Legislature(2013 - 2014)BARNES 124
02/03/2014 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB234 | |
| HB242 | |
| HB141 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 234 | TELECONFERENCED | |
| *+ | HB 242 | TELECONFERENCED | |
| *+ | HB 141 | TELECONFERENCED | |
HB 141-WORKERS' COMPENSATION MEDICAL FEES
4:18:29 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 141, "An Act setting the fee for medical
treatment or services performed outside the state under the
Alaska Workers' Compensation Act, requiring a provider of
medical treatment or services under the Alaska Workers'
Compensation Act to submit bills for treatment or services to
employers within 180 days after the date the treatment or
services are rendered, and limiting the time for appealing an
employer's denial or reduction of a bill; and providing for an
effective date."
4:18:54 PM
REPRESENTATIVE JOSEPHSON declared a conflict of interest. He
stated that he has an ongoing workers' compensation claim that
is unresolved.
CHAIR OLSON asked whether the case is an out-of-state claim.
REPRESENTATIVE JOSEPHSON answered yes.
CHAIR OLSON responded that he did not think any conflict of
interest exists.
4:19:20 PM
CHAIR OLSON stated that the committee will be reviewing the
original bill rather than a proposed amendment [not offered, but
in members' packets]. The bill contains "180 days versus 45 or
90 days," which will make sense to some public members listening
today. He explained that the difference in that breakdown was
not significant to the overall goal of the bill and the proposed
changes could have further complicated matters which might have
adversely impacted Alaska's hospitals more than out-of-state
hospitals.
4:19:53 PM
ANNA LATHAM, Staff, Representative Kurt Olson, Alaska State
Legislature, read the bill title, as follows:
An Act setting the fee for medical treatment or
services performed outside the state under the Alaska
Workers' Compensation Act, requiring a provider of
medical treatment or services under the Alaska
Workers' Compensation Act to submit bills for
treatment or services to employers within 180 days
after the date the treatment or services are rendered,
and limiting the time for appealing an employer's
denial or reduction of a bill; and providing for an
effective date.
MS. LATHAM explained that HB 141 does two things. First, the
bill will set the fee schedule for workers' compensation claims
treated outside Alaska. Second, the bill establishes workers'
compensation billing timelines. She provided background
information, including that in 2011, the legislature passed
House Bill 13, which established a comprehensive workers'
compensation fee schedule. The schedule couldn't exceed usual,
customary, and reasonable (UCR) rates, based on the UCR fee
schedule and was reflective of the geographical areas for the
services rendered at the 90th percentile. However, the
aforementioned bill failed to identify any parameters for
locations for which the fee schedule could be used. She
reported that Alaska has the highest workers' compensation rates
in the nation. Since 1986, the Oregon Department of Business
and Consumer Services has conducted a biennial study that is
considered the industry standard. Unfortunately, for the past
ten years, Alaska has been ranked in the first or second place
for the highest workers' compensation insurance premium rates in
the nation.
4:21:44 PM
MS. LATHAM provided some discrepancies between Alaska's rates
and those in the Lower 48. She drew attention to the top 25
procedure codes in members' packets entitled, "Top 25 Surgery
Procedure Codes Ranked by Paid Amounts (47% of total surgical
payments)" and asked members to compare Alaska's workers'
compensation fee schedule to Washington, Oregon, and Idaho's fee
schedules. While rates vary somewhat, Alaska's rates are
extremely high. She referred to page 40 of the report entitled,
"Medical Data Report for the state of Alaska dated September
2013." She explained that this chart ranks the top ten
diagnostic codes by total claim payments and the International
Classification of Diseases (ICD-9) codes by total claim
payments. She specifically referred to the ICD-9 code 722.10
for displacement of lumbar intervertebral disc without
myelopathy [at the bottom of page 40], and pointed out that the
National Council on Compensation Insurance (NCCI) indicated that
the average payment in Alaska at $31,177 compared to $17,049
nationwide. She reported that this represents a $14,128 cost
difference for only one procedure, noting Alaska's rates are 182
percent higher than the national average. Further, nothing in
Alaska's statutes prevents a claim treated outside Alaska from
being billed at Alaska's rates; however, HB 141 would change
that practice. Medical services treated in Alaska would be
charged using the UCR fee schedule established in 2001. Any
medical services treated outside Alaska couldn't exceed the
charges set by the workers' compensation statutes of the state
where services were rendered.
