Worker's Compensation Advisory Council

Council on Worker’s Compensation
Meeting Minutes
Madison, Wisconsin
April 13, 2005

Members present:  Ms. Bean, Mr. Beiriger, Mr. Brand, Mr. Buchen, Ms. Connor, Mr. Furley, Ms. Huntley-Cooper, Mr. Gordon, Mr. Kent, Mr. Newby, Mr. Olson, Mr. Shaver, and Mr. Welnak

Excused:  Ms. Vetter

Staff present: Mr. Conway, Mr. O’Malley, Mr. Shorey, Mr. Krueger, and Ms. Knutson

  1. Call to Order/Introductions:  Ms. Huntley-Cooper convened the Worker’s Compensation Advisory Council (WCAC) meeting in accordance with Wisconsin’s open meetings law. 
  2. Minutes:    Mr. Newby moved adoption of the minutes of the March 22, 2005 meeting; Mr. Shaver seconded the motion. The motion was unanimously approved. 
  3. Public Comments:  None.
  4. Subcommittee Reports

    Medical Cost Committee – Mr. O’Malley has completed work on re-drafting the Minnesota Treatment Parameters to conform to Wisconsin law and rule drafting conventions. The draft will be sent out to the WCAC members for review. Mr. Newby asked if the department had an estimate as to a projected amount of money to be saved by implementing treatment guidelines. Mr. O’Malley responded that it is not known if there will be a savings.

    Mr. Newby requested that the department research the issue of the feasibility of worker’s compensation participating in the state plan for pharmaceutical benefits.

    Permanent Disability Rates - Mr. Conway indicated the subcommittee’s report was sent to the WCAC members. A chart condensing the series of options with estimated costs was distributed. Mr. Welnak requested information on the cost for the benefit increase options per $100 of payroll (premium costs). That information is currently not available. Total premium paid in 2005 is estimated at $1.5 billion. Mr. O’Malley explained that the latest data from the Worker’s Compensation Rating Bureau (WCRB) is from calendar year 2002, with $270 million paid in indemnity benefits and $400 million paid in medical expenses. The data provided to the WCAC includes information on the amount of revenue needed to pay supplemental benefits for existing permanent total disability PTD cases. For new PTD cases, the additional benefits will be calculated into the premium costs. Mr. Shorey explained that under the current system, there is a 26 year lag between the maximum PTD rate in 1980 compared to 2006. The subcommittee is considering shrinking the 26 year lag to 6 years so that the older PTD claimants are receiving 80% of the current maximum PTD rate.

    Mr. Shorey explained that the bulk of the Social Security offset occurs during the first 6 years of receipt of worker’s compensation benefits. Mr. O’Malley noted that if the employee earned a low wage, the Social Security offset may extend beyond 6 years. Mr. Shorey noted that if the maximum PTD rate is increased, the Social Security offset may extend beyond 6 years. Mr. David Weir explained that for the first 6 years, the employee receives 80% of the employee’s average current earnings (ACE) through a combination of worker’s compensation and Social Security disability benefits. After 6 years, the employee’s combined earnings go down (the employee is no longer receiving 80% of ACE). Social Security uses the highest years of earnings for the 5 years before the employee was totally disabled in calculating the ACE.

    Mr. Buchen requested that the WCD provide cost information for advancing supplemental benefit rate entitlement in five year increments, assuming all other variables are constant (no change in benefit limits or entitlements). He noted that the additional cost would not be built into the premiums collected in the past. Ms. Connor stated that the subcommittee considered a special assessment on all employers to pay for existing PTD claims. Mr. Buchen expressed concern that only employers operating in Wisconsin now would be bearing the cost of the program benefit increases. Mr. Olson commented that Wisconsin is the only state where death benefits are provided if the employee’s cause of death is not due to the work injury (depending on the amount of PTD benefits paid). Mr. Shorey stated that over 200 PTD claimants are over age 65. Mr. Newby requested that the WCD provide data for the next meeting on the issue of the percentage of premium dollars required for payment of PTD benefits.

