Council on Worker's Compensation
June 6, 2002
Members present: Mr. Bagin, Ms. Connor, Mr. Glaser, Mr. Gordon, Mr. Newby, Ms. Norman-Nunnery, Ms. Vetter
Staff present: Mr. John Conway, Mr. O’Malley, Ms. Knutson, Mr. Shorey, and Mr. Krueger
- Minutes: Ms. Norman-Nunnery convened the meeting in accordance with Wisconsin’s open meetings law. Because there was no quorum, the minutes will be approved at the next meeting.
- Medical Costs Study: Dr. Richard Victor from the Workers’ Compensation Research Institute presented information to the Council from recent studies entitled CompScope Benchmarks: Multistate Comparison, 1994-1999 and The Anatomy of Workers’ Compensation Medical Costs and Utilization: Trends and Interstate Comparisons, which included a recent study of medical costs for eight states. Major findings for Wisconsin included that there has been moderate, sustained claim cost growth, with medical costs as the major and persistent driver. Medical cost increases were higher in Wisconsin than any of the other seven states studied (California, Connecticut, Florida, Georgia, Massachusetts, Pennsylvania and Texas). Medical costs in Wisconsin have increased an average of over six percent, with chiropractic charges increasing nine percent, physician visits increasing five percent, hospital charges increasing one percent, and physical and occupational therapy declining three percent. The average price per medical service in Wisconsin was the highest among the eight states studied, with the exception of hospital charges. Providers can argue that higher prices are due to higher quality care provided which decreases the duration of disability. The typical paid to charge ratio is 75 to 80 percent, while in Wisconsin it nears 100%. There was a discussion concerning the payment to medical providers and the percentage of payment that exceeded the Medicare reimbursement rates. In Wisconsin, payments for primary care were 50 percent above Medicare reimbursement rates. Dr. Victor commented that the Medicare reimbursement schedule takes into account costs to providers. Mr. Glaser inquired as to how Medicare costs are adjusted and what factors are considered in setting the rates. Dr. Victor indicated that he would gather information concerning reimbursement rates for the Council.
The study also concluded that medical cost containment measures were least utilized in Wisconsin. The percent of payments to network providers was 34 percent. Wisconsin has the fastest first payment of disability benefits and the lowest claims management expenses, due in part to the monitoring of payments by the Worker’s Compensation Division. Wisconsin has the lowest benefit delivery expenses due to lower litigation costs. Wisconsin also has the lowest frequency of permanent partial disability payments and the lowest disability duration. Mr. Gordon pointed out that medical costs were harder to close on claims in Wisconsin due to the 12-year statute of limitations. Dr. Victor responded that the statute of limitations issue could increase costs given that duration of disability and permanent partial disability are not as significant in driving claims costs. Ms. Connor inquired into the use of independent medical evaluations (IME) compared to other states. Dr. Victor responded that the reference book includes data regarding the use of IME in other states. In Wisconsin, the cost per case for an IME is higher than other states. Factors to consider are that the examination may be more labor intensive and it is used in more serious cases. Mr. Glaser expressed concern that the legislature and employers looking at the data may conclude that Wisconsin has a serious problem with medical costs and that reactive changes could reverse other positive trends. Dr. Victor indicated that the data does show an area of concern regarding medical costs. Ms. Norman-Nunnery responded that the Council is already in a position to say that we are turning our attention to this issue. Mr. Glaser pointed out that there is a huge disparity in the increase insurance costs for group health versus worker’s compensation. Worker’s compensation costs have remained steady with only a slight increase while group health insurance costs have increased dramatically. Ms. Norman-Nunnery remarked that if our state has only one issue, compared to other states we are very fortunate. She further indicated that Dr. Victor would be appearing before the Joint Committee (Senate Labor and Agriculture and the Assembly Committee on Labor and Workforce Development) today at 2:00 p.m. at the Capitol.
- Hearings Backlog Workplan: Ms. Norman-Nunnery indicated that the Division was in the process of formulating a work plan in response to the internal audit. Mr. O’Malley indicated that the six-month pilot project would begin sometime in August due to our hearing calendars. The audit identified problems with efficiency in litigated cases due to the process involved in scheduling hearings. The Division will strive to reach a balance between our need for efficiency and the needs of the attorneys. Problem areas have been identified with respect to applications filed on behalf of injured employees. The Division’s focus is to only schedule cases for hearing that are ready to be heard, and procedures will be developed to streamline this process. The Division will incorporate recommendations made at the last Advisory Council meeting which include modifying our forms so that parties can indicate an interest in alternative dispute resolution (ADR). The ALJ will be selected from an experienced staff member and will be involved in case management and ADR issues. The ALJ will be able to identify cases for pre-hearing conferences where the only dispute is which carrier is obligated to make payments, and refer appropriate cases to be resolved through the medical dispute resolution process or tiebreaker examination process.
