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Policy Matters Brief - March 20, 2024

March 20, 2024 · Public Policy & Regulatory Affairs Team

California DWC Issues Notice of Rulemaking on proposed pharmacy fee schedule changes

The California Division of Workers’ Compensation (DWC) issued a notice of public hearing for Thursday, April 11, 2024 to revise the Official Medical Fee Schedule provisions that govern the maximum reasonable fee for pharmaceuticals dispensed to injured workers.

Under the California Labor Code, the fee schedule for pharmaceuticals is based primarily upon the Medi-Cal pharmacy payment system. The proposed regulations revise the Pharmaceutical Fee Schedule to adopt relevant Medi-Cal revisions and related provisions of the Labor Code. Medi-Cal implemented a revised payment methodology utilizing National Average Drug Acquisition Cost, Wholesale Acquisition Cost, Federal Upper Limit, and Maximum Allowable Ingredient Cost in the drug reimbursement formula. The new Medi-Cal methodology also revises the pharmacy dispensing fee value and structure by updating the dispensing fee from $7.25 to a two-tier dispensing fee of $10.05 or $13.20, depending on the annual volume of pharmacy claims processed.

The public may also submit written comments on the proposed amendments until 11:59 p.m. on April 11. The DWC Notice specifies the methods of submitting written comments.

Florida passes physician reimbursement bill

The Florida Legislature recently passed a bill which would increase certain reimbursement rates for physicians providing care to injured workers. Senate Bill 362 proposes to increase reimbursement for physicians treating injured workers to 175% of Medicare rates from the current rate of 110% and increase reimbursement for surgical procedures to 210% of Medicare rates from the current rate of 140%. The bill also increases witness fees for physicians during a deposition to a maximum of $300 per hour from $200 per hour and increase expert witness fees to a maximum reimbursement of $300 per hour from the current level of $200 per hour. The bill is currently awaiting action by the Governor.

Alabama and Oregon update workers’ comp fee schedules

The Alabama Workers’ Compensation Division published annual updates to its fee schedules, effective March 1. Revisions included increases to most listed medical services and items, as well as pharmacy dispensing fees. The updates were posted online by the Division on March 6.

The Oregon Workers’ Compensation Division (WCD) also adopted updates to its rules governing medical fees/payments, medical services, and managed care organizations (MCOs), effective April 1, 2024. The most notable changes include updated procedure coding and fees for medical and ancillary services. Other changes include updated timelines for certain MCO actions and revised language and formatting for required notices of the right to appeal or administrative review in explanations of benefits (EOBs) sent to providers as well as several other similar notices that replace the prior language by October 1, 2024. Subsequent to adoption of these updates, the WCD posted a bulletin updating cost-to-charge ratios for hospital inpatient and outpatient services, effective April 1, 2024.

Michigan auto fee schedules annual inflation adjustment

The Michigan Department of Insurance and Financial Services (DIFS) published an updated annual Consumer Price Index (CPI) medical component adjustment to be applied to the state’s auto no-fault medical fee schedules later this year. The cumulative adjusted percentage of 10.16% for dates of service between July 2, 2024 and July 1, 2025 applies to services and products reimbursed based on provisions in the state’s 2019 auto no-fault reform law for certain services/products without an applicable Medicare rate.

The 2019 reform law based reimbursement for most services/products on specific markups above the applicable Medicare reimbursement rates. However, for those services/products covered under the fee schedule law but without an applicable Medicare rate, the law states that reimbursement to providers is to be based on a percentage reduction (which varies by service type and year) of the amount payable for the treatment under the person’s charge description master in effect as of January 1, 2019, or a percentage reduction of the average amount the person charged for the treatment on January 1, 2019 – both adjusted annually based on change in the medical care component of the CPI. However, these percentage of charge provisions may not be applied to claims for persons injured in accidents prior to June 11, 2019, due to subsequent court rulings.

