How Will the 21st Century Cures Act Impact Workers’ Comp?

by Devin Motley
Regulatory Counsel

devin-motley-headshotOn December 13, 2016, President Obama signed H.R.34, known as the 21st Century Cures Act, into law. Advertised as a victory for bi-partisan cooperation in Congress, the legislation aims to tackle critical health issues facing American society including combating the opioid epidemic, funding cancer research, addressing mental health care, and modifying what approval is required by the Food and Drug Administration (FDA) to bring new products to market. While the Act is not intended to impact the workers’ compensation industry (workers’ compensation is not mentioned in the 312 pages of the Act, and is a state, not a federal issue), the initiatives and funding provided by the Act will undoubtedly have a trickle-down effect on workers’ compensation medical treatment.

The Opioid Epidemic and the $1 Billion Search for a Solution

Anyone familiar with the work comp industry would agree that the opioid epidemic has been a central theme of 2016. Reductions in opioid dosage, closer monitoring of opioid treatments, prescription drug monitoring programs (PDMPs), opioid withdrawal support, and drug formularies have been implemented in many states to curb opioid usage. But how will the Cures Act affect opioid use in workers’ compensation? The short answer is, not much. That being said, the Cures Act could potentially have a negative impact on workers’ comp claims.

Pill Bottle

The Cures Act provides for $1 billion in state grants over the next two years for opioid abuse treatment and research. The money allocated to treatment will likely not help injured workers, as costs for substance abuse treatment attributable to the work injury will still be paid under the workers’ compensation claim. Funds spent on substance abuse research could lead to new and innovated treatment methods, although these changes will most likely not be embraced by the workers’ compensation industry. Generally speaking, current treatment research is dedicated to understanding and treating the psycho-social reasons behind addiction so that the treatment is focused on the cause of the addition, not the addiction itself. Because workers’ compensation treatment is primarily focused on the addiction as a side effect of the work comp injury, new treatment methods may be seen as expanding the scope of injury to areas far beyond what is currently attributable to most workers’ compensation claims. As a result, development of new treatment methods could actually serve to complicate the claim and make it more expensive for insurers and employers.

The Cancer Moonshot

Cancer is a difficult subject in the workers’ compensation industry because it is nearly impossible to legally attribute causation of the cancer to a compensable claim. Many states bypass this issue by enacting regulations that give a presumption of cause for certain types of employment. These “presumption claims” typically involve emergency responders or others whose jobs expose them to hazardous conditions. A cancer diagnosis is presumed to be caused by the employment and is therefore compensable as a workers’ compensation claim.

The Cures Act provides for $1.8 billion in new funding reserved for the “cancer moonshot,” an initiative by Vice President Biden to accelerate cancer research, to make more therapies available to more patients, and to improve our ability to prevent cancer and detect it at an early stage. The impact to these programs on the workers’ compensation industry should be positive overall. Similar to opioid treatment, funds attributable to treating cancer will not directly impact workers’ compensation claims; however, unlike opioid research, funds used for cancer treatment will have a positive impact on workers’ compensation patients.

As modern medicine increases its ability to identify cancer, affected workers will benefit from early diagnosis and treatment efforts. However, research into the root cause of cancer may lead lawmakers to create new presumption legislation for different types of cancers in new industries as the cause of cancer becomes better understood. This presumption could lead to a higher number of cancer claims, along with higher overall claims costs for the workers’ compensation industry.

Advances in Mental Health Treatment

Mental health funding granted by the Cures Act is one area that should unequivocally have a positive net impact on the workers’ compensation industry. The workers’ compensation industry is coming to a point where injured workers are being treated as a whole and not just a sum of their injuries. The importance of returning to work, counseling, and the psych-social environment of the injured worker are all gaining recognition as crucial factors in the successful recovery from a workplace injury.

Improvements in the diagnosis of mental illness as well as the availability of treatment for the population should lead to a healthier workplace overall. From decreased incidents of injury to decreased recovery time, advances in mental health treatment will help both employers and insurers.

Streamlined Approvals for Pharmaceutical and Medical Devices

Changes to the FDA approval process for pharmaceutical and medical devices may have the biggest effect on the workers’ compensation industry. It should be noted that nearly all the large pharmaceutical manufacturers lobbied heavily for this legislation to the tune of tens of millions of dollars. It is estimated that the Act will likely save drug and device companies billions of dollars because updated FDA requirements for studies and approvals are more flexible and will expedite the process.

From a treatment perspective, new drugs and devices may be beneficial to the injured worker. However, new brand drugs will likely lead to increased costs for insurers and employers because there will be no generic equivalents. It remains to be seen how evidence-based medical treatment guidelines will be impacted by these new drugs and devices, which presumably will have less research conducted prior to their introduction to the market.

What is the Take-away?

Workers’ compensation medical treatment was not meant to be impacted by the 21st Century Cures Act; however, all advances in medical treatment eventually bleed into the workers’ compensation system. State legislators and regulators will be faced with difficult decisions in the future on how to incorporate these changes into the workers’ compensation system, while maintaining a system that is cost effective for employers and insurers.