Here is a summary of legislative and regulatory developments and challenges for the first quarter of 2018 and their practical implications:

California

In mid-March the Division of Workers’ Compensation published a draft revision to California’s Official Medical Fee Schedule, which would convert the OMFS from single statewide rate to 32 distinct regional rates, based on Medicare MSA-based localities now in the process of a six-year phase-in.

The DWC asserts that using Medicare’s Geographic Practice Cost Index will improve injured workers’ access to health care in high-cost areas and will eventually result in a small overall reduction in medical costs after “hold-harmless” protections against decreases in low-cost regions expire in 2022. The proposed effective date of the regulation is January 1, 2019.

• Implications: Providers in many high-cost urban areas would immediately enjoy a fee schedule rate increase. Although increases in the Los Angeles area would be modest (approximately 1%), rates in San Francisco would rise over 10%. To protect providers in rural areas, reductions would not be immediate but would be stepped down gradually until 2022. Payers would be required to modify their bill review systems in order to properly track regulatory rates and perhaps to exercise greater vigilance to ensure a match between providers’ actual and claimed treatment locations.

Virginia

Virginia has enacted HB 558, which clarifies the appropriate regulatory rate to apply to services delivered by out-of-state providers. If the employer’s principal place of business is located in Virginia, the ZIP Code of that address is considered to be the applicable medical provider “community” for applying the regional fee schedule. If the employer’s principal place of business is not located in Virginia, the ZIP Code of the regional Workers’ Compensation Commission office where the dispute would be conducted is used to determine the applicable fee schedule.

• Implications: This legislation removes an ambiguity that previously existed in Virginia’s new fee schedule by establishing the methodology to following in reviewing out-of-state providers’ bills, but it creates challenges for bill reviewers in identifying the factually appropriate in-state location for determining the correct fee schedule rate. Further, the bill doesn’t have an effective date, so there is no obvious date-of-service “start date” for the new methodology.

New York

The New York Assembly has sent to the Senate a bill authorizing the Workers’ Compensation Board to establish a WC fee schedule for massage therapy services. The bill, AB 6797, would require these services to be provided by a licensed massage therapist and for the referral to be made by an authorized physician. Further, the measure specifically prohibits massage therapists from performing independent medical examinations.

• Implications: Bills to authorize massage therapy for workers’ compensation claims are perennially introduced in the New York Assembly. This legislative season, the measure is given a moderate chance of success in the New York Senate.