Maryland Legislature moving cancer presumption bill

The Maryland Senate unanimously passed a bill that would expand the list of cancers presumed to be compensable for firefighters and other public safety workers. The Senate voted 45-0 to pass SB 476, which would presume that thyroid, colon, and ovarian cancer were caused by contact with a toxic substance in the line of duty. The presumption would apply to firefighters and firefighting instructors, members of rescue squads and advanced life support units as well as fire marshals. Maryland law already presumes that brain, prostate, throat, kidney, bladder, and other types of cancers are compensable for these workers. SB 476 will now go through another round of hearings in the state House of Delegates.

Oklahoma and Kentucky propose workers’ comp medical fee schedule updates

The Oklahoma Workers’ Compensation Commission (WCC) formally proposed the required biennial update to its medical fee schedule and released a copy of the update on February 26. This was followed by a written comment period until March 13, 2024, and then a public hearing for oral comments on March 14, 2024. The proposed changes include updated procedure coding, reimbursement sources, and reimbursement rates, as well as added provisions related to WCC-appointed independent medical examiner fees.

The Kentucky Department of Workers’ Claims (DWC) also released a preliminary draft revision to its Schedule of Fees for Physicians, with a proposed effective date of July 1, 2024. The DWC will hold a stakeholders’ meeting to review the draft on March 21, 2024, and will accept written comments through April 1. A draft of the fee schedule forwarded to several stakeholders includes updates to procedure coding and reimbursement rates, as well as recognition of mental health counselors, licensed social workers, physical therapy assistants, and occupational assistants as additional “mid-level practitioners.”

Proposed revisions to Montana workers’ comp rules

In an effort to provide greater clarity, simplicity, and usability, the Montana Department of Labor & Industry (DLI) has proposed to revise its workers’ compensation rules by eliminating duplication of language already in statute, repealing rules no longer applicable, and clarifying DLI processes. These revisions are in response to Executive Order 1-2021, which called for identification of excessive, outdated and unnecessary regulations. A remote public hearing on the proposed revisions is scheduled for March 28, 2024, and the written comment deadline is April 5, 2024. More information can be viewed online here.

TDWC proposes changes to existing provider complaint process

The Texas Department of Insurance, Division of Workers’ Compensation (DWC) is accepting public comments on a proposed rule amending 28 Texas Administrative Code §180.2 to ensure that no health care provider or agent can use DWC’s complaint process to bypass the medical fee dispute resolution filing deadline in 28 TAC §133.307(c). The restriction does not apply to a health care provider submitting a complaint under Insurance Code Chapter 1305.

Several workers’ comp PTSD/mental health coverage bills pending

The trend of expanding post-traumatic stress (PTSD) and mental health coverage legislation continues into 2024, with thousands of pieces of legislation that would, if passed and signed into law, expand coverage for workers diagnosed with PTSD. Some bills contain presumptive coverage language, while others do not. For more on this public policy trend, we encourage review of our new white paper on the topic.

More details on the current legislation we are tracking in this area can be found on our Legislative and Regulatory Tracker, which allows you to filter legislation by industry, topic and disposition (status). For example, you can look for recently enacted or pending workers’ comp presumption legislation. The Tracker’s interactive map allows you to further narrow down and view legislation by state.

2024 IAIABC Forum

The International Association of Industrial Accident Boards and Commission (IAIABC) will hold its 2024 Forum on April 8-10, 2024 in Cincinnati, Ohio. The forum will include several educational sessions and interactive discussions on workers' compensation policy, regulation, and administration, as well as various committee meetings. Optum Workers’ Comp and Auto No-Fault is an IAIABC member and sponsor of this event. Adam Fowler from our Public Policy and Regulatory Affairs team will be participating in a Medical Issues Committee panel at the conference that will discuss how PBMs work, followed by a conversation on other workers’ comp drug issues, including difficult drugs to manage.

In a previous episode of our “Policy Guys” podcast, we spoke with IAIABC leadership, providing an overview of the importance of IAIABC to the workers’ comp community and how it connects regulators and industry professionals. Click here to listen.

Additional Optum resources:

For more information on these policy developments and others we have been tracking this year, be sure to visit our Legislative and Regulatory Tracker. Bills or regulations can be filtered by insurance line, topic, status and jurisdiction.

If you have questions on these or any other public policy developments, please contact our team at OptumWC.PolicyMatters@optum.com.

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