BOSTON (Nov. 10, 2003)-The most important nationwide trend affecting workers compensation this year has been increases in medical costs, according to panelists speaking during the recent Business Insurance's Workers Compensation and Disability Management Conference. This "most critical" trend means that the cost of caring for injured workers' medical needs is now a larger part of each workers compensation claim dollar, said Nancy Schroeder, assistant vp-workers compensation for the National Assn. of Independent Insurers in Des Plaines, Ill., who addressed the conference late last month in Boston. According to data from the National Council on Compensation Insurance, "medical claim costs are alarming, with double-digit increases the last two years. In 2002, medical severity increased by 12%, even greater than the 2001 increase of 10.7%." Yet it is important to remember that comp care "represents only 3% to 4% of total health care expenditures," said Keith Bateman, vp and director of the Alliance of American Insurers in Downers Grove, Ill. Several factors contribute to the increasing health care costs of workers comp claims, Mr. Bateman said. While costs are up for inpatient hospital stays and specialists' fees, the increased cost and utilization of prescription drugs makes that the key contributor, he said. What's particularly troublesome for workers comp insurers is that many of the tools available to control drug spending in group health plans, such as worker co-payments and the ability to direct an employee to a particular pharmacy, are not available to them (BI, Oct. 20). In addition, employers and insurers are grappling to cope with the growing use of the painkiller OxyContin. The drug, which was originally intended for people suffering from severe long-term pain, has become one of the most popular drugs prescribed for workers comp claimants. The concern with the drug stems from its addictive nature and how some users are abusing it. Some claimants who use it become addicted while recovering from their injuries and then must go through a detoxification program before they can return to work, Ms. Schroeder said. In addition, the slow-release medication can produce a heroin-like high when consumed after being ground up. It has a street value of 10 times its cost, which may entice some workers to make money by selling it, Ms. Schroeder said. But rising medical costs are not the only national trends that have emerged this year, Ms. Schroeder said. Another trend concerns federal impingement on state workers comp programs, she said. That "is an increasing and disturbing trend," said Bruce C. Wood, assistant general counsel with the Washington-based American Insurance Assn. One of the most serious examples of that is the federal Medicare program's "far more aggressive stance" in protecting its status as "the secondary payer" of benefits to previously injured workers, he said. Consequently, Medicare is requiring employers to establish trust funds to pay the medical costs of older injured workers to help ensure that employers and their workers comp insurers primarily pay such costs, so that they are not left to Medicare, he said. The Medicare secondary-payer issue "has been increasingly disruptive" and is expected to continue because Medicare is going broke at the same time Congress is expanding the drug benefit Medicare offers under its program, Mr. Wood said. Lobbying efforts heretofore have not resolved the problem, so the next step is to get Congress to step in and define Medicare's appropriate interest in a state-based workers comp system, he said. Another example of federal impingement is a bill (H.R. 1562) approved by the House Veterans' Affairs Committee that could allow veterans to receive medical care for workers compensation claims through the U.S. Veterans' Administration. It also would permit that entity to recover full charges for any such medical care, which could increase workers comp costs, Mr. Wood said. Despite those infringement issues, some progress has been reported in resolving workers comp payers' concerns about their continued access to claimants' medical data, following enactment of the Health Insurance Portability and Accountability Act earlier this year. Payers need access to such data to resolve claims and had been concerned that physicians might respond to the privacy requirements by denying information to them, although the law's preamble expressly excludes applying those provisions in the case of workers compensation claims, Mr. Wood said. While there have been pockets of problems, the education effort appears to be succeeding, Mr. Wood said. Another national trend concerns various types of activity involving state-specific funds, which generally exist at least to provide a source of workers comp coverage, if none is available elsewhere. Developments this year include concerns about the solvency of the competitive California state fund, which, if declared insolvent, could "take down" private insurers linked to it by guaranty funds, Mr. Bateman said. Meanwhile, the Arizona state fund is suing legislators who sought to use its accumulated assets for general expenses, he said. In several states, though, there have been proposals to allow a fund to write others lines of insurance, such as medical malpractice insurance in Oregon, he said. Finally, workers comp insurers continue to be concerned about state funds that seek to write workers comp insurance outside their borders while still maintaining their federal tax exemption, he said. That exemption reduces their cost of operation relative to their private insurers, who have complained that their entry into the marketplace constitutes unfair competition. This information is reprinted with permission of the Business Insurance. Copyright 2004. To learn more visit Business Insurance website:

