State of Minnesota Medical Services Review Board Oct. 14, 2004 443 Lafayette Road N. St.

Paul, MN MSRB members present: Beth Baker, M.D., chairperson Lynn Ayers Barbara Baum Jeff Bonsell, D.C. Sharon Ellis Gregory Hynan, D.C. William Martin Debra Olson Robin Peterson Andrew Schmidt, M.D. Ellen Velasco-Thompson Michael Goertz, M.D. Charles Hipp, M.D. Bruce Van Dyne, M.D. Jon Talsness, M.D. Kate Berger Beth Hargarten Sandra Keogh William Lohman, M.D. Terry Mueller Marlana Nierengarten David Kune, Minnesota Chiropractic Association Brian Hicks, Medical Advanced Pain Specialist Susan McDonaugh, Intracorp Dave Renner, Minnesota Medical Association Carolyn Blodgett, CompCost Rachel Zdgrablny, MMGNA/HRMS Kathleen Picard, Minnesota Chapter Physical Therapist Association Mark Skubic, Park Nicollet Linda Sandvig, Allina 1. Call to order, introductions, announcements Chairperson Baker called the meeting to order at 4:09 p.m. Members introduced themselves to the group. 2. Approval of minutes – Action item Minutes for the January 2004 and July 2004 meetings were presented to the board. Members requested minutes be presented to them in a more timely way. Lynn Ayers made a motion to approve both sets of minutes. Jeffrey Bonsell seconded the motion. The motion carried. 3. Assistant commissioner’s update Assistant Commissioner Hargarten presented an update about the Workers' Compensation Advisory Council. The council will have monthly meetings from now through December 2004 to assemble its legislative package. Presumably, it will propose legislation similar to last year. However, no formal decision will be made until after the December meeting. The council hopes to have its bill drafted by the start of the legislative session in January 2005. This will permit more discussion with the legislators, right from the beginning. Hargarten encouraged MSRB members to attend council meetings. Dates and times are listed on the Internet at www.doli.state.mn.us/wcac.html.

MSRB members excused:

Staff members present:

Others present:

4. Meeting schedule Hargarten gave the tentative meeting schedule for 2005: Jan. 20, 2005 April 21, 2005 July 21, 2005 Oct. 13, 2005 Sharon Ellis pointed out next year's October meeting conflicts with MEA week. As a result, a new date will be chosen for the October meeting. Marlana Nierengarten will send a revised meeting schedule to members via e-mail. 5. Rulemaking Hargarten emphasized the importance of rulemaking during uncertain legislative times. She drew attention to two handouts included in member's packets: one about pharmacy costs and the other about managed care. These have been posted for comments on the Department of Labor and Industry (DLI) Web site for approximately one month. The department is hoping to publish a formal draft in late November. She also clarified the board's role during the rulemaking process is to act as a sounding board. Pharmacy rules Hargarten began the discussion of this rule by pointing out the proposed change deals mainly with changing the maximum fee allowed. The existing language stipulates the maximum outpatient fee is limited to the sum of the average wholesale price (AWP) of the medication on the date the drug was dispensed and a professional dispensing fee of $5.14. The proposed rule sets the maximum fee at a $3.65 dispensing fee plus the lower of either the average wholesale price of the drug minus 11.5 percent, the maximum allowable cost set by the federal government or by the commissioner of the Department of Human Services, or the usual and customary price charged to the public. Ellen Velasco-Thompson asked if it is possible to include an option requiring employees to use a prescription card issued by the employer. Dr. Lohman responded there is a difference between encouragement and a requirement. Encouraging employees to use a prescription card may be acceptable, provided they have access to any pharmacy, access to any drug approved for workers' compensation and no co-pay. He added that requiring use of a card would most likely require legislative changes and is beyond the scope of the board. Lynn Ayers asked if pharmacies would actually lose money if they were paid less than the average wholesale price (AWP) called for in the proposed rules. Lohman explained the AWP is a fictional number based on a pharmaceutical company's suggested price for drugs with no generic equivalent. He explained, in reality, it is standard procedure to discount drug prices so that a pharmacy pays less than the average wholesale price. Drugs with a generic equivalent are priced according to the maximum allowable cost set by both federal and state government for Medicare and Medicaid. Baker and Lohman commented that testimony from the medical task-force indicated more pharmacists were concerned about the reduction in the dispensing fee rather than drug pricing. The pharmacy industry had hoped to actually increase the dispensing fee. Dr. Bonsell asked about possible mandates that require insurance companies to report more data. Lohman and Hargarten stated the department was working with the Minnesota Workers' Compensation Insurers Association (MWCIA) about voluntary reporting of medical data. Currently, insurers are only required to report indemnity costs. Kate Berger ended this portion of the meeting by clarifying the formal comment period for this rule had not started. When it does, the department will publish a notice with a hearing date, if one is set. So far, no comments have been presented to DLI. Berger speculated that interested parties might wait for the formal comment period to respond. The department will send information to MSRB members before anything is released to the public. Managed care Hargarten began this discussion by acknowledging the amount of work Berger and Sandy Keogh have put into this project. The rule has not changed since it went into place. The proposed rule changes address some issues that have come up throughout the years. One of the new proposals would allow managed care organizations to negotiate fees. This change was part of last year's legislative package that did not pass. Currently, managed care plans must pay for services according to the rate set by the fee schedule. The new rule would allow them to receive negotiated discounts from providers. Bonsell commented that certified care plans would have an advantage because they can require members to use

