Council on Worker's Compensation
Meeting Minutes
GEF-1 Building
Madison, Wisconsin
December 3, 2013

Members present: Mr. Beiriger, Ms. Bloomingdale, Mr. Brand, Mr. Brandl, Mr. Buchen, Mr. Ginsburg, Mr. Kent, Mr. Metcalf, Ms. Nugent, Ms. Pehler, Mr. Redman, Mr. Schwanda, Ms. Seiler  and  Ms. Thomas

 Staff present: Mr. Aiello, Mr. Ezalareb, Mr. Krueger, Mr. Moreth and Mr. O'Malley

  1. Call to Order/Introductions: Mr. Metcalf convened the Worker's Compensation Advisory Council (WCAC) meeting at approximately 10:00 a.m. in accordance with Wisconsin's open meetings law. WCAC members, staff and members of the audience introduced themselves.

  2. Approval of Minutes: Ms. Bloomingdale moved to approve the minutes of the November 12, 2013 meeting. Mr. Beiriger seconded the motion. The minutes were unanimously approved.

  3. Correspondence: Mr. O'Malley reviewed the correspondence received by the WCAC since the last meeting.

    A letter dated November 12, 2013 was received from Mr. Theodore K. Nickel, Commissioner of Insurance commenting about the letter dated September 30, 2013 from several legislators recommending the Council consider a number of changes to the Wisconsin's Workers Compensation Program.

    An email message dated November 24, 2013 was received from Mr. Robert Hurley concerning his 1982 low back injury and that his only income is now from monthly worker's compensation and supplemental benefit payments. He is requesting the Council's assistance in receiving a cost of living increase this year and to make future cost of living increases automatic.

    An email message dated November 26, 2013 was received from Mr. Stephen Schneider, VP, Midwest Regional Office, American Insurance Association urging the Council to adopt a fee schedule based on the Medicare system rather than the implementation of any non-Medicare fee schedule based system. Mr. Schneider also commented that enactment of the Florida physician dispensing system would increase the cost problem in Wisconsin and not curtail it.

    A letter dated November 26, 2013 was received from Mr. Richard Victor, Executive Director of the Workers Compensation Research Institute (WCRI) to clarify the findings of the WCRI's study that was referenced in a letter to the Council from Automated HealthCare Solutions dated October 29, 2013 regarding the cost of physician dispensing.

    A letter dated November 29, 2013 was received from Helen Knight, VP, CompPharma LLC strongly encouraging the Council's support for limiting or eliminating physician dispensing of prescribed drugs

  4. Other Council Business: Labor and Management representatives went in to closed caucus at approximately 10:15 a.m. There was a motion by Mr. Beiriger, seconded by Ms. Bloomingdale to go in to closed caucus at that time. The motion was unanimously approved.

    The WCAC reconvened in open session at approximately 1:15 p.m.

    Mr. Beiriger discussed the proposals made by the Management representatives in addition to some other proposals. Mr. Beiriger thanked everyone for their input and patience in this process.

    The issue that is a sticking point is whether to use a medical fee schedule based on Medicare for cost containment purposes. In March, the Management representatives made a proposal for a medical fee schedule to be established based on 175% of Medicare payments. There may be some misunderstanding by the use of the term Medicare. The intention was to use Medicare as a measuring stick to determine how many units would be needed to pay for a treatment. It was never the intention of the Management representatives to use the Medicare charge or cut that in half.

    The Management representatives want to approximate the payments that are made in the privately negotiated group health care market. It is difficult to start this on January 1, 2014. The Management representatives propose implementing a two-step solution. One step is for a permanent cost containment process to be in place in the next 18 months. The other step is to reduce the standard deviation from 1.2 to .70 standard deviations above the mean. With the standard deviation reduced to .70 about three fourths of all claims will be paid without reduction. Now with using 1.2 standard deviations above the mean payments are made in about 88% of all claims without reduction. Reducing the standard deviation to .70 will involve about 13% of additional claims for fee capitation.

    The current process of using the databases should continue until the Department can develop and implement a fee schedule. The Department is charged with developing a medical fee schedule by June 30, 2015.The fee schedule will be based on average payments made by group health insurance carriers plus 10% above that amount. The fee schedule will be set up with five geographical regions. The fee schedule will be adjusted each year based on the medical CPI. The fee schedule will not go longer than two (2) years before the data base would be compared again to the group health insurance market to reload a new set of numbers based on the market at that time. A number of sources are available now or will be online soon for data to obtain actual amounts paid for various CPT codes that are used in group health.

