New system will notify construction companies if subcontractors lose coverage. Florida’s Chief Financial Officer Tom Gallagher announced a new online database designed to send automatic electronic notification to primary contractors who sign up for the service concerning changes to a subcontractor’s workers’ compensation coverage status. Florida law requires a contractor to verify that subcontractors either have workers’ compensation or a valid exemption. Contractors whose subcontractor’s policy has been canceled may be liable for injuries received by employees of the subcontractor. “This database will be an excellent tool for contractors who need to receive updated policy information on the subcontractors they hire,” Gallagher said. “If a subcontractor cancels its policy or fails to pay the required premium, the contractor will receive an email notification from the department.” The “Construction Policy Tracking Database” can be accessed through the department’s website at www.fldfs.com by clicking the workers’ compensation construction icon. A brief online registration process is required to receive notification. For identification purposes, the federal ID number of each subcontractor must be entered to complete registration. If the federal ID number is not yet on file, the subcontractor’s workers’ compensation policy number will also be required.

Source: State of Florida

Superintendent Gregory V. Serio today announced that New York State now permits on-line terminations of licensees allowing for real time terminations of agents. The Department introduced electronic appointments last December and now insurance companies can also terminate agents electronically eliminating the need to use paper.

As with the online appointment process, terminations done electronically will be processed immediately and insurers will receive instant confirmation that the termination was processed.

Last year, the Department completed its first full year of online licensing for agents and brokers for license renewals and new applicants. The Department’s licensing reforms include: online temporary adjuster permits, online applications for original licenses, online renewals for brokers and agents, and licensing through NIPR for non-resident brokers and agents.

Source: State of New York

Medical Cost Containment

Medical Fee Schedules

Problem: The current workers’ compensation medical payment system is unnecessarily complex, costly, difficult to administer and often outdated. Key components of the workers’ compensation medical system –specifically outpatient surgery centers - are still unregulated and are placing extreme cost burdens on the entire system. Uncontrolled and unpredictable inflation of workers’ compensation medical costs is one of the system’s primary cost drivers and a central cause of escalating workers’ compensation premiums in the State.

Solution: Establish medical fee schedules for all parts of the workers’ compensation medical system and index them to 120% of Medicare fee schedules which will help contain medical costs and bring stability and predictability to the workers’ compensation system.

Stability and predictability allow actuaries to predict costs and insurance companies to correctly price their premiums. Our current fee schedule is not tied to Medicare, and is not updated and does not accurately reflect cost of care. Current law expects a state agency with inadequate funding and little experience to create and update complex medical fee schedules. Experience has proven it does not work. For example, the current Department of Industrial Relations (DIR) official medical fee schedule has not been updated for five years, effectively making it irrelevant and obsolete. The State’s budget crisis has also jeopardized DIR funding to complete the pharmacy fee schedule called for in AB 749.

Repeal of the Treating Physician Presumption

Problem: AB 749 repealed the presumption of correctness of the treating physician only for injuries occurring on or after January 1, 2003.

Solution: The treating physician’s presumption should be repealed for all injuries including those that occurred before January 1, 2003. The result would be a savings of approximately $2 billion to reserves, thus improving the financial health of the insurance industry. This would encourage more insurers to write workers’ compensation insurance, create a more competitive market, and put downward pressure on rates. The savings effects accident years prior to 2003.

Utilization Management

Problem: Numerous interstate comparisons and California-specific studies have demonstrated that overutilization of medical treatment is a serious problem within California’s workers’ compensation system. While California’s price per medical service is comparable to other states, California far exceeds other states in both the number of services per visit and visits per claim. Overutilization of medical services is a major cost driver that does not necessarily aid injured workers, extends injury claims, and wastes medical treatment resources.

Solution: Implementation of a comprehensive fee schedule will lead to savings, but without accompanying effective medical utilization controls, such savings will be eroded. We propose adopting a workers’ compensation medical utilization structure that includes evidence-based clinical treatment guidelines, a strong definition of “medical necessity” and a streamlined independent evaluation process. Such a program would significantly reduce delays in medical treatment to injured workers and litigation over medical treatment disputes.

We recommend using the American College of Occupational and Environmental Medicine (ACOEM) guidelines as the default interim guidelines until the Department of Industrial Relations develops an official utilization

Generic Drugs

Problem: Use of brand name drugs and high dispensing fees in the workers’ compensation system places excessive costs in the system.

Solution: Existing law requires pharmacies to provide the generic equivalent of a name brand drug, when filling a workers' compensation prescription, unless (1) there is no generic drug equivalent available, or (2) the prescribing physician has specifically provided otherwise in writing. Proposed legislation would close a loophole in last year’s generic-drug legislation (part of AB 749) by extending the generic-drug-dispensing requirement, currently imposed on pharmacies, to hospitals, clinics and physicians, when filling workers' compensation prescriptions.

