DRAFT
Council on Worker’s Compensation
Meeting Minutes
GEF-1 Building
Madison, Wisconsin
June 11 , 2013

Members present: Mr. Beiriger, Ms. Bloomingdale, Mr. Brand, Mr. Brandl, Mr. Buchen, Mr. Redman, Mr. Kent, Mr. Metcalf, Ms. Nugent, Ms. Pehler,  Mr. Collingwood, Mr. Ginsburg and Ms. Thomas

Excused: Mr. Schwanda,

 Staff present: Mr. Aiello, Mr. Krueger, Mr. Moreth, Mr. O'Conner and Mr. O’Malley

  1. Call to Order/Introductions: Mr. Metcalf convened the Worker’s Compensation Advisory Council (WCAC) meeting at approximately 10:05 a.m. in accordance with Wisconsin’s open meetings law. WCAC members, staff and members of the audience introduced themselves.
  2. Minnesota WC Medical Fee Schedule: Ms. Lisa Wichterman, Medical Policy Specialist for the Worker’s Compensation Division of the Minnesota Department of Labor and Industry, appeared at the meeting by telephone conference call to inform the Council about the Minnesota WC medical fee schedule. Ms. Wichterman has served in this position for about five years. She previously worked as a WC claims adjuster and worked with healthcare fee schedules.

    The Minnesota WC medical fee schedule uses tables from Medicare A & B. Medicare A is physician care services. Medicare B covers charges for hospitals, ASC (ambulatory surgery centers) and other outpatient healthcare providers. The fee schedule uses almost only CPT and HCPCS codes. The fee schedule has relative value units (RVU). The fee schedule is based on a Medicare formula that uses conversion factors. There are four conversion factors used in the Minnesota fee schedule. The medical-surgical conversion factor amount is $69.87. The pathology-laboratory conversion factor is set at $41.16. The physical therapy conversion factor is set at $54.41. The conversion factor for chiropractic care is $55.58. The conversion factors used for charges paid by Medicare are much lower averaging around $30.00.

    The CMS tables are based on an elderly population over 65 years old. The fee schedule looks at every charge in the table. The CMS tables need to be updated every three years for the fee schedule. The same table is used for three years. The most recent table was updated in October, 2011.The tables need to be updated to look at new payment policies and keep up to date on what Medicare is paying for healthcare services. Many health service charges in the tables do not apply to worker’s compensation cases.

    There are some healthcare services that RVUs do not cover. Examples of these are dental services, ambulance services and many home health care services. These services are not covered by Medicare and are not listed in the tables. For these healthcare services not covered by Medicare the Minnesota fee schedule pays for these services at 85% of the usual and customary charges. 85% of the billed amount is to be paid. The Minnesota fee schedule also pays charges from small hospitals, licensed for 100 beds or less, at 100% of the amount charged. 

    An actuary employed by the Department figures out the amount of changes in charges based on the RVU’s. The actuary uses consumer price index information from the Department of Labor, Bureau of Labor Statistics. The provider price index (PPIP) is used to figure the conversion factor for each year. We start with a 15% reduction in charges. Annually we look at the conversion factors and the PPIP. If the PPIP is up 1.5% for the year we raise the conversion up 1.5%. In most years the PPIP went up but there was one year where the conversion went down. There have not been a lot of complaints from health care providers using the Minnesota fee schedule. In Minnesota worker’s compensation pays more to health care providers than what is paid for general group health. The conversion factor is calculated each year using the PPIP. The conversion factors are updated every year on October 1st.

    In Minnesota there are disputes over medical costs for treatment to injured employees. Usually these occur on hospital charges. These disputes can be resolved by mediators who conduct conferences and look to both sides. The mediator makes a decision after the conference, which is usually adopting the amount in the fee schedule. Examples of some of the disputes include the health care service is not covered or that it is not related to the injury. After the decision by the mediator payment is to be made within 30 days. Since there is electronic billing in Minnesota payment times are faster. It is unusual if payment is made more than 30 days later.