Governor George E. Pataki today nominated State Department of Labor veteran David Wehner to be the next Chairman of the New York State Workers’ Compensation Board. His nomination is subject to confirmation by the New York State Senate. “David Wehner’s extensive experience and expertise in labor and other work-related issues make him ideally suited to lead the Workers’ Compensation Board,” Governor Pataki said. “The Workers’ Compensation Board is one of our most efficient, responsive and well-managed agencies, and I am confident that the high standards of excellence set by former Board Chairman Robert Snashall will continue under David’s leadership.” “I also want to commend Interim Board Chairman Jeffrey Sweet for the steady job he did while the search was underway for a new Chairman,” Governor Pataki said. “I’m pleased he will continue to serve on the Board as Vice Chairman, and I know David and Jeff will make an outstanding team.” David Wehner said, “I am honored Governor Pataki has nominated me as Chairman of the Workers’ Compensation Board. Since 1995, there have been many legislative and administrative changes implemented under Governor Pataki, which have greatly improved the Board’s delivery of services across the state. I am looking forward to the opportunity to continue that success.” Wehner, who currently serves as Executive Deputy Commissioner at the New York State Department of Labor, fills the vacancy left by Robert Snashall’s departure as Board Chairman last year. Jeffrey Sweet, Vice Chairman of the Board, has been serving as Interim Board Chairman since Snashall left last August. Mr. Wehner has served as Executive Deputy Commissioner since 2001. As Executive Deputy Commissioner, he has been responsible for the daily operations of a $6.5 billion agency, including 60 local offices across the State and more than 4,500 employees. Mr. Wehner has oversight for the unemployment insurance, employment service, welfare-to-work, job training, Workforce Investment Act, public safety and health, and worker protection programs in New York State, as well as serving as department liaison to the labor and business communities. Before being named Executive Deputy Commissioner, Mr. Wehner had served more than three and a half years as Deputy Commissioner for Administration and Public Affairs. Previously, Mr. Wehner also served as both Chief Special Assistant to the Commissioner of Labor and Director of Communications. In that capacity, he was responsible for policy oversight, intergovernmental relations and the communications functions of the department. --more-- He is a member of the Board of Directors for the National Association of State Workforce Agencies (NASWA), and past President of the National Association of Government Labor Officials (NAGLO). Mr. Wehner is a native of Rochester, and holds a Bachelor’s and Master’s Degree in Communications from the State University of New York at Albany. Mr. Wehner and his wife, Diane Wallace Wehner, live in Guilderland with their two sons, Paul and Kevin, and daughter Allison. As Chairman of the Workers’ Compensation Board, Wehner will earn an annual salary of $120,800.

Superintendent of Insurance Alessandro A. Iuppa announced that CIGNA Healthcare of Maine, Inc., and CIGNA Behavioral Health (collectively "CIGNA") have been fined a total of $900,000 for multiple violations of Maine law. The fine, which was assessed as part of a consent decree with the companies, constitutes the largest fine ever levied by the Maine Bureau of Insurance. CIGNA Healthcare of Maine, Inc. holds a certificate of authority to operate in Maine as a health maintenance organization ("HMO"). CIGNA Behavioral Health holds a license as a medical utilization review service that reviews the necessity, use, or appropriateness of behavioral health care services, and as a third-party administrator. The companies were found to have violated Maine law for failing to pay claims on time, failing to pay interest due, failing to keep supporting claim documentation and failing to have adequate procedures for identifying and correcting errors in a timely manner. In addition to the fine, the companies must pay restitution of interest to affected claimants. Both entities must pay combined restitution to affected claimants for interest due for late paid claims of approximately $915, 000 for calendar years 2001 and 2002. For prior years the companies must provide additional unpaid interest for claims processed from September 18, 1999 (the date the present text of Maine's prompt pay law took effect) to January 1, 2001. The companies will have until the end of January 2004 to calculate the additional interest due. The aggregate amount for the four years will be the largest award of restitution ever obtained for claimants by the Maine Bureau of Insurance. In addition to the claims payment issue, the consent agreement resolves a number of other violations. These include: complaint handling, company grievance procedures, records retention, failure to actively market individual health plan coverage, and member notification concerning plan cancellation. One of the most startling findings to emerge from the examination was the fact that CIGNA's own grievance review process overturned initial claim denials, when appealed, a significant percent of the time. The consent agreement requires that the companies file a plan of corrective action for the Superintendent's review and approval that addresses each violation of law listed in the consent agreement. The action plan is due to the Superintendent by December 31, 2003. The Superintendent singled out the grievance process as one area where the Bureau sought reforms. The Bureau of Insurance is part of the Department of Professional and Financial Regulation, which encourages sound ethical business practices through high quality, impartial and efficient regulation of insurers, financial institutions, creditors, investment providers, and numerous professions and occupations for the purpose of protecting the citizens of Maine. Consumers can reach the Bureau through its Web site at www.MaineInsuranceReg.org; by calling 800-300-5000 in-state; or by writing to Bureau of Insurance, 34 State House Station, Augusta, ME 04333. This information is reprinted with permission of the The Monument Newspaper Copyright 2003.

