Workers’ Compensation Advisory Council Feb.

18, 2004 Minutes
Voting members: Paul Bailey James Cavanaugh Stan Daniels Wayne Ellefson Mike Hickey Brad Lehto for Glen Johnson David Olson Reed Pollack Brad Robinson Diane Edwards for Julie Schnell Gary Thaden Ray Waldron Nonvoting members: Rep. Dan Dorman Sen. Geoff Michel Nonvoting-members absent: Rep. Joe Mullery Staff: Scott Brener Debbie Caswell Jim Feckey Beth Hargarten Jerry Meyer Cindy Miner Phil Moosbrugger Terry Mueller Teri Van Hoomissen Visitors: Craig Anderson; MWCIA Carol Backstrom; Regions Hospital Barbara Baum; MN APTA Greg Coon; Grinnell Mutual Mary C. Edwards; Fairview Henry Erdman; Attorney Tim Gallagher; MPHA Kevin Gregerson; Wilson-McShane Corp. Tom Harms; MWCIA Judy Hawley; MN Chp American PTA Steve Hollander; MARP Todd Johnson; WCRA Larry Koll; Koll, Morrison Tom Lehman; MN Hospital Assn Perry Lewis; TPS Tammy Lohmann; Commerce Bob Lund; State Fund Mutual Tim McCoy; Attorney for employees Marnie Moore; Cook Hill Andy Morrison; Koll, Morrison John Nesse; MDPA Sandy Olentehn; Park Nicollet Clinic Marlys Peterson; MARP Board Robin Peterson; MN APTA Mark Pixme; MAPS Dorothy Quick; Columbia Park Med. Group Erin Sexton; MMA & MN Orthopedic Society Mike Stockstead; MN Fire Fighters Assn Omar Syed; Attorney General’s Office Bruce Tollefson; MWCIA Kevin Tribula; PMSI Bob Weeks; MN Occupational Health Gary Westman; MN DOER Dan Wolf; APTA

Commissioner Scott Brener, chairman, called the meeting to order at 10:20 a.m. Roll was called. A quorum was present on both sides. Brener noted Sen. Linda Higgins would rotate off of the Workers’ Compensation Advisory Council (WCAC) effective today. Sen. Tom Bakk will be Higgins’ replacement. Higgins is no longer on the Jobs Committee, so Senate leadership felt it appropriate to place the vice chair of that committee in her spot.

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Gary Thaden made a motion to approve the minutes from the Oct. 8, 2003, and Jan. 7, 2004 meetings. Ray Waldron seconded the motion. All voted in favor of the motion. III. Approval of agenda Discussion occurred about the agenda and item, IV. B. Gillette injuries, that was moved to the summer meeting schedule because there was no legislative change being proposed by Thaden. Per Rep. Dorman’s request, Henry Erdman and Mike Stockstead were added to the agenda to speak on behalf of the Minnesota Professional Fire Fighters Association as item IV. B. IV. A. Commissioner’s update The commissioner did not have any items for a commissioner’s update. Presumption of coverage Mike Stockstead, president of the Minnesota Professional Fire Fighters’ Association, and the organization’s attorney, Henry Erdman, proposed a change to Minnesota Statutes §176.011 regarding occupational disease and the presumption of coverage for firefighters with heart disease. They brought this proposal to the WCAC last year. They propose adding the phrase “with a copy delivered to the employee within 60 days of the rebuttal used to deny benefit” to 176.011, subd. 15 (b). Current law contains a presumption of workers’ compensation coverage for certain specific employments when those employees contract a communicable disease. Within current law there is also a rebuttal standard that allows the employer and the insurer to rebut the presumptions with substantial factors. The firefighters association asked last time they were before the WCAC that there be some type of an opportunity to make this neutral. What they are asking for now is a listing of the substantial factors that are being brought and that a copy of this listing go to the employee. This will set out the reasons why the denial was made, so the employee has an understanding of why they are being denied. Wayne Ellefson asked what that language would do and why they would want it added. Stockstead said the denials are made and they have no knowledge of what, why, when or where, so, basically, it drags the process on for a number of years before they get the relief they need. This would give notice early on, so they can determine what the basis was and why it was denied and the individual can either provide additional information or proceed to the next step, which currently is being delayed because they are not getting any response whatsoever.

