State of the States
STATE OF THE STATES
Our industry, like many others, has been significantly impacted by the National State of Emergency related to COVID-19. Though the full impact to injured workers is not yet fully known as things continue to change, we do know there has been a concerted effort by many states to protect injured workers’ rights and benefits during this uncertain time, and in ways that have never been done before.
Federal & State Responses
In the early weeks of the pandemic came a lack of uniform response at the federal and state level, causing challenges for employers, insurers, and TPAs. As of the end of March, more than 250 executive actions related to COVID-19 were issued across the nation. More than half the states issued separate executive orders, emergency regulations, or policies directly related to insurers responsibilities, workers’ protections, and medical provider licensing. All states have suspended regular legislative sessions in favor of virtual meetings or have recessed early where not feasible.
It is still too soon to know the full impact this pandemic will have on our healthcare system or our economy, but we must continue to examine current trends in regulatory agency responses, insurance coverage issues and the ability of our government agencies to embrace more technological solutions in order to continue to serve the public.
Coverage for Exposures
A majority of states have taken immediate and decisive action to ensure injured workers have access to medical services and medications during this uncertain time. Washington was first in the nation to declare a state of emergency on February 29th, and soon after their Department of Labor and Industry issued specific guidance for employers related to coverage of COVID-19 exposures for healthcare workers and first responders.
California followed, and despite varying opinions on the compensability of COVID-19 exposure as an occupational hazard, attorneys and labor representatives across the country are calling for Governors to recognize COVID-19 as a workplace hazard that exists beyond healthcare workers and first responders.
This means employees who are not subject to shelter in place orders, who work in “essential” services such as pharmacies, supermarkets, banks, and even postal workers, could receive additional protections such as paid leave while in self-quarantine or paid sick leave.
Relaxing Regulatory Requirements to Ease Access to Injured Worker Care
To prevent further spread of the virus, states have utilized CDC recommendations for social distancing. Local and state government officials have urged hospitals, healthcare providers, and patients to carefully weigh the benefit of seeking out medical care against the relative risk of exposure in brick-and-mortar healthcare settings. This has opened the existing window for more access to telehealth or virtual healthcare services.
The adoption rate of telehealth services before COVID-19 was relatively underutilized in workers’ compensation, but with these services now more necessary than ever, state workers’ compensation agencies have specifically added billing and payment rules to ensure providers will be paid under the fee schedule. States have temporarily relaxed regulatory requirements for telehealth and HIPAA in alignment with the Center for Medicare and Medicaid Services (CMS) policy memo, which lifts some of the regulatory barriers to delivering virtual healthcare services.
Occupational and physical therapy services are being promoted heavily through telehealth platforms to keep injured workers on the path to recovery during this time, and telehealth services are even being expanded to accommodate some opioid use disorder patients who have traditionally been treated face-to-face as required by the DEA and the Substance Abuse and Mental Health Services Administration (SAMHSA).
These entities have relaxed some regulatory requirements for new patients by permitting telehealth visits for new patients for whom buprenorphine will be prescribed. Of note, this exemption is not applicable to patients who are treated with methadone; they will continue to be monitored through a face-to-face, in-person visit in a clinical setting.
Many non-emergency surgeries or diagnostic tests scheduled will be delayed in order to keep injured workers protected from exposure to the virus. While this may delay recovery in some cases, states mandated insurers to lift many of the existing restrictions on early refills of many types of medications to ensure patients can get medications they need as they stay in place.
Disaster Recovery Plans
States have also embraced technology to keep business operations as close to normal as possible. Most Departments of Insurance and Workers’ Compensation Divisions across the country have fully or partially mobilized their staff to work remotely. Prior to COVID-19, few states embraced remote work capability.
Though some agencies are better positioned to work from home, others reported challenges such as lack of reliable internet access, especially in rural communities, or insufficient equipment or infrastructure to permit the entire agency to work remotely for an undetermined time period.
Examples of states utilizing technology include virtual or telephonic hearings to expedite disputes which would impact medical care or indemnity benefits. A few states have conducted advisory committee meetings, emergency rulemaking hearings, and other public events via teleconference. This shift to remote work and virtual hearings is not only necessary in these difficult times, but provides great potential to transform business operations in the future.
While it is too soon to know if these changes will have a lasting effect on workers’ comp, this is a learning opportunity. States are proving they can support remote work, they can offer telephonic and video connectivity for hearings and rulemaking, and they can simplify regulations and requirements so stakeholders can continue to function.
