Worker's Compensation Advisory Council

Council on Worker's Compensation
Crowne Plaza
Madison, Wisconsin
June 5, 2009

Members present:   Mr. Beiriger,  Mr. Brand, Mr. Buchen, Mr. Collingwood, Ms. Connor (for Mr. Scott), Ms. Huntley-Cooper, Mr. Kent, Mr. Newby, Ms. Nugent, Ms. Pehler, Mr. Schwanda and Ms. Vetter 

Excused:   Mr. Redman


Staff present:   Mr. Aiello, Mr. Conway, Mr. O'Malley, Ms. Knutson, and Mr. Krueger 

  1. Call to Order/Introductions: Ms. Huntley-Cooper convened the Worker's Compensation Advisory Council (WCAC) meeting at approximately 9:30 a.m. in accordance with Wisconsin's open meetings law.  WCAC members, staff and members of the audience introduced themselves. 
  2. Minutes: The minutes of the May 8, 2009 meeting were unanimously approved without correction.
  3. Correspondence: Mr. Conway reported that the only item of correspondence received was a thank you note from Mr. Fales and Mr. Bohn regarding their presentation at the last meeting.

  4. Reports:  Ms. Knutson reported that the Worker's Compensation Division (WCD) is now required to report medical payments made out of the Work Injury Supplemental Benefit Fund (WISBF), the Uninsured Employers Fund (UEF), and the Self-Insured Employers Liability Fund for claimants who are Medicare beneficiaries. The electronic data reporting must be filed with the Center for Medicare and Medicaid Services (CMS) pursuant to sec. 111 of the Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007. This Act makes it easier for the federal government to enforce its rights under the Medicare Secondary Payer statute which was enacted to protect the fiscal integrity of the Medicare Trust Fund by establishing that medical payments under Medicare are secondary to all other types of insurance. The WCD estimates that there may be an average of 210 claimants per year whose claim information would need to be reported to CMS. The federal government can impose fines of $1,000 per day per claim record for claims that are not properly reported to CMS.  There are deadlines imposed by the federal government to register on-line as a Required Reporting Entity (RRE) and to submit electronic claim input files for testing.  There may be a significant financial impact on the WISBF. Wis. Stat. ?102.66 provides that medical payments are supplemental to any disability or medical benefits payable under 'any federal insurance or benefit program providing disability for medical benefits.' Therefore, Medicare under Wisconsin law is a primary payer, however, CMS maintains that Medicare is a secondary payer.  There is a potential for CMS to notify the State of Wisconsin that any Medicare benefits paid for claims against the Fund were overpaid and reimbursement must be made to Medicare.  The WCD may request that the WCAC agree to a change in the statute to require claimants to provide information to the WCD and insurers regarding application and/or receipt of Social Security Disability and Medicare benefits.  Mr. Aiello indicated that CMS allows insurers and state funds to send a query electronic input file to check for a data matches for Medicare recipients based on a few criteria including Social Security number and partial name.  RREs must have an internal review process in place to make preliminary determinations on the contents of the data query file to be submitted to CMS.  Mr. Newby inquired whether other state agencies would be able to share any software with the Worker's Compensation Division.  Mr. O'Malley responded that in speaking with staff at the Wisconsin Insurance Security Fund, they are developing their own system to comply with the CMS reporting requirements. In addition, the WCD did contact the Department of Administration with regard to the WCD sharing in a contract with a third party administrator to implement the reporting requirement.  Mr. Newby inquired whether the WCD had contacted U. S. Representative Tammy Baldwin who is on the Congressional Health Committee to relay our concerns regarding the costs involved in complying with this CMS reporting requirement.  Mr. Rollie Boeding, Bureau Director DOA State Risk Management indicated they are working with DOJ with regard to CMS reporting requirements for liability claims and with the Department of Health Services, who were not aware of any CMS reporting requirements. Mr. Newby suggested that the state including the Department of Workforce Development and/or the Governor's Office request intervention by the Wisconsin congressional delegation to delay implementation of the CMS reporting requirements for state entities. Mr. Beiriger concurred, indicating that with the potential for a substantial amount of fines to be imposed for incorrect reporting, that the WCD may want to explore contacting representatives in Congress. Mr. Kent indicated that the State should consider requesting a waiver until the WCD has the proper software in place to comply with the law.