The Division has also found that a few carriers are not filing answers and this is a growing problem. The Division is looking at monitoring whether answers are filed and following up with the insurers, self-insured employers and employers. In extreme cases when the Division continues to be ignored, a default order will be issued if medical support for the claims is contained in the file. The authority to issue default orders is already contained in statute. This procedure is used infrequently in serious cases. Ms. Conner asked whether both parties needed to agree to the ADR process. Mr. O’Malley responded that it would depend on the issue involved. The Division has discontinued the use of settlement conferences unless both parties agree. For tiebreaker examinations, sometimes the parties will agree to the process, but in other cases the Division has asserted its authority to appoint a tiebreaker physician. The Division would apply ADR options to specific case types. For example, of the 400 occupational hearing loss cases that are set for hearing each year, under 20 proceed to hearing. Mr. Bagin inquired as to the length of time before cases are now set for hearing. Mr. O’Malley indicated that currently the average is 7.8 months. Mr. Bagin commented that 6 months was a good target, but that the Division should look at prioritizing or expediting certain cases rather than rush to have every case heard within 6 months. Mr. Glaser indicated that he had not heard many complaints in the last year concerning the length of time before a hearing is scheduled.
Mr. Bagin indicated that there needed to be a fair application of the law to everyone. He stated that there should not be a unilateral penalty. Frequently, the parties agree to waive the 15-day filing requirement. Mr. Bagin would rather see the focus on timely hearings for those that truly need it. Mr. O’Malley clarified that the Division does have an informal process for granting expedited hearings, and that they are regularly granted. The applicant’s attorney must assure the Division that the case is ready for an expedited hearing. Ms. Norman-Nunnery assured the Council that the Division’s proposed plan is not in response to any urgency. The issue of timely hearings has been a continuing issue. Mr. O’Malley explained that it would take two months to put the pilot project into place with at least 10 months to be evaluated.
- Vaccine Injury Compensation Program: Mr. O’Malley discussed the National Vaccine Injury Compensation Program (42 USC 300aa-10 to 34). This is a federal no-fault system to compensate individuals or families of individuals who were injured by some vaccines administered by public or private vendors. This program went into effect in October 1988. The program is administered jointly by the U.S. Court of Federal Claims, the Department of Health and Human Services and the Department of Justice. An injured individual, parent, guardian or trustee of an injured or incapacitated individual may file a claim. Claims may be filed for either injury or death. Claims must be filed within 36 months after an injury or within 48 months after a death. The amounts awarded under the program include actual damages, with awards for death and pain and suffering limited to $250,000 and attorney’s fees and costs. The program covers some childhood vaccines such as diphtheria, tetanus, measles, mumps and rubella. At this time the program does not cover anthrax or smallpox vaccines.
- Safety Investigations Follow-up: Mr. Conway discussed the Worker’s Compensation Division plan to hire a safety specialist this fall. It is anticipated that this position will be responsible for referring cases to the Department of Commerce for investigations concerning safety violations as well as other duties. Since December 2001, there have been 78 referrals resulting in 29 violations, 20 no-violations and 8 that could not be investigated. The remainder of the referrals is still under investigation.
The Worker’s Compensation Division will be taking an active role in the Department of Workforce Development’s workplace safety initiative. The Safety Works program of issuing report cards, certificates and calendars has been well received by employers. Plans are being made for Governor McCallum or Secretary Reinert to recognize businesses for good workplace safety records with the Wisconsin Corporate Safety Award. The Safety Partnership, a group of several agencies, will be working on ways to promote safety in the workplace. Awards will be issued to Wrap-Up projects with good workplace safety records. There will be a press conference at the end of June at which time the Worker’s Compensation Division’s website (Safety Institute) devoted to workplace safety will be announced to the public.
- Claims Caseload Status: Mr. Shorey discussed claims caseload data from 1993 to 2001. The number of claims for 2000 and 2001 declined from 1999, but the average closed claim cost has increased. The average claim for temporary total disability remains approximately 21-22 days. The data on the handout for permanent partial disability for the years 1994-99 is more reliable than the data for 2000 and 2001 because payments for claims in these later years have not been completed. The Worker’s Compensation Division does not track medical costs.
- Retreat Planning: Ms. Norman-Nunnery advised the Council that the retreat is scheduled for October 9 and 10, 2002 at the Heidel House in Green Lake and encouraged all members to attend. Mr. Howard Bellman was retained as a consultant to assist with structuring the retreat. Mr. Bellman will contact members of the Council to collect information to help with the retreat.
Scheduling of public hearings was also discussed. Mr. Newby suggested scheduling one public hearing that could be conducted by teleconference. Ms. Norman-Nunnery will explore the feasibility of conducting a public hearing by teleconference.
- Correspondence: Two letters were presented to the Council. The first letter was from Mr. Russell Leonard on behalf of the Wisconsin Chiropractic Association. Three letters from third party administrators or insurance carriers were attached to his letter in which payment for treatment expense was denied. There was not enough information submitted with Mr. Leonard’s letter to determine if payment was correctly denied in these cases. Ms. Norman-Nunnery will contact Mr. Leonard for more information, which is necessary to monitor these cases.
The other letter was from Mr. Paul Ducklow concerning an ergonomic product he developed, which he believes will reduce back injuries. The Council agreed that no further action was necessary since Mr. Ducklow was previously advised of a grant program that could benefit promotion of his product.
- Adjournment: The Council adjourned until the next meeting scheduled for December 11, 2002.