Denn says physicians haven’t balked at new fees

The News Journal, August 20, 2008

For the second time in nine months, the state has ordered insurance companies to cut their rates on workers’ compensation premiums in Delaware, this time by 11.5 percent.

The move is expected to save employers $14 million, and marks another step in reform of the workers’ compensation system in Delaware, which had faced some of the highest rates in the nation.

Last fall, Insurance Commissioner Matt Denn ordered rate cuts ranging from 17.75 percent to 22 percent that went into effect the first of the year, and he said Tuesday that he will push for a further 10 percent reduction by the end of 2008.

“We’re happy. We’d rather see it be more like 50 [percent] or 60 percent … but we think we’re heading down the right path,” said A. Richard Heffron, senior vice president for government affairs at the Delaware Chamber of Commerce.

The lower rates in the current round of cuts can be achieved through a fee schedule that limits what doctors can charge for certain procedures, Denn said.

High rates here have put financial pressure on local firms and even limited economic development opportunities, observers have said. The cuts announced Tuesday become effective Oct. 1, and employers should receive a rebate for any overpayments, said Denn, who is a Democratic candidate for lieutenant governor.

“Workers’ comp has probably been the No. 1 expense for contractors for a while,” said Ed Capodanno, president of the Associated Builders and Contractors Delaware chapter. “It’s good to have the curve go in the other direction a little bit.”

Denn’s order follows legislation that aims to reform the system by instituting standard physician fees, an effort that Denn said has not prompted doctors to push back. “We’re not aware of any doctors who were treating compensation cases who have stopped as a result of this fee schedule,” he said.

Heffron agreed. “Over a thousand doctors applied to be certified, which tells us they want to be in the system,” he said.

Lower rates are especially helpful in today’s economic climate, officials and businesses said. “It’s also good from an economic development standpoint,” Capodanno said. “A lot of companies that relocate here look at workers’ comp rates as an indicator of the economic climate.”

With rates in Delaware now roughly 30 percent lower than last year, Denn still believes there’s room to demand more savings from insurance carriers. Total workers’ compensation premiums paid by Delaware employers last year were estimated at $122 million.