CONTENTS

3 4 5 Free publications available online Anderson, Feckey in new positions at DLI Workers’ compensation medical costs in Minnesota: A summary of the Minnesota Department of Labor and Industry’s Medical Costs Task-force activities and recommendations New MNOSHA 75/25 program saves money, promotes safety Special Compensation Fund: Change to insurers report of benefits paid From the State Register: Minnesota Health Care Programs provider participation list available Seminar announcement: Rethinking workers’ compensation disputes; effective dispute-resolution in changing times

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D-1 Court decisions: October through December 2003

Free publications available online

Summary: Work comp medical costs in Minnesota

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Court decisions: October through December 2003

D-1

Free publications available online
These publications — and others — are available on the Department of Labor and Industry Web site at www.doli.state.mn.us (specific addresses provided below). Minnesota Workers’ Compensation System Report 2001 • Report highlights: http://www.doli.state.mn.us/wn02dec1.htm • Full report: http://www.doli.state.mn.us/rsreport.html — PDF

Minnesota Workplace Safety Report, 2001 • Full report: http://www.doli.state.mn.us/rsreport.html — PDF Prompt First Action Report on Workers’ Compensation Claims, 2003 • Full report: http://www.doli.state.mn.us/pubwkcp.html — PDF Collection and Assessment of Fines and Penalties, 2003 • Full report: http://www.doli.state.mn.us/pubwkcp.html — PDF An Employee’s Guide to the Minnesota Workers’ Compensation System, 2000 • Complete guide: http://www.doli.state.mn.us/guide.html An Employer’s Guide to Employment Law Issues in Minnesota, 2000 • Complete guide: http://www.dted.state.mn.us/00x04-f.asp
(published by the Department of Trade and Economic Development)

Publications are also available in printed versions. To request a copy, contact Customer Assistance by phone at (651) 284-5030, by fax at (651) 296-9634 or by e-mail at DLI.brochure@state.mn.us.

COMPACT is online-only: Sign-up for e-mail notification of new editions of COMPACT
COMPACT is a quarterly, online publication of the Minnesota Department of Labor and Industry. Its purpose is to provide department news and workers’ compensation case information to professionals who work within the Minnesota workers’ compensation system. For e-mail notification about new editions Send an e-mail message, with “COMPACT” in the subject line and the subscriber’s name and e-mail address in the body of the message, to DLI.Communications@state.mn.us. An e-mail notification will be sent when each quarterly edition of COMPACT is available online. Upon request, COMPACT will be made available in alternative formats such as Braille, large print or audiotape.

Anderson, Feckey in new positions at DLI
The Department of Labor and Industry (DLI) recently appointed two new directors: Jamie Anderson as legislative affairs director and Jim Feckey as executive director of the newly combined Special Compensation Fund and Investigative Services unit. As an assistant to the commissioner, Anderson will monitor all legislation that impacts the agency and inform DLI staff members about the activity at the capitol. Anderson is new to the agency, but is familiar with the agency’s work and the activity at the capitol. Before coming to DLI, she worked as the administrator for the Committee on Jobs and Economic Development Finance in the House of Representatives. Prior to working in the House, she was an account executive for Himle Horner, Inc., a public affairs firm in Bloomington, Minn.
Jamie Anderson DLI Legislative Affairs director

Anderson earned her law degree at California Western School of Law in San Diego and a bachelor’s degree at the University of St. Thomas in St. Paul, Minn. Jim Feckey is a familiar face around the agency, working for the Investigative Services unit for nearly 11 years, the past seven years as its director. Now, as the director of the Special Compensation Fund, Feckey is charged with the administration of the indemnification and investigation of uninsured workplace injuries, the second injury and supplemental benefits program, the Investigative Services unit and the assessment process to fund the aforementioned programs. As director of Investigative Services, Feckey oversaw the investigation of workers’ compensation criminal fraud cases, mandatory coverage and penalty assessment cases and the investigation of first reports of injury submitted against uninsured employers. Before coming to the Department of Labor and Industry, Feckey spent more than 22 years as an investigator and supervisor in the Vice, Homicide, Sex Crimes and Child Abuse units of the St. Paul Police Department. He was also involved in the research and development aspect of police management and as an instructor and supervisor in the St. Paul Police Recruit Academy. Feckey attended the University of Minnesota and Metro State University, earning a bachelor’s degree in criminal justice. He also attended the FBI National Academy (128th Secession) in Quantico, Va., for advanced police investigation and administration, and completed the FBI Instructor Development Course.