    There are higher cost and lower cost health care providers. We need to investigate the outcomes of treatment achieved by different providers. When the outcomes are superior the health care providers should be awarded more for providing superior outcomes. We should look to the outcomes and study these. There could be 5 to 10% higher payments to providers with superior treatment outcomes. The Management representatives want employers to be able to direct care for injured workers. The Labor representatives want employees to make their own choices. It would help to have more information on outcomes. There should be a way to pay providers more for superior outcomes. It will be a challenge to look at data for outcomes but it needs to be done. Although reviewing outcomes is not done today, we need a study group to consider this in the future. The more information that can be collected about outcomes will help both Management and Labor continue to make good choices.

    The Management representatives would like the treatment guidelines to become parameters. The parameters could be used by providers about how to practice medicine. That is what happens in the private health care market. We should ask the Department to report periodically to the Council on utilization rates, billing patterns and cost drivers that are part of the system. The purpose of treatment parameters is not to tell doctors what to do but they are a cost containment provision.

    There have been ideas on how to address fraud. The Management representatives agree on funding a position at the Department of Justice to prosecute fraud in the worker's compensation system by employees, employers, health care providers and insurance companies. Section 943.395, Stats., could be amended to be used to prosecute others.

    The Department needs expertise in the medical area. This position could be used for evaluating fee schedules, medical bill review and utilization review . There is no position to assist the Department and the time has come to take this step.

    The Management representatives proposed reducing the statute of limitations from 12 years to three years. It would save significant expense if this was done. The Management representatives have revised their proposal and now propose a six year statute of limitations for traumatic injuries only. Te statute of limitations was increased in the past to address occupational diseases. The twelve year statute of limitations should be maintained for occupational diseases.

    Reporting traumatic injuries within one year was proposed by the Management representatives.

    There is a need to obtain more money for the WISBF. There should be a permanent bar for reimbursement of supplemental benefits. There is a need to provide a process for covering costs for the reimbursements. Future costs for indexing permanent total disability claims can be built in to the premium rate structure but cannot go back on charging premiums. Cost for reimbursement should be spread as broadly as possible.

    The fee for providing digital medical records should be $26.00.

    The Management representatives agree to all of the proposals from the Self-Insurers Council.

    Mr. Beiriger, on behalf of the Management representatives, responded to the Labor proposals.

    The Management representatives agree to extend the sunset for two years on the vocational rehabilitation training statute. There is a need for additional time to determine how this provision is working.

    The Management representatives agree with authorizing administrative law judges to issue prospective orders on cases for rehabilitation benefits to those employees whose permanent restrictions cannot be accommodated by their employer to within 85 % of their pre-injury wage.

    Management is still considering the Labor proposal for a bump up in the permanent total disability rate.

    The Labor proposal for the social security offset amount as a way to respond for additional money in to the WISBF was also considered but Management suggested finding an alternative means to take supplemental benefits off that fund.

    Management is agreeable to the Labor proposal for the two year increase to the permanent total disability (PTD) rate. A longer term solution is needed for PTD indexing. The Council has continued to listen to requests from injured employees to increase the benefit rate. The Council has made great strides and great progress to bring the benefit rate up and we will continue to discuss this on an annual basis.

    Management will continue to look at the Labor proposal for the revision of the permanent partial disability (PPD) rate after 200 weeks to increase the benefit rate to the current benefit rate at that time.

    Management is continuing to look at the Labor proposal for the continuation of health care coverage after twelve weeks at the same rate as the employer provided pre-injury. If the employer paid 75% of the premium for health insurance and the employee paid 25% for this, employers would be required to continue the health insurance coverage for the length of an employee's healing period. Where both employers and employees make payments it will be the responsibility of employees to maintain coverage. The intention is to continue what the employer was doing for health coverage pre-injury.

    The Management representatives feel responsible to get back to the legislators about their proposals. We will try to respond in very short order.

    A motion by Mr. Beiriger to approve the proposed legislative and rule changes from the Self-Insurers Council. Ms. Bloomingdale seconded the motion. The motion was unanimously approved.

    There was a motion by Ms. Bloomingdale, seconded by Mr. Beiriger, for the Council to go into closed caucus at approximately 1:45 p.m. The motion was unanimously approved.

    The Council reconvened in public session at about 6:25 p.m.

    Ms. Bloomingdale responded to the suggestions made by Management.