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Brener noted he has no problem this. He suggested the language should be cleaned up to some degree, so we define a copy of what is needed, to make it quite clear. Thaden asked whether the intent is that the employee is aware of what the factors are. Stockstead said that is correct, so the employee would have the document the insurer prepared with the substantial factors. Thaden noted if they were not delivered to the employee within the 60 days, say it took place on the 70th day, they would be in violation of the statute and there would be a presumption of some fine or some imposition of a violation of the statute, but it would not actually change the use of the factors. If you went to court, the presumption would not change and the use of the factors would not change. It would just be a violation of the statute for not having told you within a certain timeline. Stockstead said, “yes.” Reed Pollack speculated if a firefighter is denied and has legal counsel, does this supersede that relationship? If represented by an attorney, all communication goes to the attorney rather than the employee. Stockstead responded that up until this point an employee does not generally have an attorney. Assistant Commissioner Beth Hargarten said we could add language that says a copy of the substantial factors should be delivered to the employee and the employee's attorney, if they have one. Jim Cavanaugh said he does not have a problem with this, as long as he knows the who, how and what, such as what is being delivered to whom and what constitutes delivery. From that standpoint, the language needs to be cleaned up. He suggested we tighten the language, because it is not clear – at all – what you are doing, but noted the concept is OK. Thaden asked for the procedure to be defined. He asked whether the insurance company has all the medical information before they put together these “substantial factors” or whether they deny and then start accumulating medical information. Stockstead said, in his experience, it has gone every way. The insurer has access to the employee’s entire medical information within 10 days of an injury. Thaden expressed concern they may not have all the information if the employee is still seeking medical care and, in this case, the insurer may not know all the facts yet and the insurer would be required to deliver this document even though they do not have all of the information. Stockstead said, under current law, they have a certain period of time in which to deny a claim. The only way the insurer is allowed to deny is through “substantial factors,” so not having the information is not a factor. In these particular cases, the information is gained rapidly. Brener suggested a motion be made to add the firefighters’ proposal to the 2004 package with the premise they work with the Department of Labor and Industry (DLI) to define the language more carefully. Cavanaugh said he wants to make sure what we are doing is not in some way hamstringing the employer in terms of the time. He does not know the procedure and is not clear whether 60 days is enough time and whether all the medical information is gathered by that time. Stockstead clarified the 60 days is from the time of rebuttal. They are not asking to change the time of the review and denial. When

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the review and denial are done, they are looking for the clock to start and then they would have 60 days to get a copy of the information about whatever was used to make that determination to the employee. Thaden made a motion to include the firefighter language in the 2004 WCAC bill, subject to review of the language. Ray Waldron seconded the motion. All voted in favor of the motion. IV. C. Collective bargaining agreements Kevin Gregerson administers the Union Construction Workers’ Compensation Program for the Wilson-McShane Company. Gregerson distributed a brochure that briefly explains the program. He noted these issues are important to both labor and management. The program is an alternative workers' compensation program created through collective bargaining. This program was authorized by Minnesota Statutes §176.1812 in 1995. This was requested by labor and management in the construction industry, to allow them to collectively bargain an alternative method for resolving any and all problems on workers’ compensation claims. It is, essentially, a private mediation/arbitration program. In 1997, a program was approved by DLI and has been operating for six-and-ahalf years, serving the unionized construction industry in Minnesota. It has been very successful. In the pilot provision language, it says the employers in the public and private sectors outside of construction may also negotiate an alternative workers’ compensation program. To date, that has not happened. However, in the past year, his company has been approached by unionized employers and their unions in the grocery industry, the trucking industry and the warehouse industry to perhaps model a program for their industry based on what has been done in the construction industry. They would like to do this under the pilot provision; however, that provision expires at the end of this year. Gregerson asked for support for an amendment to M.S. §176.1812 to extend the time period of the pilot provision to allow these programs to be built and to see how they work. Next year, he would report back to the WCAC about how the program is doing and may ask that there be no pilot program at all. Instead, collectively bargained workers’ compensation would be provided to any unionized employer in any industry whether public or private. Cavanaugh asked if a year was enough time. Gregerson said he is asking for two years to extend that filing period. Brener stated he is in support of Gregerson’s proposal. Olson made a motion to extend the pilot program for two years. Paul Bailey seconded the motion. Robinson asked why the pilot program was originally limited. Brener recalled the intent at the time. Bechtel was working through the construction trade, primarily. The

