Here is a summary of legislative and regulatory developments and challenges for the fourth quarter of 2018 and their practical implications:
The New York Workers’ Compensation Board published its long-awaited fee schedule revision on December 26. The new rates and payment rules go into effect on April 1, 2019.
MedRisk’s early analysis indicates that physical therapy regulatory rates will increase significantly, due in large part to a 50% increase (from eight to twelve) in PT relative value units. Rates for chiropractic treatment were also raised. The Board also dropped an earlier proposal to cap physical medicine sessions after 12 visits or 180 days of service, retaining the current rule that permits more than 12 treatments or more than 45 days of therapy or chiropractic treatment if the need is fully documented by a physician.
In other New York news, a New York appellate court in November upheld the WCB’s authority to change its policy regarding application of the New York medical treatment guidelines to out-of-state providers treating New York claimants. Previously, the WCB applied its guidelines to in-state providers and to out-of-state treatment received by New York residents, but now applies them to all in-state and out-of-state providers treating New York claimants, even if the claimant lives outside New York.
The fee schedule increase is the first in 20 years. Because the New York fee schedule is very low compared to other states and to estimates of providers’ cost of care expenses, the increases may expand injured workers’ access to medical care by encouraging more providers to treat WC claimants. Regarding application of New York medical treatment guidelines to out-of-state providers, this initiative may prompt pushback from out-of-state providers unfamiliar with New York’s substantive protocols and administrative procedures.
Through a complex regulatory process, the delivery of telehealth services to workers’ compensation claimants located in Texas by physical therapists is now permissible in Texas. The regulations broadly support the delivery of these services by a PT provider, regardless of his or her location, who has an unrestricted Texas license or who has a Compact Privilege to practice in Texas. The standard of care is the same as applies in an in-person setting, with customary informed consent and confidentiality requirements.
Earlier in the year, the Division of Workers’ Compensation removed the requirement that the patient must be located in a rural location. Next, a new Texas statute permitting the delivery of telehealth services opened these services to health professionals including physical therapists. Finally, effective November 11, 2018, the Texas Board of Physical Therapy Examiners adopted standards asserting the necessary regulatory authority over telehealth services delivered by PTs.
Texas joins a growing number of major states encouraging telerehab services for injured workers. The increasingly friendly regulatory environment should encourage rapid expansion of these services.
On November 27, the Illinois General Assembly overrode outgoing Governor Rauner’s veto of Senate Bill 904, thereby supporting Illinois providers to charge 1% per month interest for late payments for WC-related services. The legislation also requires payers to affirmatively notify providers within 30 days when a payment has been denied.
This measure reinforces providers’ existing rights by giving them an administrative process via the Workers’ Compensation Commission for collecting late-payment interest. The law places corresponding pressure on payers to process medical bills quickly and to ensure that denials are timely communicated.
Here is a summary of legislative and regulatory developments and challenges for the third quarter of 2018 and their practical implications:
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.
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.
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).
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.
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.
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%. Click Here to see estimated OMFS allowances per region.
Here is a summary of legislative and regulatory developments and challenges for the second quarter of 2018 and their practical implications:
In early June the NY Workers’ Compensation Board announced a proposed regulation that would increase the New York medical fee schedule for the first time in 20 years. The WCB projected an overall increase of five percent but gave no details then on how individual provider specialties would be affected.
Very recently, the WCB has published draft regional conversion factors and individual CPT relative values. MedRisk has analyzed those proposed rates, which, if adopted, would increase PT/OT fee schedule rates by 24% to 30% and chiropractic treatment fee schedule rates by 24% to 43%, depending on the applicable region.
Because the NY fee schedule is very low compared to other states and to estimates of providers’ cost of care expenses, most stakeholders have supported this proposed increase as a means of increasing injured workers’ access to health care. If adopted, the increase will be effective for all dates of service after October 1, 2018.
There has been a great deal of legislative and regulatory activity mandating providers’ submission and payers’ and their agents’ receipt of electronic bills. Among the jurisdictions addressing this issue are the following:
Implementing the statute discussed in the Legislative Update for First Quarter, 2018, the Virginia Workers’ Compensation Commission has published draft regulations that mandate providers to submit bills electronically, with certain exceptions for small and low-volume providers. If finally adopted, the rule takes effect December 31, 2018, and applies to all bills with dates of service after that date.