    Mr. O'Malley reported on the status of bankruptcies with Chrysler and General Motors. Chrysler as of August 3, 2007 is no longer self-insured for worker's compensation in the State of Wisconsin.  The insured worker's compensation liability for Chrysler is with AIG Group.  There have been no problems with payment of benefits at this time.  The bankruptcy was filed with the Southern District of New York Bankruptcy Court.  Pre-petition worker's compensation claims will go forward. However, the Department has not been advised that the bankruptcy court has approved payment to attorneys to defend claims.  Non-litigated worker's compensation claims with Chrysler are being paid.  With respect to the bankruptcy of General Motors, it was also filed in the Southern District of New York Bankruptcy Court.GM has been self-insured for worker's compensation in Wisconsin since 1924. GM has a higher volume of litigated cases.  A few cases that were set for hearing have been taken off the docket.GM voluntarily paid uncontested claims involving disability benefits a week or two in advance in anticipation of the bankruptcy filing.  The WCD expects a similar situation with respect to Chrysler in that pre-petition worker's compensation claims would be allowed to proceed.  The WCD assumes that payment to legal counsel will be approved to represent GM in contested claims.  New hearing applications for GM have been put on hold until we are able to determine the status of those cases. Both Chrysler and GM have surety bonds and after those are extinguished, the Self-Insured Employer's Liability Fund would be responsible for payment of benefits. has never had an unfunded self-insured employer claim.  Mr. Krueger indicated that the bond for both Chrysler and GM is a perpetual bond.  In addition, in the case of Chrysler Wisconsin has a guarantee from the parent company, Daimler.GM still has operations in Wisconsin with a parts distributorship in Hudson. 

  5. New Business:   Mr. Newby inquired whether there were any reductions that are anticipated in the WCD budget.  The Governor made statements that all employees would be subject to furloughs regardless of funding source.  This would also affect management's wages which are frozen and furloughs for management employees.  The WCAC needs a report on the budgetary implications with respect to the WCD.  There will be more demands on the staff time and with the source of funding for the WCD, the money is there to pay staff.  Ms. Huntley-Cooper indicated that the WCD has not received a waiver with regard to the budget reduction.  The 5% budget reduction is across the board and the WCD must look for reductions with no exceptions.  Mr. O'Malley clarified that the WCD has no general purpose revenue (GPR) operations other than one small line item for GPR for special death benefits.  Mr. Buchen asked if the saved money would be lapsed from the WCD budget to the general fund.  Ms. Huntley-Cooper responded that with regard to staffing reductions, the WCD would need to review whether funds would be lapsed.  Mr. Buchen commented that in the past the assessment for insurance carriers was not lowered and money was lapsed to the general fund.  Mr. Newby requested information on whether the 5% budget reductions would affect the separate state funds including the WISBF and the UEF.  Mr. Conway responded that the administrative appropriation showed a potential cut which included the WISBF, but the WCD was inquiring with the administration as to whether that was included in error.  Mr. Newby indicated he wants a report quickly because it is only about three and a half weeks before the budget will be finalized and signed.  Mr. Beiriger inquired regarding how the assessment is set whether it is based on actual expenses or 5% lower.  Mr. Conway indicated the assessment includes a reserve and the WCD ends up with a surplus when the expected costs are lower.  Mr. Buchen inquired whether in the past when money was lapsed it came out of the assessment surplus.  Mr. Conway indicated that it would be best for the Department budget's staff to respond to the WCAC questions with regard to budget reductions and lapsing of funds.  Mr. Newby indicated that the WCAC can request a report from the Department on expected cuts and evaluations as to the impact of the cuts on WCD's ability to carry out WCAC orders and statutory requirements.  Mr. Newby moved that the WCAC request a report from the Division on the impact of expected budgetary actions with regard to its ability to carry out its responsibilities and to communicate a response within 10 days.  Mr. Buchen commented that the WCAC should go on the record as being opposed to this budgetary action and to keeping the assessment level the same while cutting the expenditures.  Mr. Newby indicated that the WCAC members would discuss this issue in caucus and determine what action if any would be taken.  Mr. Buchen reported that the legislature was considering amending Chapter 895 with regard to comparative or contributory negligence.  Mr. Buchen is concerned that the language in the bill potentially conflicts with the Chapter 102.  He is also concerned about any effect on the exclusive remedy provision in the statutes.  Mr. Buchen indicated he would forward the specific language to the WCD for an analysis.  The analysis would include the effect of that proposed language on the exclusive remedy provision set forth in sec. 102.03(2).