  5. Correspondence: Mr. Conway reported he received a letter from Mr. and Mrs. Robert Guenterberg this morning and copies were provided to the Council.
  6. DWD WC Division Law and Administrative Rule Proposals:  Mr. O’Malley explained the department proposals (all references are to the proposal numbers).

    1. – 7. Involve Professional Employment Organizations (PEOs). At this time the department is still discussing concerns with the Office of Commissioner of Insurance (OCI) and the Wisconsin Compensation Rating Bureau (WCRB). These proposals are tabled until the next WCAC meeting. Frances reported that NAPEO indicated they planned to attend the next Council meeting on this topic.

    8. The department receives frequent complaints from insurance companies that treating practitioners are requiring pre-payment for the final medical report from the treating practitioner. The final medical report is required under Wis. Administrative Code §DWD 80.02(2)(e)4. The department’s proposal would prohibit the practitioner from demanding pre-payment for the report. Any dispute that arises concerning the fee charged for the report would be resolved under the reasonableness of fee dispute resolution process (Wis. Admin Code §DWD 80.72).

    10. The proposed language does not address the situation where the doctor rates permanent partial disability (PPD) based on a percentage of loss. The department will have proposed language to cover this situation for the next meeting.

    12. Mr. Newby inquired whether the disclosure of information complied with HIPPA. Mr. O’Malley responded that HIPPA does not apply to the WCD. The proposed language was intended to prohibit re-release of information unless authorized by the department. The draft language is based on language in the Unemployment Insurance statutes. The WCD will confirm that the proposed language is consistent with HIPPA. Mr. Kent suggested that when the WCD agrees to provide data for research, that it should have the right to view the overall result of the study without paying a fee to access it.

    A WCD staff member has brought to WCD management’s attention that the department never developed a form as referred to in Wis. Admin. Code §DWD 80.49(7)(a). However, the department does have a form letter that is sent to injured workers who have been off work 13 weeks. Mr. Furley stated that additional information provided to injured workers is beneficial. The department will develop a form for insurance carriers to send to injured workers.

    Mr. Newby requested clarification of the distinction between a temporary help agency and a PEO and the issues surrounding the department’s proposal. Mr. Krueger explained that there are issues surrounding proof of coverage. An employer enters into a contract with a PEO. Currently, there is no procedure for the PEO to notify the department that it is on the risk for those employees and that it is providing coverage. If the employer and the PEO terminate the contract, the department is not notified. The employer is required to immediately have worker’s compensation insurance coverage. However, one PEO went out of business, the employer was uninsured, and 17 claims were filed against the Uninsured Employers Fund (UEF). There is also an issue regarding the experience rating. There is no method to break out the losses for each client. When a client with a high experience rating enters into a contract with a PEO, the experience rating does not stay with the client. The department is currently discussing these issues with OCI and WCRB to arrive at proposed language that would be acceptable to them.

  7. Review of Public Proposals:  Mr. O’Malley explained the one additional public proposal regarding the mileage reimbursement rate. By custom and tradition, the mileage rate for injured workers is set by the department at the rate that state employees are reimbursed. Usually the rate is adjusted every four years. The current rate was set in 2002.

    Mr. Newby requested the department’s position on the public proposal requiring insurance carrier’s claims adjusting staff to have an office in Wisconsin. The department indicated that for training and compliance purposes, it is desirable that insurance carriers and/or third party administrators (TPA) have an office in Wisconsin.