Jim Feckey DLI Special Compensation Fund executive director

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• COMPACT • February 2004

medical costs
in minnesota
he Minnesota Department of Labor and Industry convened a Workers' Compensation Medical Costs Task-force that met seven times between Aug. 26 and Dec. 2, 2003. Twelve representatives from the labor, business, health care, insurance, hospital and pharmacy industries considered the nature and scope of medical costs in the Minnesota workers’ compensation system (see Appendix A). The department provided briefings of available information and data about medical costs in Minnesota workers’ compensation, other Minnesota health care systems and other state’s workers’ compensation systems. The department also presented a series of recommendations to serve as a starting point and focus for the taskforce’s discussions and considerations.

workers' compensation

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A summary of the Minnesota Department of Labor and Industry's Medical Costs Task-f orce activities and recommendations

An overview of the department's recommendations:
Pharmacy costs 1. Set maximum allowable fee for medications at: • maximum allowable charge + $3.65; or • 86 percent average wholesale price + $3.65, if no maximum allowable charge price is available. 2. Allow an employer/insurer to contract with and negotiate rates with, a pharmacy network from which the injured employee must select a pharmacy to fill prescriptions. Mileage parameters would be included to ensure reasonable access. 3. Require pharmacy benefit managers to disclose to employers and insurers any rebates or discounts received from drug manufacturers or pharmacists. 4. Amend the workers’ compensation treatment parameters to provide: • rules for use of specific classes of drugs (such as use of narcotics for musculoskeletal pain); and • time and quantity parameters for the use of selected drugs for specific conditions (such as nonsteroidal anti-inflammatories for initial treatment of musculoskeletal injuries). Hospital costs 1. For all services not covered by the medical fee schedule, pay noncritical-access hospitals at the most recent average overall payment-to-charge ratio for all hospitals plus 15 percent (53 percent + 15 percent = 68 percent). Adjust this reimbursement rate annually with updated data from Department of Health. 2. Identify critical-access hospitals for increased reimbursement. Pay in-patient services at criticalaccess hospitals at 100 percent of usual and customary (U and C) rate. Pay all other services at the medical fee schedule rate plus 15 percent, if it applies, or at the average payment-to-charge ratio for all hospitals plus 30 percent, if it does not apply.

Summary of department's recommendations continued ...
Medical fees 1. The appropriate inflator for the conversion factor is the producers price index for physicians (PPI-P). Re-adjust the Minnesota workers' compensation medical fee schedule conversion factor to what it would have been had the PPI-P been used for annual adjustments since 1993 — $62.86 — and in the future adjust by PPI-P. 2. Pay nonhospital services not covered by the fee schedule at 68 percent of the providers U and C costs. Utilization control 1. Amend the statute to limit physical medicine modalities and procedures to 24 visits per injury. 2. Amend the statute to define any technology not approved by the FDA prior to the date of enactment as “not reasonably required” unless approved for use by the Department of Labor and Industry commissioner in consultation with the Medical Services Review Board (MSRB). Treatment parameters 1. Add to the statutory definition of“reasonably required treatment”: • “as defined by any applicable treatment parameter”; • treatment exceeding a parameter is presumed to be “not reasonably required”; and • presumption is rebuttable by clear and convincing medical evidence that a reason for departure exists. 2. Require judges and payors to apply the parameters: • payors must cite parameters in denials of “unreasonable” treatment; • fact finders must make decisions based on parameters; and • if parameter was not used in adjudicating a claim, the fact finder must explain why it was not used. 3. Authorize the department to use “expedited” rule-making to update and extend parameters with legal standard that parameter must reflect evidence-based medical practice and be developed in consultation with MSRB.

Managed care 1. Certified managed care plans be allowed to negotiate fees with participating providers. 2. Make peer review, utilization review, case management and dispute resolution optional features of certified managed care. 3. Redefine when there is a prior treating relationship. 4. Require the employee to use the certified managed care plan’s designated provider for the first 14 days of treatment. 5. Even when the employer does not have a managed care plan, allow employer to select initial health care provider for the first 14 days of treatment.

Summary of medical task-force's recommendations
The labor representatives were universally opposed to any changes in the status quo, consistent with their opinion that there was no medical cost problem and their concern that the proposed changes would all have negative impacts on the injured workers’ access to health care services. The pharmacy representative also opposed any changes to the current system. The health care provider representatives unanimously opposed any reductions in payments for services, but frequently endorsed recommendations aimed at controlling inappropriate utilization and strengthening the treatment parameters. Only two of the health care provider representatives offered any comments about the department’s managed care recommendations.They both opposed any changes – especially allowing managed care plans to negotiate rates of payment with participating providers. A majority of the employer representatives generally endorsed the department’s recommendations or offered no comment. Note: The task-force agendas, testimonials and minutes can be found on the Department of Labor and Industry Web site at www.doli.state.mn.us/medcost.html.