Immediate Medical Treatment

Problem: For countless reasons, injured workers are routinely denied the immediate, essential, and, often times, basic medical treatment they are entitled to under the workers’ compensation system. In 9 out of 10 cases, the injured worker is ultimately granted the medical care they or their physician initially request. These unnecessary delays in medical treatment lead to unnecessary costs (increased medical, indemnity, and litigation) as untreated workers’ medical conditions worsen, they take much longer to return to work, and they seek legal counsel to resolve the issues.

Solution: The employer will be responsible for providing immediate medical treatment to all injured workers. Employers will have up to one year to deny a claim as opposed to the current 90 day period and can deny a claim for fraud at any time. Employers will be responsible for all medical treatment until the claim is denied.

Claims Handling

Problem: Inefficient claims handling contributes greatly to claims staying open longer and increased and unnecessary litigation in the system. A large percentage of claims handlers are overworked and underprepared to do their job. The overwhelming majority of participants in California’s workers’ compensation system believe that higher and more consistent standards for claims examiners through certification and training would greatly contribute to more efficient benefit delivery and reduced costs throughout the system.

Solution: (1) Establish certification standards and continuing education requirements for claims examiners to improve the consistency and quality of claims handling, (2) provide more and better training resources for claims examiners.

More Information can be found at http://www.insurance.ca.gov/docs/wc_update_8-14-03.pdf

Source: State of California

WASHINGTON -- The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) today urged employers and workers to take appropriate safety measures to avoid injury and illnesses associated with the recovery and cleanup efforts following Hurricane Isabel.

Fatal accidents involving electrocution of power company workers, as well as serious injuries associated with tree trimming, have prompted the agency to remind employers, workers and the public to ensure that they observe appropriate safety and health precautions while performing cleanup and utility restoration operations. This includes coordinating with control centers responsible for power circuits so that workers do not enter areas where there are live wires.

Source: Occupational Safety and Health Administration

The two major significant changes to the Program Directive pertaining to handling complaints relating to workplace safety and health conditions are:

a.) Complaints are not identified as "formal" or "nonformal”. For data entry in the NCR, signed complaints will be coded as formal and unsigned complaints as informal.

b.) Complaints are classified as on-site inspections; investigations using letters, telephone or telefax; or invalid.

The new complaint policies and procedures were developed through the Complaint Process Improvement Project as a part of the Department of Labor/OSHA's Reinvention Effort. They were pilot-tested in the Area Offices in Cleveland, Ohio, and Peoria, Illinois. After review and evaluation of the pilot test, the policies and procedures are being implemented as part of OSHA's national program. Oregon OSHA reviewed these policies and procedures. Changes were made as necessary to reflect our State Administered Plan. The goal of these new procedures is to provide quicker resolution of complaints, speed hazard abatement and enable Oregon OSHA to focus their inspection resources at the workplaces where they are most needed.

Source: State of Oregon

WASHINGTON -- The Occupational Safety and Health Administration will announce in tomorrow's Federal Register that it is extending until Oct. 2, 2003, the period for comments on the agency's proposal to amend its Respiratory Protection Standard.

OSHA received several requests from interested parties and stakeholders asking for additional time to comment on the assigned protection factors, and changes to several substance-specific standards. The original deadline for comments was Sept. 4, 2003.

Proposed revisions to the respiratory protection standard were published by OSHA on June 6, 2003. Proposed amendments incorporate new Assigned Protection Factors (APFs -- numbers that reflect the workplace level of respiratory protection) for respiratory protection programs. The final respirator standard, when completed, is expected to prevent approximately 4,000 injuries and illnesses and prevent about 900 deaths annually from cancer and other chronic diseases.

Source: Occupational Safety and Health Administration

WASHINGTON -- Construction workers will benefit from increased attention to safety and health issues under an Alliance signed today between the International Safety Equipment Association and OSHA during the National Safety Congress in Chicago.

The Alliance unites ISEA and OSHA on safety and health issues in heavy construction worksites, with a particular focus on the proper selection, use and maintenance of personal protective equipment.

OSHA and ISEA will disseminate information on the appropriate forms of PPE, while promoting the value of its use to mitigate the many hazards found in heavy construction. Both organizations will also provide electronic links for users to obtain beneficial materials available on their websites. Additionally, communication between ISEA members and OSHA personnel will be promoted, particularly with OSHA's compliance assistance specialists, in order to stay current with developments in the field.

Representatives of OSHA and ISEA will participate in forums, roundtable discussions, or stakeholder meetings on construction-related safety and health issues, and also speak, exhibit or appear at conferences, meetings and various industry events to promote the effectiveness of safety and health programs.

The Alliance also calls for the collection and sharing of information on the latest equipment technologies and best practices related to PPE with construction employers, labor organizations, insurance providers, other state and federal government officials, and safety and health professionals.

Source: Occupational Safety and Health Administration