Payers are given only two days to reject bills submitted electronically in the mandated uniform format. Payers must pay uncontested portions of electronically submitted bills within 60 calendar days or must automatically include in late payments interest at Virginia’s standard annual judgment rate of interest, currently six percent.
The Tennessee Bureau of Workers’ Compensation has adopted a similar regulation, effective for dates of service beginning July 15, 2018, with two principal differences. First, the Bureau is empowered to grant exceptions to individual providers from this electronic bill submission mandate, and payers are exempt from the electronic bill receipt process for low-volume providers.
Second, the payer has 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).
The New Jersey Department of Labor and Workforce Development has adopted final rules, implementing a 2016 statute, which mandate providers’ submission and payers’ receipt of electronic bills. There are exceptions for low-volume providers. Payers are given 60 days to pay uncontested bills, but there are no provisions in the regulation for late-payment interest or penalties. This is a new regulation and does not have an effective date shown.
The Illinois General Assembly has passed and 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 reasonable exceptions. If the bill is enacted, the DOI will use its discretion in drafting regulations consistent with this broad direction.
These electronic bill measures represent a multi-year and widespread initiative to mandate electronic bill submission and payment for all but a limited number of providers and payers. Although most commercial payers have technology in place to receive provider bills, the statutes and regulations mandating rapid rejection or acceptance and payment will challenge the payer community operationally.
Here is a summary of legislative and regulatory developments and challenges for the first quarter of 2018 and their practical implications:
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 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.
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.
Here is a summary of legislative and regulatory developments and challenges for the fourth quarter of 2017 and their practical implications:
During 2017 the New York legislature considered several bills to improve injured workers’ access to high-quality health care. AB 7544 would require the New York State Workers’ Compensation Board to annually revise the rate schedule for health care rendered under the workers' compensation system.
On a separate but related topic, AB 1419 would require telehealth service expenses to be included as covered expenses within the provisions of the workers' compensation law. Further, SB 833 would establish a task force to conduct a study on the advisability of utilizing telehealth within the workers' compensation system.
Implications: Although none of these measures were enacted, they represent a growing legislative focus on improving injured workers’ access to health care in New York. The drafting note to AB 7455 mandating annual fee schedule updates states, “ The Workers’ Compensation Board has not adjusted rates of payment for health care providers for over 10 years. . . . Payments for health care services rendered pursuant to the workers’ compensation system do not reflect the current cost health care, including labor, property and energy costs.” Similarly, the memorandum to SB 833 proposing a study on the application of telehealth services in workers’ compensation suggests that telehealth could prove effective to “ensure that all injured workers have access to quality health care services.” In 2018 the New York legislature may focus on WC health care fees and delivery mechanisms.
The Wisconsin legislature declined to pass an agreed-upon bill proposed by the Wisconsin WC Advisory Council which would have adopted a fee schedule for medical services delivered to WC claimants. By tradition, bills drafted by the Advisory Council, composed of management and labor representatives, are passed without substantive amendments.
Although Wisconsin WC medical services are priced very high compared to other states, which is typical of charge-based systems in the six states without fee schedules, Wisconsin medical costs per claim are moderate because of low utilization. As a consequence, business community support for a fee schedule has been tepid. Further, the proposed fee schedule mechanism, based on in-state average payments made by group health and self-insured health plans, appeared complex and expensive to create and maintain.
Implications: Wisconsin House Speaker Robin Vos was quoted as saying that the WC Advisory Committee’s bill was “dead on arrival.” It is unlikely that Wisconsin will attempt another run at establishing a WC fee schedule in the foreseeable future.
Here is a summary of legislative and regulatory developments and challenges for the third quarter of 2017 and their practical implications:
The Maryland legislature has recently established a one-year bill submission period for Maryland providers. Previously there was no timely submission period prescribed by statute.
Beginning October 1, 2017, however, HB 1484, amending MD Labor & Employment Code § 9-660(D) extends that period to the later of twelve months from (a) date of service, (b) acceptance of claim by the payer or (c) determination of compensability by the Commission. The timely submission period is further extended from one year to three years if the Workers' Compensation Commission finds that there is good cause for the delay.