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program was working in 1995, so they decided to give it a chance to work outside of the construction industry. Robinson clarified that the request was to give the program extra time to see how the program might work outside the construction industry now that it has been discovered that it works inside the construction industry. Brener agreed. All voted in favor of the motion. IV. D. Legislative list Brener announced that Jamie Anderson was out and he presented the legislative list. After conversations about the legislative bill with many people at this table and in the audience over the last nine months, he thinks they have something that will work for everyone. Brener suggested the language from the 2003 WCAC bill be included in the 2004 package. That bill is still sitting on the Senate floor. The 2004 proposal currently includes housekeeping proposals to assign all penalties to be deposited into the Assigned Risk Safety Account instead of the Special Compensation Fund (SCF). That is generally what happens now, but there are a couple of outstanding accounts that go back into the SCF. This change is not a financial issue and there will be no SCF assessment impact. It is better bookkeeping. The second housekeeping provision is to delete the statutory requirement regarding sending notice of cancellation letters. This service is a duplication, because the insurance industry sends cancellation letters. This is a cost-saving effort on the part of DLI to be more efficient without any impact on the system. Brener noted other potential legislation includes a proposal from the Minnesota Association of Rehabilitation Providers to change the retraining plan filing deadline from 156 weeks to 52 weeks after the initial service of maximum medical improvement. It also includes issues from Stan Daniels relating to the layoff of employees with work-related injures in northern Minnesota mining operations and an exemption from workers’ compensation insurance requirements from the Amish community. The 2004 proposal includes the following medical cost issues: Pharmacy • Allow the employer/insurer to negotiate with a pharmacy network from which the injured employee must select a pharmacy to fill prescriptions. The pharmacy must be within 15 miles of the employee's home or work location. • Pharmacy benefit managers are required to disclose any rebates.

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Managed care • Allow managed care plans to negotiate fees with participating providers. • Make peer review, utilization review, case management and dispute resolution optional features of certified managed care. Utilization • Add to the statutory definition of “reasonably required treatment” as defined by any applicable treatment parameter. The treatment exceeding a parameter is presumed to be not reasonably required. The presumption is rebuttable by a preponderance of medical evidence. This section will sunset in three years. • Require judges and payers to apply the parameters. Payers must cite the parameters to deny claims of treatment to injured workers. Fact finders must make decisions based on those parameters. If the parameter was not used, the fact finder must explain why. This section would sunset three years post enactment. • Authorize the department to use “expedited” rulemaking to update and amend parameters with a legal standard that the parameter must reflect evidence-based medical practice and be developed in consultation with the MSRB. Language will be added that ensures the issue runs through the MSRB and gets a sign off by the MSRB before any rulemaking systems go into place. • 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 commissioner in consultation with the MSRB. Medical fee schedule • Direct the commissioner to develop a service-based fee schedule. Brener opened discussion about the WCAC 2004 bill. Daniels asked for an explanation about why the first two bullets under utilization are necessary, when the provisions will sunset in three years. Brener said the treatment parameters were designed and developed in 1993 to provide a best practices medical care system in workers’ compensation. These best practices are developed principally by physicians. Labor has a stake in that, as well as the employer community. They come out of DLI’s MSRB, which is a group that include union officials, employer officials, doctors, chiropractors and physical therapists. Research shows that people who work through a best-practice system come out healthier and the system works in a more efficient manner. The problem the department has had is the application of the treatment parameters in court. The intent is to strengthen what is on the books with respect to treatment parameters. The practical effects are you should see fewer IMEs and fewer instances of insurers pulling away from what is considered to be necessary treatment. At the same time, it should cut down unnecessary medical expense.

