Here is a summary of legislative and regulatory developments during the first quarter of 2016 and their practical implications:

Pennsylvania

A bill currently being considered by the House Labor and Industry Committee (HB 1141) would, among other things, require that provider payments below fee schedule must be supported “through a bona fide provider network arrangement,” a term that is undefined in the legislation or anywhere else in Pennsylvania’s statutes. Another provision prohibits any sort of channeling, including referring or recommending, injured workers to preferred providers, unless the network performs services that are consistent with the functions of the now dormant Coordinated Care Organization (CCO) mechanism.

• Implications: If enacted, the bill would put WC provider networks out of business in Pennsylvania while imposing Draconian penalties on employers and insurers for relatively innocent infractions. Reportedly it is supported by orthopedic physicians, but is opposed by the Insurance Federation of Pennsylvania and the business community.

Tennessee

The Tennessee Bureau of Workers’ Compensation adopted the ODG medical treatment guidelines in late January. Previously the state had only one guideline addressing opioid administration for chronic pain. The BWC also adopted the ODG drug formulary.

• Implications: Treatment for workers’ compensation injuries will now be presumed to be reasonable and medically necessary if the ODG guidelines are followed. In order to contest treatment within guidelines, utilization review must provide “clear and convincing evidence that the physician erroneously applied the guidelines.” The BWC also reported that it will be reviewing its current UR rules in the near future.

Texas

The Texas Division of Insurance recently announced that its Research and Evaluation Group will study a number of workers’ compensation issues in 2016, including the performance of certified HCNs (e.g., RTW outcomes, medical costs, quality-of-care issues, medical dispute resolution) and the utilization of office visits and physical medicine services.

• Implications: TDI has an extensive database of WC claim information and an interest in continually improving system outcomes. If flaws attributable to system participants are identified, TDI is likely to propose legislative and regulatory changes that will enhance TDI’s enforcement powers.

Virginia

Virginia Governor McAuliffe has signed into law SB 631, which requires the WC Commission to establish a fee schedule effective January 1, 2018.  This will be a six-zone “medical community” fee schedule using historical in-state health care payments as the rate base.  It will be provider-friendly (i.e., the fee schedule will be generous). The measure permits “employers” (including insurers and TPAs) to contract with “contracting entities” and “PPO network arrangers” for discounted provider payments, but has troubling language allowing employers to contract only “directly” with either providers, contracting entities or PPO arrangers.  Further, the definition of “PPO Arrangement” refers to “multiple provider contracts to which the PPO Network Arranger is a direct party.”

• Implications: As the law is currently written, it appears to prohibit the common PPO network practice of using indirectly contracted providers via subnetworks, yet one section (§65.2-821.1 (B)(3)) does appear to permit payers to take a discount not only by notifying the provider of the name of the “directly contracted” relationship but also “if other than by a direct contract” (perhaps a subcontracted relationship?). MedRisk has contacted the American Insurance Association, which has pledged its efforts to “clean up” the language during the 2016 and 2017 legislative sessions. Without further action, however, this legislation could create difficulties.