Other issues such as paper forms with wet signatures, and payment by check versus electronic/EFT, can also be overcome by embracing technology and tools of modern business, meaning that when all of this is over, we can continue changing the workers’ comp systems for the better.
The pandemic has great potential to move us forward with less red tape. After all, it is not reams of paper that place injured workers on the path to recovery, it is about our ability to deliver high quality medical care, ease of communication, and quickly respond when facts change.
I am optimistic we will look back on the other side of this and wonder why it took us so long to make the system easier for everyone. We may realize our biggest obstacle of all was our thinking that things could not be done differently, when in fact, they could.
It used to be that testing positive for marijuana in a drug screening would result in termination or denial of employment, but as marijuana legislation has taken off, states like Arizona and Minnesota protect workers from such fates. While many states allow employers to enforce drug-free work policies and terminate violators, the tide may be changing.
In mid-2019, the state of Nevada enacted Assembly Bill No. 132, while the New York City Council passed a measure, both of which prevented employers from denying employment over the presence of marijuana in a drug screening taken by a prospective employee, assuming the job was not a safety-sensitive position, or was funded by or tied to federal entities.
This was later followed up by the introduction of more legislation across the country in early 2020. Washington State introduced House Bill 2740, which followed the path of Nevada and New York City, and California came next with the similar Assembly Bill 2355. West Virginia’s House Bill 4186 would remove marijuana entirely as a tested substance from screening requirements in their Alcohol and Drug-Free Workplace Act, essentially guaranteeing similar protections. And Colorado introduced House Bill 1089, which would prohibit employers from terminating employees for lawful, off-duty activities, specifically calling out marijuana use.
These protections create a growing concern, as marijuana use can lead to workplace injuries and accidents. While these measures do not promote the use of marijuana on the job, the clinical understanding of how long marijuana impacts judgment, spatial-reasoning, and other safety-central facilities is still in the air, meaning these measures may pose a potential risk.
In related news, within the last few months three states have taken steps to potentially require workers’ comp insurers to reimburse patients for the cost of medical marijuana.
In New Jersey, a week after an Appellate Court ruled that a workers’ comp judge can require an employer to reimburse employees for medical marijuana used to treat chronic pain, legislators introduced Assembly Bill 1708, which would officially require payers to reimburse medical marijuana for injured workers who receive authorization from a medical provider after traditional therapies fail. The bill passed the Financial Institutions and Insurance Committee with a 9-4 vote, and only after removing a provision where injured workers were required to try another medication or treatment without success prior to using medical marijuana.
In Maryland, the Workers’ Compensation Commission ruled in the case of Mark T. Lee V. Auto Warehousing Co, that an insurer must pay up to $200 a month for an injured workers’ marijuana therapy. Commissioner James Forrester ruled that the insurer must pay for “legally prescribed” treatments; although marijuana was not specified in the ruling, in this case the claimant held a state-issued marijuana card and experienced severe reactions to other medications which were prescribed and paid for, making it clear that the ruling was specific to marijuana.
And finally, the Hawaii State Legislature introduced a set of companion bills – Senate Bill 1523 is practically identical to House Bill 1534 – that if enacted would require workers’ comp carriers to reimburse injured workers for the cost of medical marijuana prescribed to treat work-related injuries. These bills specified that maximum reimbursement for medical cannabis shall be determined by methods set forth in provider fee schedules, patients must be enrolled in the state’s medical marijuana program, and it must be documented that the potential benefits outweigh the risks.
Such reimbursement requirements are already in place in Connecticut, Maine, Massachusetts, Mississippi, and New Mexico. If more states follow suit, a national trend could soon spread.
The gig economy has made it difficult to establish if certain workers should be classified as employees or independent contractors, and the distinction is the difference between having and not having work-related benefits.
Contractors are not entitled to minimum wage, unemployment, workers’ compensation, and more. This has caused much debate, and in California the case of Dynamex Operations West, Inc. v Superior Court of Los Angeles (2018) led to a ruling that codified the “ABC test,” a three-part set of criteria that businesses must meet to classify their workers as contractors. California quickly followed this up with Assembly Bill 5 to enact the ABC test into law, and shortly thereafter other states introduced similar legislation.
New York introduced Assembly Bill 08721 with similar language to implement the ABC test, as did New Jersey with Senate Bill 4204. New Jersey was particularly interested in such legislation, as their Department of Labor and Workforce claims that Uber alone owes the state an estimated $650 million related to taxes, fees, and other matters tied to worker misclassification.