  6. Unfinished  Business-Proposals:  Mr. Newby inquired as to whether the data requested from the medical providers have been supplied to the WCAC members.   Mr. Beiriger indicated that action with respect to a medical fee schedule proposal by the providers should be deferred until management gives its report.  Mr. Russell Leonard, Wisconsin Chiropractic Association, indicated that the medical liaisons to the WCAC have been part of the advisory council process for 18 years.  Wisconsin has the best outcomes in the country with respect to medical treatment; however, it is acknowledged that there has been a trend for increasing prices. The proposal submitted by the medical liaisons to the WCAC guarantees that employees will receive access to healthcare and good medical treatment outcomes.  Current charges would be frozen and an audit would be conducted.  Prices would only be increased to coincide with the medical consumer price index.  Mr. Conway indicated that the WCD was asked to look at the proposal and the ability of the Division to administer the proposal.  Mr. Conway commented that a lot of the detail needed clarification.  For example, whether the Legislative Audit Bureau would conduct an audit or another neutral source?  What happens if none of the data bases are found to be in compliance with statutory requirements?  The WCD views the proposal as requiring an enormous task to develop data with regard to charges for medical services for all providers who have worker's compensation patients.  This may result in a separate fee schedule for each provider and hospital.  Collecting and analyzing that data would be a large task while indexing forward would be relatively simple.  There are many practical questions that need to be answered before the WCD is able to determine the scope of the project required to administer the proposal.  Mr. Beiriger indicated that feasibility of implementation is a concern.  While the management members of the WCAC are not able to agree on that specific proposal, they are interested in continuing to work with the providers to develop a medical fee schedule.  The process should involve a committee to include carriers and medical providers as well; but that issue is not ripe at this point.  More time is needed to analyze this issue. 

    Mr. Beiriger indicated that Management in response to Labor is able to arrive at some agreement on some issues.  Management is interested in continuing discussion with regard to return to work responsibilities for employers and to find employment for disabled workers.  The retraining option for individuals should be included in a study committee.  With respect to the proposal on emergency responders, Management is in agreement with a statutory amendment; however it should provide that only those individuals that are required to report to the emergency and that are in transit to the designated location would be included.  Deviations are a concern if the emergency responder does not return to home after assisting with the emergency.  Management is in agreement to increase the burial expense maximum to $10,000.  Management rejects Department proposal number 19 because it is Management's position that rule must be drafted for the Certification of Readiness (COR) process for review before statutory authority is provided for the rule making process.  The Management members want more participation in the rule making process with regard to an administrative rule on the Certification of Readiness process.  Management is hopeful that a permanent solution can be agreed upon for increasing and indexing permanent total disability benefits and for a medical fee schedule.  There are increases proposed in supplemental benefits to raise benefits from the 1993 to the 1997 rate.  Mr. Aiello reported that the WISBF balance is currently $9.8 million and that further requests for reimbursement by insurers for supplemental benefit payments would be received by the end of the fiscal year.  Mr. O'Malley indicated that the WISBF would likely be able to pay benefits for the next two years; but that beyond that time would depend on a number of factors including the number of claims made against the fund; additional medical payments that may be made due to new Medicare requirements; and the outcome of the constitutional challenge to the change in the barred traumatic claims statutes.  Management indicated they are in agreement with audio recording of hearings as long as it is done by a party and in a non-obstructive manner.  Management has agreed that incarcerated individuals should not receive disability benefit payments.  Because worker's compensation is founded on a wage replacement concept, Management proposes that an amendment be made to the barred traumatic claims statute to provide that prosthetic replacement that occurs after the statute of limitations has run would need to have been medically advisable prior to the statute of limitations running.  Management also proposes that hearing aids not be paid for non-compensable hearing loss claims beginning in 2012.  Management has agreed to increase the permanent partial disability benefit rate $10 for each of the next two years.  Management proposes that the WCAC continue to work on reducing medical costs and on increasing permanent total disability benefit rates to a six-year lag with a cost of living adjustment.  This could be accomplished through two bills if necessary.  

    The WCAC went in to caucus and upon return from caucus, Mr. Newby reported that Labor had a discussion with regard to Management's proposals and the two sides are very close but have not yet reached complete agreement on a limited agreed bill package.  The WCAC has agreed to establish a committee to review the medical cost and permanent total disability benefit issues.  The committee will consist of two members from Labor, two members from Management, the three medical liaisons to the WCAC, and other experts as necessary to provide information.  The experts may include representatives from the insurance carriers.  WCD staff will also be members of the committee.  Labor would like the option of an alternative member.  Mr. Newby and Mr. Kent will represent Labor on this committee.  Mr. Beiriger agreed that it was best to start working on these issues sooner rather than later.  The WCAC will hold off a month or two to try and reach a full agreement on all issues to be included in one bill and to try and accomplish this by September 2009.  Mr. Newby indicated with regard to the issue of payment for barred traumatic claims necessitating prosthetic devices, the Labor and Management members of the WCAC were still working on agreed upon language to amend the statute.  Both Labor and Management have agreed to reject Department proposal number 19.  The WCAC has indicated that the WCD may continue to utilize the COR process, but there is no agreement for a statutory amendment or an administrative rule at this time.  With respect to emergency responders, additional language should be added to the prior proposal to include that it covers the emergency responder to return back to home except when the person is engaged in a deviation for a private or personal purpose.  The language should mirror that of the traveling sales person statutory provision.  WCD staff will draft some language for review by the WCAC.
  7. Adjournment: Discussion on all agenda items concluded and the meeting was adjourned at approximately 5:00 p.m.

    Future meeting dates:   None currently scheduled.
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