MS. LATHAM said the bill would also set billing timelines and
require a provider submit bills for treatment to employers
within 180 days after the date the treatment is rendered. It
would also limit time to appeal an employer's denial of a
reduction of a bill to 60 days. The bill has an immediate
effective date and contains a retroactivity clause, as well as
transition language. The transition language allows medical
providers to submit bills for service within 180 days of the
effective date, irrespective of the date of service, and allows
providers to submit an appeal for denied payment within 60 days
of the effective date. She summarized that HB 141 will set
reasonable timelines for billings, provides certainty for
employers and insurers, fixes some loopholes in House Bill 13,
and makes incremental changes to existing statutes. These
changes should provide stability and prevent further increases
to workers' compensation insurance rates.
4:24:39 PM
REPRESENTATIVE JOSEPHSON pointed out that the high cost of
medicine and the 182 percent disparity goes far to address
Alaska's high premium rates.
MS. LATHAM agreed premium rates are an issue.
CHAIR OLSON said medical costs are approximately 80 percent of
the amount paid on workers' compensation cases. The costs are
significant. He informed members that the committee will
consider three additional workers' compensation bills that could
impact workers' compensation laws. This bill provides the
"first leg" of the stool. He offered his belief that when the
bills are considered in their entirety, they could provide
consumers some reasonable savings. He advised members that he
has held discussions with the national organization that sets
rates, NCCI, and if the bills pass the state will move in the
right direction. He said he would be happy with a 15-20 percent
reduction in insurance rates, which has happened in other states
that have implemented serious reform. Again, he cautioned that
this bill is only one segment. He reported that about 20
percent of the workers' compensation injuries are treated
outside Alaska. He explained that this issue arose when an
original billing used a lower rate [based on the Lower 48
state's rate], but once an audit was done, the claim was
subsequently rebilled [using Alaska's higher rate]. However,
the Alaskans were treated in the Lower 48 state and not in
Alaska.
4:27:10 PM
REPRESENTATIVE JOSEPHSON appreciated the explanation. He asked
whether the medical providers find 60 days to be sufficient to
appeal or reject a bill. He added that he represents the
business interests of most of the medical community in his
district.
MS. LATHAM said the sponsor has not received any letters from
the medical community.
CHAIR OLSON remarked that the bill was introduced last
legislative session.
4:28:14 PM
REPRESENTATIVE HERRON asked how many states have a provision
that allows them to bill at the Alaska rate rather than using
their own workers' compensation rates.
MS. LATHAM answered none. She explained that states use one of
two fee schedules, either the UCR or else a Resource Based
Relative Value Scale (RBRVS), noting 43 states have adopted one
of the two schedules. Additionally, some states have reciprocal
agreements with other states, but to her knowledge no other
state has adopted this approach.
4:29:02 PM
REPRESENTATIVE HERRON asked how much money the state has lost in
the past few years because of the workers' compensation billing
practices used by other states.
MS. LATHAM answered that she did not have any quantifiable data;
however, she offered to provide data on cases that have been
"back billed." She reported that about 24 percent of workers'
compensation cases seek treatment outside Alaska.
CHAIR OLSON estimated the companies impacted probably represent
approximately 80 percent of the workers' compensation premiums
in the state. He characterized this as a "right and wrong"
issue since the claims are initially billed out for an Alaska
patient being treated outside Alaska. This bill attempts to try
to fix an "abuse" of the system issue.
REPRESENTATIVE HERRON agreed. He thought it was appropriate and
also characterized the current practice as "a matter of right
and wrong."
4:30:40 PM
MICHAEL MONAGLE, Director, Central Office, Division of Workers'
Compensation, Department of Labor & Workforce Development, in
response to Chair Olson's question, on whether the division
tracks the percentage of claims being treated outside Alaska,
answered no. He explained that the National Council on
Compensation Insurance (NCCI) began a medical data call several
years ago. The NCCI released its first data cut for Alaska in
January 2013, with a follow-up report in September 2013. He
reported that the NCCI's figures show that 24 percent bills are
out-of-state billings. He stated that the division performs a
cost of living adjustment every three years. Additionally, the
division extracts the numbers of people living outside Alaska
and he reported that approximately 300 claimants are currently
receiving ongoing benefits out-of-state, but in most instances
people are treated out-of-state and return to Alaska. He did
not believe that the aforementioned Alaska residents are
permanently residing outside Alaska.
4:32:51 PM
REPRESENTATIVE JOSEPHSON asked whether the department is
concerned about bills that may be lost due to clerical errors or
third-party payer systems, relative to the 60-day deadline. For
example, part of the HB 141 is designed to respond to a recent
Seattle decision in which the courts ordered that a $199,000
workers' compensation bill be paid. He remarked that is a big
bill to have "lost in the mail." He wondered if the provider
should receive certified mail.
