Lincoln Surgical Hospital (above) could benefit from recent changes to NWCC rules on doctor referral

While Judges debated and rejected changes to rules about expert testimony in the Nebraska Workers’ Compensation Court, there was little discussion about a change to court rules allowing for a controversial practice among doctors.

At last month’s public meeting of the Nebraska Workers’ Compensation court, the court unanimously passed a change to NWCC Rule 50 that allowed doctors to refer to facilities where the doctors have an ownership interest.

 Supporters of so-called “physician-owned” hospitals many of which are surgical hospitals, argue that that these facilities provide services at a much lower costs than hospitals. A recent article in The Wall Street Journal detailed how hospital systems can inflate the costs of medical care by limiting referrals of primary care doctors employed by them.  Medical costs comprise roughly 60 percent of total workers’ compensation costs. Not surprisingly insurers like doctor-owned hospitals because of the lower costs.

But physician-owned hospitals can’t take Medicare or Medicaid due to changes brought about by the ACA. Hospitals argue that physician owned hospitals shift the cost of poorer and unhealthier patients on to them which is why the ACA disfavored physician-owned hospitals.

Essentially the change to NWCC Rule 50 was a victory for insurers and doctors over hospitals. Since the early 1980s medical expenses have taken up an increasing share of workers’ compensation expenses — now comprising 60 percent of the total expense. If the change to Rule 50 does lead to lower medical costs for the same level of service, then it should be helpful to injured workers because there will be less pressure to reduce benefit levels through legislation.

These legislatively mandated reductions in benefits usually mean worker receiving less compensation for permanent and temporary disability. Reductions in disability for compensation for injured workers has recently been cloaked in legislation adopting the American Medical Association Guide to Permanent Impairment, 6^th Edition which has been the subject of many state-level constiutional challenges  from plaintiff’s lawyers.