Council on Worker's Compensation

Meeting Minutes
February 3, 1999

Members present: Mr. Bagin, Mr. Beiriger, Mr. Buchen, Mr. Gates, Mr. Glaser, Mr. Grassl, Mr. Muelver, Mr. Newby, Mr. Olson, Ms. Vetter, Mr. Welnak.

Staff present: Mr. Krohm, Mr. Gates, Mr. O' Malley, Mr. Martz, Mr. Smith, Mr. Vinge.

Liaison present: Ms. Sherman, State Medical Society; Mr. Leonard, Wisconsin Chiropractic Association

  1. Minutes. Mr. Gates called the meeting to order in compliance with Wisconsin's open meetings law. Mr. Muelver moved approval of the minutes of the December 15, 1998 meeting as drafted. Mr. Bagin seconded the motion. The motion passed unanimously.
  2. Division Administrator. Secretary Stewart, Mr. Glaser, Mr. Bagin, and Mr. Grassl thanked Mr. Krohm for his outstanding service to the Worker's Compensation Division, the Advisory Council, the IAIABC and to the broader worker's compensation community in Wisconsin during his tenure as Administrator of the Division. Secretary Stewart introduced the new Division Administrator, Mr. Robin Gates. She described a variety of senior management positions he has held in the Departments of Administration, Revenue and Workforce Development during more than 20 years of state service. She said Mr. Gates has received state and national awards from several professional organizations interested in the administration of state government for his management leadership. She said Mr. Gates will continue to meet the high standards of service set by Mr. Krohm.
  3. Restarting payments into the Work Injury Supplemental Benefits Fund. Mr. Vinge reviewed recent revenues and expenditures. In 1994, as provided by statute, the Department suspended payments into the fund because the prior year's expenditures were less than 3 times the fund balance. Now the fund has dropped below that threshold. He said expenditures for state-fiscal-year (SFY) 1998 totaled $2.1 million reducing the fund balance to $5.4 million or less than three times the SFY 1998 expenditures. The law requires insurers to re-instate payments effective January 1, 1999.

    Mr. Glaser moved, and Mr. Bagin seconded the motion, that the Department notify insurers to re-instate payments. Discussion on the motion. Mr. Buchen asked if expenditures fluctuate much from year to year. Mr. Vinge responded that there is very little variance. Mr. Glaser said that he objected to current statutory scheme that stopped payments into the fund at any time because the payments serve as incentive to operate a safer workplace Mr. Bagin questioned the safety effect because so few employers are even aware of the fund. Mr. Gates called the question. The motion passed unanimously.
  4. Medical Study Committee. Mr. Krohm summarized the work of the Committee. He said there is no evidence that worker's compensation medical costs in Wisconsin are higher than other states, and in Wisconsin, nominal charges are the same for worker's compensation and general medicine, but discounting is more prevalent on the general medicine side. Costs are down everywhere in the last 5 years and savings from worker's compensation medical treatment will be modest. He concluded that "managed care" is an ill-defined term, but: (1) a majority of injured workers are treated under a system of informal managed care in Wisconsin; (2) employees generally receive high quality care; (3) outside these informal managed care arrangements there are still significant friction costs (e.g., insurers' rate base includes $30 million for investigation/litigation) and delays for workers; and (4) there are some (although few) abusive extremes with respect to both treating and examining physicians.

    Mr. Buchen asked if Wisconsin's worker's compensation costs were comparatively low. Mr. Krohm said they were slightly below the midwest average and clearly below the national average. Still, he said that where worker's compensation costs are outside of a discounted contractual arrangement, they represent "found money" for providers because they are outside capitation costs. Mr. Glaser pointed out that one person's discount is another person' premium increase.

    Mr. Glaser credited Mr. Krohm for his extensive work in documenting that the 60/40 split between medical and indemnity payments is not a cause for alarm about skyrocketing medical costs. Instead, the subcommittee agreed that the tilt toward higher medical costs in Wisconsin represents earlier return to work and more light duty. He also thanked Mr. Krohm for narrowing the scope of the subcommittee's work from such broad subjects as 24-hour coverage to a more manageable agenda which will permit either labor or management members of the Council to propose responsible, incremental changes.

    Mr. Bagin indicated that, due to good marketing, there are a number of provider discount networks already operating in worker's compensation, but that to prevent mischief, he might consider some possible changes. Mr. Buchen said he would consider changes that improve the quality of care and reduce friction costs related to medical disputes.

  5. WCRI's report: "The Worker's Story: Results of a Survey of Workers Injured in Wisconsin." Ms. Monica Galizzi from the Worker's Compensation Research Institute presented the major findings. WCRI used Division data on workers reporting a back injury in 1989 and 1990 and then did a follow up survey of each worker to determine the extent to which the severity of the injury affected the person's return to work; financial status and perceived lifestyle 6 years later. The study also looked separately at compromised claims (although it did not compare severity here).

    The study concluded that 6 years after the injury the outcomes were worst for those involved in a compromise claim, and that overall, the severity of the injury was related to the outcome six years later. The study also found that at least 29 percent of the injured workers had had a pre-existing back condition, and at least 80 percent of the workers eventually returned to work (although some were not able to remain on the job due to the injury). Not surprisingly, those workers with the most information about the worker's compensation system were the most satisfied with the outcome.
  6. Department proposals for the agreed bill. Mr. Smith outlined the Department's proposals. See attachment, below.

    Mr. Glaser and Mr. Buchen both expressed concern that the proposal to amend ss. 102.04, 102.05, and 102.07 relating to no-employee contractors might create more problems for someone like a plumber doing part-time contracting work with his own policy, but who was also clearly a regular, full-time employee for another employer (say, a school). Mr. Martz agreed to review the proposal further.

    Mr. Glaser questioned whether amending s. 102.05(1) relating to withdrawal of coverage by substituting the word "every" for "any" was necessary.

    Mr. Glaser strongly objected to the fact that insurers who paid into the work injury supplemental benefit fund in s. 102.65 would benefit by a proposed across-the-board reduction in all insurers administrative costs. He said that labor and management members should take another look at s.102.65 to see if there was an alternative on which they might agree.
  7. Wage codification project. Mr. Smith asked the Council to review several areas in which the Department's wage experts were somewhat divided with respect to "part-time, part-of-class" determinations:
    • If 2 or more workers work the same number of weekly hours (e.g., 24 hours), to what extent, if any, must their hours overlap on the same days and same time of day?
    • Should the Department allow a 5-hour variance in the weekly schedules worked by 2 or more workers in determining if they are part of the same class. For example, workers who work from 20-25 hours per week could be considered part of a class, but those working less than 20 or more than 25 would not be part of that class.
    • In determining whether at least 10% of employees are doing the same job as the injured worker, how should the Department count workers when the employer has multiple locations in the "area" (e.g., Kohl's); multiple locations within one city; multiple departments with or without multiple locations (State of Wisconsin)?
    • For employees who work a fixed, regular, alternating weekly schedule (e.g., 36 hours in week one; 48 hours in week two) should the Department average the dollars, or hours, or neither one?
    The Council asked Mr. Smith to present the Division's recommendations at a future meeting.
  8. Adjournment. The Council adjourned to March 22, 1999 at 10:00 a.m. in Madison.