    Ms. Bloomingdale stated the Labor representatives agree to the two-step plan proposed by Management for the medical fee schedule. The Labor representatives are willing to accept step one of the plan to reduce the standard deviation to .70.The second step of the plan is to charge the Department to create a fee schedule using average group health rates plus 10% using five regions in the state. The fee schedule is to be adjusted by the medical CPI annually and reviewed every two years. Ms. Bloomingdale also stated that the Labor representatives would like to have the fee schedule that is developed reviewed and approved by the Council before it is implemented. The Department will get information from Wisconsin Health Information Office (WHIO), the state health plan, Worker's Compensation Research Institute (WCRI), data provided by group health insurers or any other credible source.

    Labor agrees the PTD rates will be indexed to a six year lag and this shall take effect for injuries after June 30, 2015. Labor agrees with the proposal to create a study group for quality studies and providing bonuses to health care providers for superior outcomes. This is a good idea. The study group can also do utilization reviews and can give reports to the Council.

    On the issue of fraud, Labor agrees there should be funding for a Department of Justice position to investigate and prosecute any fraud by employers, carriers, providers or employees.

    Labor agrees to adding a medical expert to the Department staff for utilization review or any other reason the Department may need a medical expert on staff.

    Labor agrees to a nine year statute of limitations for traumatic injuries, but that the statute of limitations for occupational illnesses will remain at twelve years. The Labor representatives also agree on keeping the two year time period to make a claim for traumatic injuries.

    Labor agrees to permanently suspending reimbursement to insurance carriers for supplemental benefits and the Management representatives will find a funding mechanism for these reimbursements.

    Labor agrees to the $26 maximum fee for providing medical records by electronic means.

    On the issue of dispensing of pharmaceuticals by doctors, Labor agrees to the fee specified in the Management proposal but wants to strike out the third paragraph of that proposal. (Management Proposal No. 10)

    Labor agrees to the two year extension of the sunset provision on retraining issues.

    Labor agrees to the proposal for administrative law judges to issue prospective orders on cases for retraining and Labor agrees with the language recommended by Mr. Beiriger.

    Labor agrees with a two year bump or advance in supplemental benefit rates for employees receiving compensation for PTD. For PPD Labor agrees that the benefit rates will increase by $15 for each of the next two years, $15 benefit rate increase the first year and another $15 benefit rate increase the second year.

    Labor agrees to PPD benefit rate indexing after 200 weeks.

    The next issue that Labor agrees is having employers continue health care coverage to maintain health insurance at the level of insurance coverage in effect at the date of injury whether or not the injured worker continues as an employee during the healing period. When there is disputed liability the employee will be made whole for the value of the health insurance coverage through the hearing process. The effective date for the health care coverage provision will be June 30, 2015.

    There was a motion by Mr. Beiriger to accept the proposals as presented by Labor as the agreed upon bill for this session. Seconded by Ms. Bloomingdale. The motion was unanimously approved.
    Ms. Bloomingdale stated that this was a very long and arduous process and that all involved did a great deal of work.Many compromises were made. The advisory council process needs to continue because of the importance of this continuity for the State of Wisconsin. Ms. Bloomingdale stated that Labor representatives were looking forward to working with the legislature in passing this agreed upon bill. Ms. Bloomingdale expressed appreciation on behalf of all of the Labor representatives for the input received from the Legislature, health care providers, insurance carriers, worker groups, business groups and to the Department staff for doing such a fine job of keeping the process on task.

    Mr. Beiriger stated that he agreed with Ms. Bloomingdale's comments. Mr. Beiriger also expressed appreciation on behalf of the Management representatives to the Department staff and to everyone else who provided input throughout the process. The Council has an agreed bill and it is important for us to support the bill since there are many reasons for both Labor and Management to support the bill. Mr. Beiriger stated there is a great deal in the Wisconsin worker's compensation system that is very good but there were also some other things that could not be ignored and that we have done a good job in addressing things that are of concern to the system.

    Mr. O'Malley stated that he was not certain when the drafter would complete work in drafting the bill. The Department will share an estimated time when the drafter will complete work on the bill when this becomes available.

    The next meeting was tentatively scheduled for January 14, 2014.
  5. Adjournment: Motion by Mr. Beiriger, seconded by Ms. Bloomingdale to adjourn. The motion carried unanimously and the meeting was adjourned at approximately 6:45 p.m.
  6. Next Meeting: January 14, 2014

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