providers within the network. Lohman explained that after the initial visit with a network provider, an injured worker could still see any doctor, as long as they have had a prior treating relationship. Dr. Schmidt asked if bringing a patient initially to a trauma center would constitute a prior treatment relationship. He was concerned about the potential loss of revenue for the trauma center in this situation. Berger clarified the definition of prior relationship as one established before the workers' compensation injury. An injured worker may go to any trauma center for initial treatment of a serious injury. After the emergency is over, he or she must arrange to see another physician if the trauma center is not a participating provider in the managed care plan. Under the proposed rules, if the injured worker’s own physician is unavailable, the worker may see a network physician and then switch back to his or her own doctor. Under the proposed rules, this doctor is reimbursed according to the fee schedule unless the doctor has negotiated with a managed care plan. Schmidt expressed concern that an injured worker could get lost in this situation. Ellen Velasco-Thompson explained this was unlikely, because a case manager is provided at the beginning to manage these situations and ensure rules are followed. Dr. Hynan had questions regarding managed care certification. He requested clarification of items on page four of the proposed rule. According to Berger, this addresses specifics concerning provider accessibility. Before a managed care plan can be certified, it must map out which providers are included in the agreement and where they are located according to a network map set up by the respective county. This is to ensure an adequate number of each category of health providers is available and to give employees convenient geographic access to care. Under the proposed rule, the managed care plan network is presumed adequate if it has 25 percent of the providers in each category. Lohman added that a managed care organization might set up separate contracts with different providers. Next, Hynan asked how a health care provider is notified of an insurance claim. Berger answered that the current practice will still be in place. The only question that may come about is if an insurance claim is denied and the employee continues to see a managed care provider. Lohman stated the injured worker would know the status of the claim within 14 days of the date of injury. There is no statutory requirement that compels insurance companies to directly notify a provider. He added it should become apparent during the billing process. Insurers must provide payment information within 30 days of receiving a bill. If billing is sent out on a timely basis, the provider will know within the 30 days if the claim has been accepted. The department has no authority concerning communication between a provider and his organization's billing department. Ellen Velasco-Thompson related how this is accomplished in her organization. Bonsell doubted a change in managed care would lead to lower costs and cited his experience as an HMO provider. Lohman answered that this situation is different from managed care because an HMO acts as its own insurer. It seems reasonable that insurers would not use managed care services unless the cost was competitive with uncertified managed care. He went on to say we would be able to document exact savings if anyone who is a PPO provider would disclose the amounts they will accept as payment. He clarified that certified managed care was more than a network; it is subject to regulations uncertified managed care is not. William Martin and Hyman were concerned administrative costs would negate any potential savings. Lohman stated this was unlikely. Managed care organizations (MCO) are vendors for insurers and must provide cost reduction if they want to stay in business. Hargarten added that the costs of dispute resolution would also decrease. Disputes would be handled through MCO dispute-resolution processes. Only those that could not be resolved would go on to the Office of Administrative Hearings. After this discussion, Dr. Schmidt handed out a report he said illustrated the cost of caring for an orthopedic patient. This study claimed workers' compensation patients required twice the effort of a Medicare patient. Schmidt related his own experiences and agreed with this assessment. He cited this report as evidence in an area where the department has little data. Bonsell added the department must develop ways to access more data, even if it means legislative changes. Lohman welcomed suggestions about ways to get this data from nongovernment sources. He explained that many state agencies have reviewed this issue and have not been able to develop a plan that asks for data without violating the employer/insurer contract. They have a right to guard their proprietary processes. Hargarten then asked Schmidt why workers' compensation claims, aside from the paperwork, take more time. Wouldn't treatment of any kind of injury require the same amount of time? Both Schmidt and Hynan agreed the majority of workers' compensation cases were more complex than other injuries. Lohman reminded them that 80 percent of all workers' compensation cases involve less than one week of treatment. Hargarten ended the discussion encouraging board members to contact Kate Berger or her with any additional comments. 6. Process toward rulemaking Hargarten introduced the next section about developing pharmacy treatment parameters. Lohman has developed a proposal for writing treatment parameters using information from accepted medical literature about this subject. Specific issues will be defined as detailed questions. Two or three board members will act as a task force for each question. Most of the work will be done through electronic technology, such as e-mail or conference calls. The task

force will write a report about their issues and present it to other board members. The department will also post the reports on its Web site. All comments will be collated and given to the board before each MSRB meeting. The board has the option of either accepting or rejecting the proposal. If rejected, the issue will go back to the task force for further work. If accepted, department staff members will convert the report to rulemaking language. After this is done, it will be resubmitted to the board for consensual approval. Several members asked if language could be changed after the board made its recommendations. Lohman assured them of Commissioner Brener's commitment to this process. Department staff members will keep the commissioner informed throughout the proceedings, so there should be no surprises at the end. If Brener has any concerns, this will be communicated directly to the board. 7. Approval of proposal – Action item Bonsell made a motion to accept Lohman's proposal. Schmidt seconded the motion. The motion carried. 8. Task-force volunteers According to Lohman, the commissioner wants the first task-force to deal with parameters of narcotics, nonsteroidal drugs and muscle relaxants. Baker, Schmidt and Velasco-Thompson volunteered to investigate this issue. Lohman suggested the task force use the three-month window between MSRB meetings to conduct research and write its report. 9. New business There was no new business. 10. Old business There was no old business. 11. Adjourn – Action item Velasco-Thompson made a motion to adjourn the meeting. Bonsell seconded the motion. The motion carried’ the meeting was adjourned at 6:01 p.m. Respectfully submitted, Marlana Nierengarten Executive Secretary MN/rh