    The Minnesota fee schedule has been in effect 20 to 30 years. The CMS 2009 table was implemented in 2010. In Minnesota there are also treatment parameters. With the treatment parameters if a payer agrees to pay they do not go back and deny. The treatment parameters are also used to establish medical necessity for treatment and promote good health care for injured employees. When there is a dispute involving the parameters that is about whether there is a need for departure from the treatment parameters, they can file a mediation request for a conference with a mediator. In Minnesota most of the mediators are attorneys and are familiar with the fee schedule and treatment parameters. A mediator decision can be appealed to the Office of Administrative Hearings for the dispute to be heard by an administrative law judge. It can take 21 days for a mediator to issue a decision. Once the mediator decision is made a party has 30 days to appeal to the Office of Administrative Hearings. It is not known how long it takes the Office of Administrative Hearings to hold a hearing and issue a decision. It will take more time for a decision if it is to be heard by a judge. The number of appeals is not known but it is probably in the hundreds.

    There is no fee schedule in Minnesota for implants. The charge for implants is based on 85% of the usual and customary amount. Implants are very expensive. Minnesota is looking at other ways to set charges for implants. One method is to use the invoice price plus 25%. Another way is to use the DRG code for payment if it was done in a hospital. The implant is part of the DRG and should be paid for in this manner.

    In Minnesota worker’s compensation pays more than the Medicare rate. Minnesota is the only state that pays charges from small hospitals at 100%. Charges from large hospitals are paid at 85%. For health insurance, hospitals all have different contracts for payments. Health insurance payments are based on contracts, not fee schedules.

    Worker’s compensation payors pay more for services than general health. The reasons for worker’s compensation payors to pay more are that there is additional paperwork that is required to be completed, ratings for permanent disability and more time is involved into providing these health care services. There are no problems in Minnesota about health care providers not accepting injured employees for treatment.

    In the Minnesota Worker’s Compensation Division, Ms. Wichterman does most of the work with the medical fee schedule. She works with an attorney & an actuary. The mediators are employed by the Department of Industry and Labor. There are 15 mediators on staff. Most of the mediators are attorneys who previously worked representing plaintiffs or defendants. The mediators work only on worker’s compensation cases. There is information on the Department’s website under WC Heath Care Provider. The website provides links to CMS tables. The Department does not have a license to use the CMS tables but there is a link on the website to access the tables.

    In Minnesota physical therapy for work hardening is not part of the fee schedule. Payment for work hardening would be at 85% of the usual and customary charges. If health care charges are not covered by CMS but are covered under worker’s compensation, the charges are paid at 85% of the usual and customary amount.

    The Minnesota Fee Schedule includes bundling edits. There are some bundling edits for treatment provided to injured workers. For multiple surgeries, 100% of the first surgery is paid and 50% of the charge for the second surgery is paid because this is part of the multiple procedure codes. $69.87 is the conversion factor for medical and surgical services. The Medicare conversion factor is $34.00.

    Small hospitals with 100 beds or under receive payment at 100%. Minnesota is now looking at whether this should continue. Now many of the small hospitals are owned by larger hospitals.

    Ms. Wichterman is not certain about the comparison of Medicare rate reimbursements for Wisconsin and Minnesota. Wisconsin may have a slightly lower Medicare reimbursement rate but it is close to what it is in Minnesota. The Minnesota fee schedule pays at a rate of approximately 200% of Medicare. Worker’s compensation would usually pay more for health care services compared to group health. Depending on the contract worker’s compensation would pay 10 to 20% more than group health charges. In the budget for cost savings on the system in 2010 the actuary did some work. Ms. Wichterman did not have numbers on this but it was budget neutral to the state.

    Ms. Wichterman had no recollection about there being any outliers in the system. If there were outliers there would be a way for this to work through the system. Shoulder arthroscopies paid at $300 were not noticed.

    CMS came up with the RVU’s to make sure that they are accurate. CMS believes that RVU’s for physical therapy are too high so there is a need to make an adjustment. When new procedures come up CPT and HCPCS codes are added. The codes can gradually change. New codes are not added each year. In Minnesota new codes are added every three years. If there is no code for a health care procedure the charge defaults to 85% of usual and customary. The most current and accurate usual and customary charges available are used.

    In Minnesota there are challenges if the right CPT code is not used. In disputes the mediators look at it. The mediators would also review the office notes and look at how it was billed.