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Daniels asked what percentage of the treatment parameters work now. Brener responded that DLI’s surveys tell us the parameters are being applied approximately 70 percent of the time right now. Daniels thinks 70 percent is pretty good and we should not change the language. Brener said it is not good enough. He noted that in the 30 percent where the treatment parameters are not being applied, those folks were coming out in worse shape and at a higher cost to the system according to DLI’s research. Brener clarified that all the treatment parameters have “escape clauses” built into them. In situations where a treatment parameter clearly is not the correct process, you are not obliged to follow that particular treatment parameter. There are ways out of them through implementing best practice work. Daniels asked, if this language were applied, how it would it stop the 30 percent who are getting around the treatment parameters. Brener responded it is DLI’s belief that if the courts start applying the treatment parameters there would be fewer cases of folks going around them, unless doctors go around them. That is the intent. Daniels said he is not totally against this proposal, but he would feel more comfortable if he had more time to talk about it. A break was called at 11 a.m., so the employee and employer representatives could caucus individually and attempt to come to agreement about additional legislative proposals. Brener called the meeting to order at 11:07 a.m. No further agreements were made and the remaining legislative proposals were set aside until the March meeting. In the meantime, the commissioner, Olson and Waldron will get together to try to come to a mutual understanding regarding those elements that are confusing to some folks. The following proposals were approved for inclusion in the 2004 bill: • • • • • • the 2003 WCAC bill language will be maintained; the two housekeeping proposals; the two pharmacy proposals; the two managed care proposals; the last two utilization proposals; and the medical fee schedule proposal.

The following proposals will be discussed at the March meeting: • • • Change the retraining plan filing deadline from 156 weeks to 52 after the initial service of MMI. The first two utilization proposals to add to the statutory definition of “reasonably required treatment.” Require judges and payers to apply the parameters.

Olson made a motion to approve the list of proposals and the plan for the March meeting as outlined by the commissioner. Waldron seconded the motion. All voted in favor of the motion.

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Ellefson asked for discussion. He pointed out the last two bullets under utilization and asked for stronger language about the MSRB not only having an opportunity – but to actually do – a review and make a recommendation. Brener said that was the intent and was acceptable to him Thaden wanted to make sure we know what we are going to do procedurally. Thaden made a motion to put the language together for the first list Brener enunciated. The two caucus leaders will get together with the commissioner to seek some resolution about the three outstanding issues. When the language is drawn up, it will be sent to all of the council members. The bill will get introduced. If there are any additional issues that are agreed upon, the language will be sent to the council members and then we can do an amendment to the bill afterwards. Cavanaugh seconded the motion. All voted in favor of the motion. Brener noted he is still in discussions with the Minnesota Medical Association. They are getting quite close and he thought they would have an agreement about medical reimbursement issues shortly. That will be another issue to be considered in the next week or so. Brener asked Daniels if he has a proposal about laying off employees with workrelated injuries in northern Minnesota mining operations ready for consideration at this point. Daniels responded he is not yet ready to discuss that issue and it might not be feasible for this session. IV. E. Workers' compensation exemption Brener noted the workers’ compensation exemption can either be litigated and we face the consequences with the court systems, which he thought would not be positive for either side at the table, or the WCAC can come up with its own solution to try to move forward. Waldron asked for a recommendation. Cavanaugh proposed an amendment to the language provided in the meeting packets. He said he was ambivalent about doing anything, but he would be less ambivalent if the provision were sunset in three years. Brener stated that was acceptable to him. Cavanaugh moved that the WCAC adopt the language provided, with a proviso that a three-year sunset provision be added to it. Waldron seconded the motion. All but Robinson approved the motion and the motion passed. The religious exemption will be included in the WCAC’s 2004 bill. Hickey said his concern is whether this issue has gone the litigation route in other states and what the outcome was of that litigation. Hargarten responded that the exemption law has never been challenged in the states that have the exemption provision we talked about in the past. Those states are Kentucky, Pennsylvania and Wisconsin.

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Omar Syed, from the Attorney General’s Office, was not aware of any lawsuits in other states that were similar to Minnesota’s situation. Robinson said he has a problem with using a religious exemption as a crow bar to change a statute that has something to do with an economic relationship. He feels we are being extorted. He sees this as a judicial issue and, even though we might finish second, he would rather finish second honestly than to submit to what he perceives to be an extortion based on a religious reference. He does not support this change. As a point of order, Bailey asked for a revote on whether to adopt the religious exemption, because the motion was passed without discussion. Daniels seconded the motion. A roll-call vote was taken for the motion to reconsider the vote. The motion failed. The motion to add the religious exemption to the 2004 bill stands. Brener announced the 2004 WCAC bill will consist of a religious exemption, a collective bargaining agreement pilot project extension, a firefighter notice piece, as well as the variety of medical cost containment proposal pieces previously agreed upon and a majority of the provisions from last year’s bill. Discussion occurred and it was decided to schedule an extra meeting March 10, 2004, at 9 a.m. Respectfully submitted, Debbie Caswell Executive Secretary