In fact, the U.S. House of Representatives passed House Bill 2474, which called for similar utilization of the ABC test with a 224-194 vote, but as of early February the bill has not seen any action in the Senate.
A Harvard Law School report found that in Washington State, 10-25% of employees were misclassified from 2008-2017, resulting in the following losses from 2013-2017: $152 million in unemployment taxes, $268 million from unpaid premiums to workers’ comp systems and private self-insured pools, and $384 million in federal income taxes. Meanwhile, Tennessee released a compliance report surrounding employee misclassification, fining 77 employers with $4.5 million in penalties for misclassifying employees, primarily due to a lack of workers’ comp coverage.
While Tennessee has not expressed interest in utilizing the ABC test, the state introduced two identical bills, Senate Bill 2404 and House Bill 2628, which would give their Bureau of Workers’ Compensation the ability to punish businesses that do not comply with workers’ comp requirements, including the issue of stop-work orders.
In the last few years, a high volume of lawsuits were launched against opioid manufacturers by state and city governments, with 41 state Attorney Generals banding together to investigate drug makers and distributors, while federal courts oversaw hundreds more lawsuits. These cases seek monetary damages from drug manufacturers, claiming they misled the public regarding the safety of opioid products, resulting in the harm of the opioid epidemic.
And as time went on, courts ruled against drug companies. In Oklahoma alone, Johnson & Johnson was ordered to pay $522 million for creating a public nuisance with deceptive marketing that led to the state’s opioid crisis; shortly after the ruling, four more large drug companies agreed to a $260 million settlement to avoid facing similar judgments. Purdue Pharma paid a $270 million settlement, while Teva Pharmaceuticals paid $85 million.
As these stories made news, federal prosecutors began to investigate six pharmaceutical companies for potential criminal charges in connection with shipping large quantities of opioids that contributed to a healthcare crisis. So far, five of the companies named have been subpoenaed, with reports noting that manufacturers failed to fulfill a stipulation of the Controlled Substances Act which requires manufacturers to report orders of controlled substances, including opioids, that are unusually large or frequent, or that substantially deviate from the norm. In one example, a manufacturer sent 3.7 million hydrocodone pills from 2008-2011 to a pharmacy located in a town of 400 people.
With more lawsuits and information coming forward, it is likely this trend will continue.
Patterns of Provider Fraud
The Workers’ Compensation Insurance Rating Bureau (WCIRB) released a research brief, Treatment Patterns of Medical Providers Indicted for Fraud in California Workers’ Compensation, which analyzed the treatment patterns of indicted and suspended providers based on a sample of individual providers linked to WCIRB medical transaction data, and comparing those patterns to those of non-indicted or suspended providers.
The WCIRB found that the average total medical paid per indicted provider was ten times higher than the average paid to other providers between 2013-2018, largely because indicted providers treated significantly more injured workers and rendered more services per patient.
Indicted providers in the Los Angeles Basin accounted for about half of all indicted providers identified, but they received more than 90% of the medical payments made to indicted providers.
The shares of medical payments for medical-legal (ML) and medical liens to indicted providers were two-to-three times higher compared to other providers. Indicted providers were also paid a significantly higher share of payments for complex office visits and ML evaluations.
Suspended providers, on average, were paid significantly less than providers that were indicted both before and after suspension or indictment. Providers indicted were paid significantly less for liens after indictment, indicative of the impact of the automatic stay of liens.
Treatment Guidelines Updated
The Kentucky Department of Workers’ Claims (DWC) amended their medical treatment guidelines. Based on the Official Disability Guideline (ODG), these guidelines include the following changes:
- Making it clear that injured workers have the right to choose their treating physician
- Specifying that “recommended” treatment under the guidelines does not require preauthorization
- Clarifying that if physicians furnish sound medical reasoning in support of “conditionally recommended” treatment, that insurers cannot deny authorization solely on guideline requirements
- Removal of deadlines for insurers to notify workers and providers of a denial of treatment
Chronic Pain Guidelines
The Louisiana Office of Workers’ Compensation approved a set of chronic pain treatment guidelines that went into effect February 20th, stressing patient education and informed decision making, along with active interventions that include therapeutic exercise over passive modalities, and regular re-evaluation of treatment every three-to-four weeks to monitor progress and effectiveness of care.
Furthermore, the guidelines state that long-acting opioids should never be used for acute or post-operative pain, and that an opioid trial should be completed prior to utilizing long-acting opioids.