    The Minnesota Worker’s Compensation Division has a couple of hundred employees. A medical doctor is on staff and works two days per week. The medical doctor is an independent contractor. The medical doctor is the medical director and he works on the treatment parameters. He did all of the research and reviewed all of the studies for the treatment parameters. At this time he is working on new treatment parameters covering the use of dorsal column stimulators and pain pumps and drafts of the proposed treatment parameters covering these are currently available. The medical director does all the research for the treatment parameters. The legal department puts this in legal language for the rules. There is a committee that works with the medical director on the treatment parameters. Members of the committee include doctors, chiropractors, a hospital administrator, a physical therapist, nurses, and a labor and management representative.

    In Minnesota there is no system or process to follow or evaluate treatment outcomes provided by health care service providers.;

    If a worker’s compensation claim has been denied and the health insurance company paid for the medical treatment, the worker’s compensation payor reimburses the health insurance the higher rate. The worker’s compensation payor would reimburse the health insurance such as Blue Cross who then would pay the health care provider at the higher rate. The group health insurance pays the health care provider the amount in the WC medical fee schedule. If the health care service was not included in the fee schedule it would fall back to 85% of the usual and customary charge.

    The treatment parameters cover treatment provided for injuries to the cervical spine, thoracic spine, low back, upper extremities RSD, and there are general guidelines for all injuries. Good communication helps keep disputes down. There is good provision of services to injured employees. There are ways to depart from the treatment provided for in the treatment parameters. The treatment parameters help to provide for treatment that is appropriate and prevents overtreatment and also prevents under-treatment.

    Minnesota has a pharmacy fee schedule. Payments for drugs with the pharmacy fee schedule are based on the average wholesale price less 12% plus a $3.14 dispensing fee. The pharmacy fee schedule includes the use of generic drugs. Physician dispensing is permitted in Minnesota if they get approval from the Minnesota Medical Board. Employers can tell employees what pharmacy to get prescriptions from if it is within 15 miles from their home. There have been no problems with physician dispensing.


  3. Database Audit Report:  Janet D. Jamieson, Ph.D., project manager for the audit gave a presentation on the Worker’s Compensation Health Cost Database Audit. 2011 Wisconsin Act 180, Section 30(2) provided statutory authority for the audit. The audit was required to be commenced by November 1, 2012, and be completed by June 30th, 2013 so that the standard deviation remains at 1.2 above the mean and the permanent partial disability maximum benefit rate was not decreased. Two opinion papers were developed to provide an opinion as to whether the Department should consider defining “economically similar regions” and, if so, a recommendation on the number of regions & how the regional boundaries should be determined, and an opinion about whether the current level of 25 occurrences per billing code per region required by the Department is statistically significant or if it should be changed. The audit was conducted in conformance with standard auditing practices and included three major tasks (1) project administration, (2) developing the audit requirements and (3) conducting audits of the databases.

    The three database companies audited were Rising Medical Solutions, Inc., Health Systems International, LLC and Fair Health, Inc. The Department’s Hospital Radiology Data Base was also audited.

    For the project administration a kickoff meeting was held on November 5th, 2012.There was communication with the database companies including letters and telephone calls. The audit project administrator for each database company was identified as well as the staff responsible for the development of the certified databases. A detailed project plan was developed. There were monthly project status reports & conference calls with the Department. The project concluded with providing and presenting the final report.

    Requirements for the audit were developed. The certification documents submitted by each company were reviewed to identify company specific requirements for the audit. This led to the development of an audit requirements document for each company that included performance & technical requirements. Information & documentation was collected & reviewed from each database company including the organization, key staff involved in development of the certified databases and the processes used for collecting the source data used in developing the certified databases. Each database company was interviewed to establish a record of representations of the process used to compile the certified databases. The source data providers who provided the data included in the certified databases was validated that included the development of a source data interview form used to interview two of the major data contributors for each database company.

    In conducting the audits, onsite visits were scheduled. Onsite interviews were conducted to validate the processes used to develop the certified databases. The information from the source data providers was validated. An examination database for each certified database was collected & validated by the Department. The dataset used to develop the certified databases was reviewed. A random sample of records in the examination database including records representing all geographical areas and code types were identified and the information in the selected sample of records was compared to an image or electronic copy of the billed information.

