We need to deal with this legislation and make sure it passes this year," Donley said.
The proposed legislation has drawn criticism from some groups. Since 2000, the average increase in workers' compensation costs is just over 8 percent, said Paul Worrell, president of the Alaska State Medical Association. He said he does not think this is a big crisis.
Referring to guidelines for treating workers' compensation patients as a "cookbook," he said the authority and discretion over patients' care is transferred from the doctor to an insurance clerk.
"The cookbook would be the decision-maker," he said. "We're not eager to run into that situation."
Worrell said a preferred list of generic drugs is a lot of hassle over nothing. He said 95 percent of the medicines used by workers' compensation patients are already generic.
"We don't really see how there's a big crisis," Worrell said. "(But) we're willing to sit down and discuss any of these issues."
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