The guidelines do not have a formulary for the treatment of pain, but they do feature sections on when to utilize pain specialists to review opioid regimens, opioid risk assessment tools, the need for psychological evaluations, and much more.
2019 Carrier Scorecards & RTW Report
The Texas Division of Workers’ Comp (DWC) published their annual Carrier Scorecard for 2019, documenting complaints issued against carriers, along with the timely payment, processing, and reporting of various components of the workers’ comp system.
Overall, complaints against carriers dropped from 6,205 in 2018 to 4,149 in 2019, but carriers’ scores for timely payments dropped as well. Regarding the timely processing of medical bills, a majority of carriers maintained a processing rate near 98%.
The Texas Department of Insurance Division of Workers’ Compensation (TDI-DWC) released their annual report on return-to-work (RTW) in their workers’ comp system, analyzing RTW outcomes from 2007-2017.
This report focuses on two types of RTW rates; initial RTW, which is the percent of injured employees who return to work for the first time after an injury, and sustained RTW, which is the percent of injured employees who returned to work and remained there for at least nine months after injury.
Key highlights of the report include:
- Initial RTW increased from 78% in 2007 to 83% by 2017
- Sustained RTW increased from 60% in 2007 to 65% in 2016
- Median days away from work decreased from 27 days in 2007 to 24 days in 2017
- Larger employers had higher initial RTW rates than smaller employees, likely due to more robust RTW programs
- The public administration industry had the highest initial RTW rates at 87%
- Employees in mining, utility, construction, and agricultural industries saw the lowest initial RTW rate at 75%
The International Association of Industrial Accident Boards and Commissions (IAIABC) submitted a letter to the Air Ambulance and Patient Billing Advisory Committee – a federal committee that reviews options to improve the disclosure of charges and fees for air medical services – urging them to allow states to implement fee schedules for air ambulance services.
Several states have implemented such fee schedules, only to have them shot down due to conflicts with federal law, including the Airline Deregulation Act and the Federal Aviation Act. These decisions have prevented states from controlling the high costs associated with air ambulances.
This debate has waged on for years, and organizations like the IAIABC are hoping the federal government will create legislation to make exemptions for air ambulance services in order to better control costs.
The National Council on Compensation Insurance (NCCI) recently published Comparing the Quantity and Prices of Physician Services Between Workers Compensation and Group Health. The report utilized their Medical Data Call (MDC), and the NCCI captured transaction-level detail on medical bills processed on or after July 1, 2010, then compared that to data licensed from Truven Health Analytics, an IBM Watson Health Company the provides healthcare data and analytics.
Both data sets were for service years 2013-2016, and key highlights of the report include:
- Workers’ comp typically paid more than group health for comparable injuries
- Workers’ comp injuries typically saw a greater quantity of services than group health for comparable injuries, discovering that 80% of cost differences could be attributed to quantity of services
- Quantity of service varied by injury, but across all injuries, workers’ comp saw higher quantities than group health
- Price differences were more related to jurisdiction than type of injury, due to workers’ comp fee schedules
- Traumas to arms and legs had smaller cost and quantity difference when compared to chronic or pain-related injuries
- Workers’ comp saw higher costs in evaluation, management, radiology and physical medicine, attributed to a greater quantity of service, even when prices were lower
- Workers’ comp typically paid higher prices for surgery
The National Council of Insurance Legislators (NCOIL), an organization of legislators serving on state banking and insurance legislative committees around the nation, adopted a model law in December which will serve as a template for states that endeavor to implement a workers’ comp drug formulary.
The model law was originally based on Indiana Senate Bill 369, which mandated the adoption of the Official Disability Guideline (ODG) drug formulary, categorizing drugs into “Y” or “N” categories, where Y drugs do not require preauthorization, while N drugs do. However, NCOIL’s adopted model law avoids designating any commercial formulary, but rather requires the formulary be “evidence-based” and “nationally recognized.”
Model legislation is often used as the basis for new bills when proposed at the start of a state’s legislative session. It is important to note, model legislation developed and adopted by NCOIL is non-binding until it completes the regular legislative journey and is signed into law in that state. This process ensures local stakeholders have the opportunity to make any necessary adjustments to conform the model bill to their states’ existing workers’ compensation system laws and requirements.
This model act could be the impetus to additional formulary adoptions across the nation, though given current legislative priorities centered on broad reaching public health and economic impacts of COVID-19, in combination with an upcoming election cycle, the focus on formularies may be somewhat diminished for the remainder of 2020.