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

Tennessee

As reported in last quarter’s Legislative Update, the Tennessee Bureau of Workers’ Compensation has adopted a regulation requiring providers to submit and payers to receive medical bills electronically, effective for dates of service beginning July 15, 2018, unless the Bureau grants and exception to individual providers and payers on a case-by-case basis. Under the Rule, payers have only 15 days to accept or reject electronic and must pay all uncontested portions of the bill within that 15-day period. Late payments accrue an interest rate of 2.08% per month (25% annually).

MedRisk raised the question whether the rule applies to provider requests for reconsideration, an issue apparently not fully considered by the Bureau nor clearly addressed by the regulation. The Bureau has very recently responded to MedRisk’s inquiry, stating that, while the regulation’s language is inconsistent in places, the intent of the Bureau to require providers to submit all bills including reconsideration requests and, require payers to receive them, using any electronic format, including secure fax, secure encrypted email or standard ASC X12 format. MedRisk is working with our trading partners to develop resubmissions and amends capabilities to complete our electronic submission capabilities.

• Implications

Incorporating bill receipt via fax or email into bill ingestion systems may present challenges to payers. The Tennessee Bureau has acknowledged this and has granted delays to claim administrators who ask for a temporary exception from the rule’s electronic receipt and payment requirements. Given the recent influx of electronic billing and payment regulations, however, commercial payers may struggle to meet these challenges in the near future. MedRisk is monitoring these developments to ensure full compliance.

Illinois

Also reported in the Second Quarter update, the Illinois General Assembly sent to Governor Rauner for signature a bill that empowers the Department of Insurance to establish rules to ensure that all providers submit bills electronically and require all payers to receive them electronically, with certain exceptions. On July 29, the Governor issued an amendatory veto, stating that he does not object to the major thrust of the bill – mandating payers’ electronic bill acceptance and processing within a short 30-day TAT – but he recommended changes that insurers and employers view would rebalance undue advantages the bill gives to providers (e.g., imposing a 90-day bill submission TAT on providers, replacing providers’ right to file a civil action in circuit court to obtain payment with an administrative hearing determined by the Illinois Workers’ Compensation Commission).

• Implications

The implications of the amendatory veto are uncertain. The General Assembly now has the option of attempting to override the Governor’s veto by three-fifths vote, incorporating some or all of the Governor’s recommendations into the bill by majority vote, or abandoning this initiative for now. The General Assembly is in the second year of its two-year session, and SB 904 cannot be carried over into 2019. Legislative action (or inaction) bears watching in the next few months.

California

A 32-regional fee schedule is coming closer to reality in California. The Division of Workers’ Compensation’s solicitation for a second round of stakeholder comments to the DWC’s proposal resulted in support from the provider community, as expected, and only muted criticisms from the payer community, including a request for a six-month postponement from the scheduled January 1, 2019, inception date.

• Implications

Sooner or later, it appears that California WC payers and their trading partners will need to move to Medicare’s Geographic Practice Cost Indices (GPCIs). This initiative in California could harken a nationwide shift toward greater sensitivity to regional variations in the cost of health care delivery, especially through the use of methodology employed by a dominant claim payer such as Medicare.

Although the shift to GPCIs represents a major shift in fee schedule methodology, the direct impact on California fee schedule rates is not that significant. A recent RAND study estimated that implementation of the GPCI methodology would result in modest decreases (1% – 5%) in the more rural, low-cost areas of the state and material increases (5% – 9%) only in Northern California areas encompassing San Francisco and Santa Clara. The Los Angeles area, which represents over 42% of California WC payments, would be relatively unaffected, with an increase of less than 1%.