MR. MONAGLE said the division rarely reviews medical records
since the billing is between the provider and the payer. The
division receives medical records when there is a dispute
between the provider and the payer, either through a reduction
or a denial of the bill. In those instances the provider will
come before the Workers' Compensation board to file a claim.
4:34:32 PM
REPRESENTATIVE JOSEPHSON characterized the division as serving
as a referee in disputes.
MR. MONAGLE answered yes; that the division serves as a records'
custodian and keep case files for the 19,000 reports of workers'
compensation injuries and the subsequent reports as well as
administering the adjudication process when disputes occur.
4:35:06 PM
JULIE CISCO, Risk Manager, Kenai Peninsula Borough School
District (KPBSD), referred to a letter in members' packets from
Dave Jones, Assistant Superintendent of the KPBSD. She reported
that the KPBSD's per claim costs have increased approximately
400 percent in the past four years, of which approximately 80
percent is for medical cost. The school district needs some way
to contain costs. In the past, one option was to send people
out-of-state for treatment and pay the lower state fees. That
option vanished several years ago when a Lower 48 hospital
discovered a loophole and re-billed the KPBSD for several years'
worth of procedures. She urged members to support HB 141.
CHAIR OLSON asked whether the KPBSD is a member of a pool or if
the borough is a qualified self-insurer.
4:36:48 PM
MS. CISCO answered that the KPBSD is self-insured for the first
$250,000 per claim, but above that the district buys excess
insurance through the Alaska Municipal League's (AML) pool.
CHAIR OLSON said that explains why the KPBSD has been tracking
the claims so closely.
MS. CISCO agreed; noting that this represents "first dollar" for
the first $250,000, without any aggregate limit. Thus, the
KPBSD could have 100 claims breach that limit.
4:37:14 PM
CHAIR OLSON highlighted that in the past couple of weeks that
his office has been contacted by a number of self-insurers or
pool members with a large retention who have been "hit" by
outside hospitals so it is not just primary insurers who have
been adversely affected.
4:37:39 PM
SALLY STUVEK, Human Resources Director, Fairbanks North Star
Borough (FNSB), said she oversees risk management, which handles
workers' compensation for the FNSB and the FNSB School District
(FNSBSD). The combined plans for the FNSB and the school
district's workers' compensation plan is a self-funded program.
She reported that the FNSB spends approximately $1 million on
workers' compensation benefits. The FNSB continues to see
medical costs increase. The regulation of fees and charges for
medical treatment, medical equipment, and prescription drugs
would reduce overall workers' compensation costs. She stated
that assuring a schedule for out-of-state provided service would
have a positive impact on the overall costs for workers'
compensation. She said the administration of the FNSB fully
supports the components listed in HB 141. She concluded her
testimony by reporting that the FNSB assembly will consider a
resolution on February 13, 2014. She offered her belief that
this bill creates a reasonable timelines for billing services
and for the appeal period.
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 141.
4:39:39 PM
REPRESENTATIVE JOSEPHSON offered his sense that HB 141 makes
positive adjustments to existing practice. He noted that
subsection (f) of the aforementioned statute, makes it clear
that if something is a covered event under the workers'
compensation law, such that any delay by the provider submitting
the bill can't fall on the worker.
CHAIR OLSON indicated Mr. Monagle has nodded yes.
4:40:39 PM
REPRESENTATIVE JOSEPHSON referred to decision he previously read
the Barrington decision [Alaska Workers' Compensation Appeals
Commission - Dr. Edward Barrington, Appellant, vs. Final
Decision February 12, 2007] that makes it a little murky, but
ultimately reaches that conclusion. He said that sometimes a
provider doesn't know a settlement has occurred. He remarked
that HB 141 is simple enough; however, the law of workers'
compensation, including regulations and procedures is "utterly
complicated." Thus, even though HB 141 looks straightforward,
it isn't clear how the bill will ultimately affect the outcome;
although it seemed reasonable that six months will allow
sufficient time for providers to submit a bill. He further
noted that a worker is still allowed to go to the nearest point
for adequate help even if it is in California. He offered his
belief that Alaska is improving [in providing all types of
medical procedures], especially in Anchorage.
4:42:04 PM
REPRESENTATIVE REINBOLD moved to report HB 141 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 141 was reported from the
House Labor and Commerce Standing Committee.