During the last three years, state legislators have considered an impressive 2,518 pieces of workers’ compensation-related legislation, enacting more than 462 pieces into law. In 2006 alone, with only 44 states in session, 714 pieces of legislation were introduced, with 17 percent (or 122) enacted. As the chart below displays, 2006 workers’ compensation legislative activity was similar in number to 2005, albeit with slightly fewer bills introduced and one additional bill enacted. In 2007, workers compensation legislation dominated a number of legislative sessions, with 1,059 bills introduced and 220 bills enacted.
Legislative Focus The table below lists the top seven categories of legislation introduced and enacted from 2005 through 2007. Interestingly, while injury severity (medical utilization), medical CPI and prescription drug costs were generating the most discussion entering current legislative sessions, these national cost drivers were not the principal focus for the legislation introduced in the past three years. As shown, “benefits,” which included only bills impacting indemnity benefits that injured workers are entitled to receive, represented the most bills introduced (31 percent) and enacted (34 percent) in both of the two previous years.This trend suggests that local issues, not national cost drivers, dominate a state’s legislative agenda.
Top Ten Categories The legislators have been fairly consistent in the issues they have attempted to address in the past three years. As shown below in the table highlighting the top ten categories of the past three years, there is little variation in the categories listed.The most notable change is the more than doubling of bills impacting medical care that were introduced in 2006 and 2007.
In regard to substitutive content in the bills being introduced, the following themes were prevalent in 2005: - Reform Packages*
- Continued establishment of Medical Fee Schedules
- Redefining Accident/Injury/Illness
- Electronic Exchange of Data from an Insurer or Claim Administrator to the State
- Deployment of Penalties to Reform Inappropriate Behavior
- Adoption of Medicare as the Standard of Medical Fee Schedules
- Establishment of Medical Provider Networks
In 2006, the following themes were present:
- Reform Packages
- Continued establishment of Medical Fee Schedules
- Redefining Accident/Injury/Illness
- Electronic Exchange of Data from an Insurer or Claim Administrator to the State
- Electronic Exchange of Data from Risk Provider to State
- Deployment of Penalties to Reform Inappropriate Behavior
- Adoptions of Medicare as the Standard of Medical Fee Schedules
And in 2007, the following themes were present: - Continued establishment of Medical Fee Schedules
- Electronic Exchange of Data from Insurer or Claim Administrator to the State
- Electronic Exchange of Data from Provider to Payer
- Adoptions of Medicare as Standard of Medical Fee Schedules
* “Reform Package” refers to bills that provide for substantial changes to a state’s workers’ compensation system across the entire spectrum. Reform packages typically change virtually every aspect of a states’ workers’ compensation system or at least the core of a state’s system.
As this list attests, several themes have been constant over the past three years: Continued establishment of medical fee schedules; electronic exchange of data from insurer or claim administrator to the state; electronic exchange of data from provider to payer; and adoptions of Medicare as standard of medical fee schedules.
Several themes that were present in 2005 dropped off the radar in the following years — one being the program that crafted workers’ compensation provider networks after group health. In 2004 and 2005, two states adopted legislation that established such networks. Since then no states have enacted such similar legislation. Another theme that was prevalent in 2005 was legislation that redefined the terms of accident and illness, however these disappeared in 2006 and 2007.
Although reform packages did not crack the top 10 in any of these years, they achieved the highest percentage of enactment at an 83 percent rate. In 2005, six states had reform packages and five of them — Alaska, Illinois, Missouri, Oklahoma and Texas — implemented reform packages.
That was not the case in 2006, where three states introduced reform packages and only one — Ohio — enacted it. In 2007, three states — Delaware, New York and South Carolina — introduced and enacted reform legislation. South Carolina’s reform bill was initiated in 2005 but was not enacted until a special session in 2007. New York and Delaware both enacted their legislative reform packages in record time. Neither state took more 16 days from the date the bills were introduced until the respective governors signed the bills into law. Possible Future Trends During the 2005, 2006 and 2007 legislative sessions there were two thematic areas of focus that could evolve into long-term trends: Provider Networks and Redefining Injury and Illness.
Workers’ Compensation Provider Networks
Both California and Texas have recently adopted medical cost-containment strategies that mirror the health care networks that provide medical services to employees in employer-sponsored health care benefit plans. One notable difference is that workers’ compensation networks cannot limit the total amount paid out on any given employee for the life of a claim like health benefits programs.
The networks in both states are designed to provide the employer with more control over medical management of an injured employee’s claim, thereby reducing its cost. Previously, many workers’ compensation jurisdictions allowed claims payers to have networks for the purpose of entering into contracts with health care providers that allowed the claims payers to take advantage of discounts below the state’s fee schedule when paying for medical services. While the networks set up in California and Texas allow for discount pricing, the networks also are allowed to establish pre-authorization requirements, treatment protocols, and other medical treatment requirements traditionally aligned with health care plan networks.
It is interesting to note that both states allow networks to give discount pricing and, when appropriate, to pay fees to health care providers that are higher that the state’s fee schedule. In 2006 and 2007 no jurisdictions proposed legislation establishing workers’ compensation provider networks.This does not necessarily mean that other states will not follow suit. It more likely indicates that other states are taking a wait-and-see attitude before enacting similar changes to their systems.
Redefining Injury and Illness
In 2005, Oklahoma and Missouri amended their statutes by altering language in the statute regarding the definition of injury and illness. In 2006, several states also attempted to make similar changes to their statute, although none of the 2006 legislation was enacted.The following year a few states attempted to make similar changes but none were successful.This change to workers’ compensation statutes is one of the most controversial. Depending on the success in states where it has been adopted, other states will either enact similar legislation or try other adjustments to their basic statutes. 2008 Overview The 2008 legislative session has been a very benign year for legislative activity surrounding workers’ compensation. During this past year only 750 bills have been considered, with just 79 enacted.While nine states are still in session and could enact legislation, only California currently has bills in the process that could be enacted this year. Of the 79 bills enacted during this past calendar year only six impact medical issues in any way and none of those six make substantial changes. |
Clinical Focus 