    Rising Medical Solutions, Inc., Health Systems International, LLC and Fair Health, Inc., cooperated fully in meeting the requirements of the audit period, the processes the database companies used to develop the certified databases were validated during the onsite audit interviews and all procedures and methodology were found to be consistent with those reported to the Department on their original application for certification. These database companies provided a copy of an examination dataset for the period from July 1 to December 31, 2012 that was verified by the Department. All three certified database companies provided access during the onsite visit to their electronic data required to select a random sample of billing records to validate the data included in the certified databases. The audit did not identify any errors in the data records used to create the certified databases but was able to validate the data in the certified databases. Each of the three database companies used different approaches to identify outlier charges in their data. All three of the companies provided access to information on their source data providers that was validated as represented on the information provided in their certification documentation.

    Department database certification requirements allow each certified database company to define their own “economically similar regions” for the state. Each of the three certified database companies identified unique regions for their database coverage. Rising Medical Solutions, Inc., sorts data in to four regions of the state. Health Systems International, LLC defines four regions that differ from those identified by Rising Medical Solutions, Inc. Fair Health, Inc. defines eight regions of the state. Each company identifies the zip codes that are included in each region and there is some overlap. A major problem with the current system is that the more delineations that are used, the more the data is diluted, leading to statistically inconclusive results.

    Each database company uses a unique methodology for developing their economically similar regions. Rising Medical Solutions, Inc. breaks out it’s data in to four distinct regions by zip code prefix and the major population centers of Wisconsin are separated from the geographic areas of the rest of the state. Health Systems International, LLC identified it’s regions based on a 2009 study that Glen Boyle participated in that analyzed statewide median payment patterns in Wisconsin and tried to develop four groups that demonstrated similar payment patterns. Fair Health, Inc. identifies eight economically similar regions using the same geo zip system that was developed by Ingenix to assign zip code areas.This zip code model is based on defining urban and rural areas of the state and areas that are deemed to be economically similar.

    The Department’s requirement of at least 25 occurrences per billing code per region represents a minimum number of occurrences that must be present in the database or it is not a statistical sample. Determining the appropriate sample size depends on knowledge of the variation in the universe of charges for a given medical service within a defined geographical region. The methodology for developing an adequate statistical sample is based in scientific research. Selecting and identifying a representative sample from a universe of data depends on understanding the variation within the universe from which the sample is drawn. Establishing standard geographical areas for all certified database providers to use might significantly improve the amount of data available in each geographical region and the representativeness and validity of the data used by the Department to adjudicate disputes involving worker’s compensation medical bills.

    Suggestions for improving the certification process include the following:
    1. The Department may consider identifying the specific economically similar regions of the state and limiting the number to three or less.


    2. The Department may acknowledge that CPT and HCPCS are not different databases and combine the two.


    3. The Department may define the criteria for what is an ambulatory surgical center (ASC) bill.


    4. The Department may provide a clear consistent definition of the date range for the certified databases.


    5. The Department may consider eliminating the two provider minimum requirement because it should be much higher if it is to have any value.


    6. The Department may allow electronic data submissions or at least email or a simple SFTP site for transmitting the certified database data.


    7. The Department may consider adopting CCI edits and other rules that address payment adjustments based on modifiers.

  4. Approval of Minutes: Mr. Brand moved to approve the minutes of the May 14, 2013 meeting. Mr. Redman seconded the motion. The minutes were unanimously approved


  5. Permanent Total Disability Study Committee: Mr. Aiello updated the progress of the Permanent Total Disability Committee. The last meeting of the committee was held in November, 2012.The Department is continuing to monitor the outcome of these cases to determine if they are resolved by litigation, finding of fact orders or compromised settlements


  6. Correspondence: Mr. O’Malley reported that no correspondence was received for the WCAC since the last meeting.


  7. Adjournment: Motion by Mr. Buchen, seconded by Ms. Bloomingdale to adjourn. The motion carried unanimously and the meeting was adjourned at approximately 11:55 a.m.