Here is a summary of legislative and regulatory developments during the second quarter of 2015 and their practical implications:

Minnesota

• Action: Minnesota has enacted legislation designed to reduce cost and delay in WC medical payments, with staggered effective dates. By January 1, 2016, WC payers must supply providers with the information needed to submit claims electronically. By July 1, 2016, medical records must be sent and accepted electronically. By September 1, 2016, WC payers must allow providers to match their payments to specific bills, so that if a bulk payment is made to a provider for more than one patient, the check or electronic funds transfer statement must specify the amount paid for each patient. The law also sets the WC fee schedule for inpatient hospital services (except for catastrophic injuries and critical access hospitals) to 200% of the applicable Medicare DRG amount for discharges post January 1, 2016, and gives payers the option of paying the entire bill within 30 days or denying payment for non-compensability.
• Implications: The law is part of a trend toward legislators’ willingness to introduce group health payment concepts into the WC system in order to reduce friction costs. Payers and their trading partners need to adapt to these changes.

Tennessee

• Action: The Tennessee Division of Workers’ Compensation appears to be on its way toward adopting medical treatment guidelines primarily based on ODG. There is one exception however – spinal treatment – where the Division’s Medical Advisory Committee has recommended the development of a state-specific parameter.
• Implications: When the new guidelines are promulgated, Tennessee will join a growing list of states with regulatory medical treatment standards. Nevertheless, which treatments are authorized and the “teeth” the guidelines have to control utilization vary greatly from one jurisdiction to the next, creating complexity for WC payers and their claim staffs.

Virginia

• Action: Virginia has enacted legislation that replaces its rate structure based on usual and customary charges with one pegged to 120% of the average amount reported into the Virginia All-Payer Database or, if relevant data is unavailable there, according to a fee schedule established by the WC Commission based on non-WC payer data.
• Outlook: Although the objectives of the law are sound – basing WC payments on a slight premium about non-WC payments – in operation this measure introduces operational complexity into what should be a straightforward reference to Medicare rates. At present there is no estimate when this law will be implemented. The Workers Compensation Research Institute’s latest CompScope report showed that Virginia’s medical provider costs were 34% higher than the median costs among 16 states studied. Hospital outpatient services were 52% higher than the 16-state median, according to WCRI.