New MNOSHA 75/25 program saves money, promotes safety
By Patricia Todd Director of MNOSHA Compliance

Seventy-five and 25 have become important numbers to Minnesota employers looking to save money and keep employees safe, through a new effort by the Minnesota OSHA Compliance program. In a continuing effort to reduce injuries and illnesses in the workplace, MNOSHA Compliance has implemented a new program – 75/25. An employer may now obtain a 75 percent reduction in penalties, if it also reduces workers’ compensation claims by 25 percent within a one-year period, providing employers in Minnesota with an added economic incentive to reduce accidents and protect employees from harm. Participation in this program does not preclude an employer from using consultation services, in fact, it is encouraged. Employers selecting this option receive a 75 percent reduction in penalties assessed as a result of a compliance inspection, provided the MNOSHA citations issued are not “willful,” “repeat” or “failure to abate” citations. In addition, the compliance inspection cannot be a result of a fatality, serious injury or catastrophe.
To qualify for this program, certain terms must be met:

1. The initial penalty assessed must be greater than 6. The company must implement “A Workplace Accident and Injury Reduction” (AWAIR) Program $5,000. and a safety committee. 2. The employer must contest the original citations and attend an informal conference with MNOSHA 7. Minnesota OSHA Compliance will contact the to define the terms of the settlement agreement. As employer quarterly to discuss the employer’s with all settlement agreements, employees may progress. appeal the results. 8. One year after the completed settlement 3. Twenty-five percent of the original penalties must agreement, a paper review of the actual workers’ compensation claims submitted to the employer’s be paid within agreed upon terms. insurance provider will be conducted with the 4. The employer must reduce, by 25 percent, the employer, the appropriate employee representative number of workers’ compensation claims submitted and MNOSHA Compliance. to its insurance provider during the 12 months 9. If the employer fails to meet a claims reduction of following the completed settlement agreement. 25 percent, it will owe a percentage of the original 5. Management of the company must agree to penalties, based on a sliding scale. training. The training to be obtained will be agreed upon during the informal conference. The intent of this program is to have an indirect connection between MNOSHA and workers’ compensation rates. It is an opportunity for employers, employees and MNOSHA to work together to reduce the hazards, injuries and illnesses occurring within Minnesota workplaces.
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• COMPACT • February 2004

SPECIAL COMPENSATION FUND

Change to insurers report of benefits paid
Notice concerning the workers’ compensation insurers/ self-insurers report of benefits paid during the 12-month period ending Dec. 31, 2003

The process of assessing workers’ compensation insurers and selfinsured employers for the Special Compensation Fund has changed. Companies are no longer required to file reports on a semi-annual basis. The filing will now be done on an annual basis. The next filing, containing financial information for calendar-year 2003, is due April 1, 2004. The information reported will be used to calculate the assessment that will be due Aug. 1, 2004, and Feb. 1, 2005. Insurers and self-insured employers that are liable for the assessment will receive an invoice approximately 30 days prior to the payment due dates. In addition, the workers’ compensation insurers/self-insurers report of benefits paid can now be filed online at www.doli.state.mn.us/scfassessment. An identification code is required for online filing. Your company’s identification code can be found on the mailing label of your assessment form. It is printed to the right of the company name. If you have any questions, contact John A. Kufus by phone at (651) 284 5179 or by e-mail at john.kufus@state.mn.us.

From the State Register:

Minnesota Health Care Programs provider participation list available
Notice is hereby given that the Minnesota Health Care Programs provider participation list for Jan. 1, 2004, is now available. The provider participation list is a compilation of health care providers that are in compliance with the Department of Human Services (DHS) “Rule 101.” If a provider name is not on the list, the department considers the provider noncompliant. The list of providers is separated by provider type, each section is in alphabetical order by provider name and there is no additional information on the list other than the provider’s name. This list is distributed on a quarterly basis to the Department of Employee Relations, the Department of Labor and Industry and the Department of Commerce. To obtain the list, call Rule 101 Specialist Kelly Crawford at (651) 296-0766 or toll-free at 1-800-366-5411. Minnesota Statutes §256B.0644 and Minnesota Rules parts 5221.0500, subp. 1 and 9505.5200 to 9505.5240, also known as DHS “Rule 101,” require health care providers that provide medical services to an injured worker under the workers’ compensation law to participate in the Medical Assistance Program, the General Assistance Medical Care Program and the MinnesotaCare Program.
February 2004 • COMPACT •

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RETHINKING WORKERS’ COMPENSATION DISPUTES:

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Effective dispute-resolution in changing times

Practical information for mediating workers’ compensation claims
Sponsored by the Minnesota Department of Labor and Industry at the Continuing Education and Conference Center, University of Minnesota,
1890 Buford Ave., St. Paul, Minn.

• Mediation research • Cross-cultural issues • Mediation advocacy • Mock-mediation demonstration • Mediation ethics • Judicial perspectives • Claims-management perspectives

See complete seminar information online – www.doli.state.mn.us –

Pay just $95 for a full day of mediation information and discussion. Register online at www.doli.state.mn.us or send a check made out to Department of Labor and Industry and the registration form below to: Minnesota Department of Labor and Industry, 443 Lafayette Road N., St. Paul, MN 55155-4320, Attn.: Chris Beaubien. Name Company name Address City, state, ZIP Phone Fax E-mail Bill to

Amount enclosed
For more information, to request special accommodation or to register by phone or fax, call Chris Beaubien at (651) 284-5478 or call toll-free 1-800-342-5354.