    Mr. Shaver requested the department’s position on the minimum PPD rating for implantation of an artificial spinal disc. Mr. O’Malley indicated that the department remained neutral on the proposal. To the extent that the WCAC members agree, the proposal would reduce litigation on this issue. The WCAC agreed to this proposal to establish a minimum percentage of disability of 7.5% for artificial discs.
    Mr. Newby requested additional information on the proposal regarding reasonableness of fee disputes. Mr. O’Malley explained the database information is proprietary and some vendors do not sell the database to health care providers. The hospital radiology database is in the public domain. Ms. Laura Leitch stated an hospital audited billings and found that a number of bills were erroneously reduced by insurers citing use of a certified database. Ms. Knutson explained that not all CPT or ICD9 codes are certified in the databases because there are not 25 occurrences in a zip-coded region. There are currently no penalties against an insurer for erroneously applying a database reduction to charges. Some insurers reduce the charges citing “usual and customary” or “80% of charge”. The department in resolving disputes occasionally will combine data from all the databases to arrive at more than 25 occurrences to calculate an average charge.

    Mr. Newby requested an update on the WCD’s efforts to streamline the hearing process. Mr. O’Malley indicated the Worker’s Compensation Process Improvement Team has been meeting regularly and has agreed on two proposals involving joint certification of readiness and expedited hearings.

  8. WCAC action on Department proposals:
    8. Agreed.
    9. Disagreed. There is concern that the proposal requires discovery resembling the civil litigation process.
    10. Agreed
    11. Agreed.
    12. Agreed with proposal, amendment requested to address issues involving HIPPA and require access to the results of the study.
    13 & 14. Disagreed. Management is concerned with increasing penalties when there are still issues surrounding efficiency in the department’s mail handling. Management would like to see the department take a different approach and focus on serious insurer and TPA offenders. Labor suggested instead of fining carriers, if there is no response, there is a presumption the employee has a compensable injury and that benefits are due. Management is open to continuing discussions with WCD regarding alternatives.
    15. Agreed with proposal, amendment requested to require the interest to be credited against the assessment or paid to the Second Injury Fund rather than the School Fund.
    16. Agreed.
    17. Agreed with proposal, amendment requested to require the interest to be credited against the assessment or paid to the Second Injury Fund rather than the School Fund.
    18. – 28. Agreed.
    29 & 30. Agreed with proposal, amendment requested to add “records”.

    The WCAC requested the department draft a proposal to include in the statute that injured workers will receive the same mileage reimbursement rate as state employees.
  9. WCAC action on Labor and Management proposals:
    Regarding Labor proposals: Management at this point looked at non-economic proposals (not 3, 6 or 7). This also includes the PTD alternatives and the medical cost proposals. Management requested that the WCD provide information regarding:
    #3 - the number of scheduled injuries with 200 weeks or more of disability;
    #6.- the cost associated with an increase in benefits (from 2/3 to 75% of average weekly wage); and
    #7 the increased PPD rate.

    Labor requested their proposal #4 be amended to include a telephone number for the injured employee to call with questions. Labor envisions a plain language summary of the method used to calculate the injured worker’s average weekly wage.

    Regarding Management proposals:
    #1. Labor tentatively agreed.
    #3. Mr. Shaver relayed that in a recent LIRC decision, there was an issue concerning what constitutes a fitness program. Mr. O’Malley stated if there is encouragement by the employer for participation, then it is not voluntary and the employee is covered under the Worker’s Compensation Act.
    #5. Disagreed.
    #6 Agreed.
    #9. Agreed. The WCAC also requested that the department draft a proposal to state that the Self-Insured Employers Liability Fund be used only for payment of benefits.
    #10. Disagreed. Mr. O’Malley indicated that during the last agreed bill process, Mr. James Alexander from the Judicial Commission indicated the Wisconsin Supreme Court must authorize the application of the Code of Judicial Conduct to administrative law judges.
  10. Adjournment:   Discussion on all agenda items concluded and the meeting was adjourned. The next meeting has been scheduled for April 26, 2005 beginning at 10:00 a.m. A future meeting is also scheduled for May 11, 2005 beginning at 1:00 p.m. All meetings are scheduled at Holiday Inn Madison East.