Maryland regulation COMAR 14.09.03.06(C) continues to require payers to reimburse providers or to deny in full or in part or within 45 days of receipt of a provider's bill.
Payers that are unaware of this new law may mistakenly deny as untimely provider bills submitted within the permitted twelve-month period. Further, the new law may hamper payers' efforts to promptly close Maryland claims.
The Division of Workers' Compensation has adopted regulations that define acceptable standards for telemedicine delivered to WC claimants. The criteria set forth in Rule 16-2 (7 CCR 1101-3) go considerably further than the statutory definition of telemedicine in Colorado's Medical Practice Act.
The DWC Utilization Standards now require use of both audio and video equipment during the telemedicine session so that the provider can diagnose and evaluate the patient in order to confirm or alter the treatment plan, including medications and specialized therapy. Previously, the Utilization Standards broadly referenced only "Telehealth," which doesn't require interactivity or the use of both audio and video technology.
The Colorado DWC's definition of telemedicine focuses on workers' compensation's unique emphasis on rehabilitation and return to functionality. A consistent leader in health care utilization management regulation, the DWC is likely to be influential in shaping the emergence of telemedicine as an effective and efficient component of claim management.
The Virginia fee schedule law, effective January 1, 2018, also includes "Silent PPO" prohibitions to protect providers from abusive PPO network practices. The law prohibits payers (employers, insurers and TPAs) from "stacking" (shopping for the lowest discount rates for a specific provider among available network contracts) and requires payers, at time of payment, to identify the provider's agreement that the payer is relying upon for the discount below fee schedule, plus any other intermediate network contracts linking the payer to the discounted rate.
The law also prohibits contracting entities, such as MedRisk, from disseminating the specific provider's negotiated discount and other contract terms without the provider's written permission. This provision protects the provider from non-permitted disclosure of confidential business information.
These new requirements are consistent with MedRisk's standard operating procedures countrywide and pose no problem to MedRisk's continuing and expanding business in the commonwealth.
Here is a summary of legislative and regulatory developments and challenges for the second quarter of 2017 and their practical implications:
The Pennsylvania Bureau of Workers' Compensation responded to a PA Supreme Court decision invalidating the AMA Guides to the Evaluation of Permanent Impairment as a standard for disability ratings by suspending all Independent rating evaluations. The Court ruled in Protz v. WCAB that statutory reliance on the AMA Guides was an unconstitutional delegation of legislative authority to the American Medical Association.
Implications: The Supreme Court decision and the BWC's reaction to it create two problems. First, there is no current active standard or system in Pennsylvania for determining permanent impairments. Second, the Court didn't specify whether its ruling should apply only on a going-forward basis or retroactively, as well. Unless the BWC issues a clarifying policy statement, which hasn't been its practice, closed cases may be reopened.
Texas has enacted legislation giving the Division of Workers' Compensation greater control over work-hardening and work-conditioning programs. Senate Bill 1494 removes an automatic exemption from pre-authorization and concurrent review which CARF-credentialed facilities previously enjoyed. The amendment to Labor Code §413.014, effective September 1, 2017, permits the DWC by rule to reinstate exemptions for certified facilities if the agency determines exemptions are appropriate.
Implications: The DWC has targeted work-hardening and work-conditioning programs as potential sources of fraud and abuse. Removal of the automatic statutory exemption from preauthorization gives the DWC regulatory discretion to set standards to control costs and prevent the administration of excessive or unnecessary treatments. The legislation was supported by insurers and the broader business community.
The Industrial Commission of Arizona has proposed moving from a Fee Schedule based on comparisons with surrounding states' WC medical payments to the RBRVS (resource-based relative value scale) reimbursement mechanism used by Medicare. Also included in this proposal is a rule that would require providers participating in a network to be reimbursed at 90% of either the fee schedule rate or of the full amount of any negotiated discount rate payable to the network.
Implications: In general, Arizona Fee Schedule rates have increased over the last several years and now are higher than average. We expect to see moderate rate reductions if the ICA's proposed RBRVS methodology is adopted, which is expected. The rule regulating network payments to participating providers, however, has drawn objections that restrictions on in-network providers' reimbursement methodology runs counter to the ICA's cost containment goals, and the ICA reportedly has dropped this part of the proposal.