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

Arizona

Arizona’s Industrial Commission adopted the revised Physician Fee Schedule that was proposed earlier this spring and changes go into effect October 2015.

• Impact: These changes will increase physical medicine prices by approximately 7.49% and radiology prices by 1.27%.

Florida

On July 20, 2015, the Florida Department of Financial Services, Division of Workers’ Compensation adopted the Florida Workers’ Compensation Health Care Provider Reimbursement Manual, 2015 Edition (Rule Chapter 69L-7.020, Florida Administrative Code). However, the policies and reimbursement allowances identified in the Health Care Provider Reimbursement Manual were not ratified by legislature.

• Impact: The proposed rates – which would have increased FS 20% for physical medicine – did not pass. They will be reviewed again in 2016

Minnesota

Effective October 1, Minnesota is changing the conversion factors for Physical Medicine and Chiropractic Services. The conversion factor for Physical Medicine and Rehabilitation Services moves to $49.18 and the conversion factor for Chiropractic Services moves to $49.09.

• Impact: As in previous years, the Minnesota Department of Labor and Industries is adjusting the conversion factors by the percent change in the Producer Price Index for Offices of Physicians (+0.6 %).

North Carolina

Effective July 1, 2015, the North Carolina Industrial Commission has adopted a new fee schedule for workers compensation related health care services. The NCCI estimates that fee schedule rates for hospital outpatient services will decrease by an average of 40% and radiology rates by 28%. FS rates for other medical services are projected to increase: physical medicine rates by 59.9% and evaluation and management rates by 33.5%.

• Impact: The new fee schedule requires payers to adjust their medical expense projections and their expectations of provider network performance. Overall, the NCCI estimates that the combined effect of the July 2015 changes will be an increase in professional medical services of +1.4%. Within this general category, however, Physical medicine network savings should dramatically increase, while diagnostic network savings should decrease.

National

The federal Centers for Medicare and Medicare Services (CMS) had a large impact on state workers’ compensation systems in the third quarter by finally replacing ICD-9 codes with ICD-10 codes for medical diagnoses, effective October 1, 2015. There was a great deal of scrambling among WC stakeholders to ready themselves for this change.

The effect is due to the prominence of CMS as a general health care payer, so that what CMS requires is eventually accepted as a standard by other payers and other systems. There a few states that are required by statute or regulation to follow CMS rules. Other jurisdictions follow CMS rules as a matter of policy, while some states are content to follow their home-grown regulatory standards.

• Implications: As a consequence, payers and their trading partners face an array of ICD requirements as of October 1. In certain states (e.g., Texas, North Carolina) ICD-10s must be used for all dates of service on or after October 1. In other states (e.g., California, Florida), the ICD-10 requirement applies, at least for now, to state reporting only. Still other states (e.g., Colorado, Maine, South Carolina) at this point will require ICD-10s only for in-patient services.

In addition to the ragged implementation process, the ICD-10 system represents a training and operational challenge to payers through its five-fold increase in the number of potential diagnoses, from 14,000 ICD-9s to 150,000 ICD-10s. With greater choice comes greater precision, but some may question whether this level of detail is needed:

• W93.2XXD – Prolonged exposure in a deep freeze unit or refrigerator
• Z63.1 – Problems in relationship with in-laws
• V91.07XA – Burn due to water skis on fire