It is my understanding that CMS has revised the Medicare Fee Schedule for 2004 and extended the time providers have to decide whether enroll with CMS as a participating provider. Doctors have until February 17, 2004 to consider the new fee schedule before making their 2004 participation decision. The new fee schedule incorporates increases passed by Congress and signed by the President into law on December 8, 2003. Because the law was signed so late in the 2003 calendar year, CMS is back peddling trying to incorporate the changes brought on by the law with the current calendar year. As a result, CMS has extended the time providers have to consider the new fees and whether they want to remain a participating provider or not. As a result Medicare contracted carriers have released the following physician advisory at the behest of the CMS: 1. Providers should stop and contemplate the rate increases authorized by the Medicare Prescription Drug, Improvement, and Modernization Act before making their 2004 Medicare participation decision. If doctors decide to maintain the same participation status in 2004 that they currently have now, they do not need to take any further action. 2. After reviewing the new rates, members should understand the extended timeframes for making their decision and the rules involving their 2004 payments while their decision is being processed, especially if they decide to change their participating status. 3. If members decide to change their participation status, they should be sure to complete the participation agreement that everyone should have received from their respective carrier and submit it to that carrier as soon as possible. The 2004 participation enrollment period has been extended and carriers will accept the agreements postmarked as late as February 17, 2004. For the complete listing of the new Medicare fees, go to MEMBERS ONLY section under INS. & MANAGED CAREE and then select MEDICARE:

Continuing to build an infrastructure between the insurance industry and the chiropractic profession, the American Chiropractic Association (ACA) recently participated in the latest in a series of conferences with leaders of several major insurance groups. Known as the Claims Solutions Work Group (CSWG), the conference was held in Chicago, IL, and featured senior-level executives of the ACA, the National Association of Independent Insurers (NAII), Shelter Insurance, Farmers Insurance, Allstate, national and state BlueCross BlueShield, General Casualty Insurance, AAA, Erie Insurance Group, American Family Insurance and Metropolitan Life Insurance, among others. Hosted by NAII, the largest property/casualty insurance association, the meeting marked the sixth time ACA has participated in a CSWG conference since 1999. Expanding upon breakthroughs achieved from past CSWG meetings, the participants discussed chiropractic reimbursement issues, developed joint projects that will support a better relationship between insurers and doctors of chiropractic, and identified priorities for the coming year. Specific problematic billing codes were also discussed, including extra-spinal CMT, neuromuscular reeducation, testing and measurement codes, massage, hot packs, manual therapy (97140) and E/M codes with CMT. Many insurers agreed to review their practices and those of their business partners as they relate to these codes. ACA President Donald Krippendorf, DC, has noticed continued, dramatic improvement in the communication and cooperation between payers and doctors of chiropractic as a result of the CSWG conferences. "In four short years the participants of the Claims Solutions Work Group have constructed a bridge between insurers and chiropractors that did not previously exist. The ACA is proud to be a part of this most important program." According to Paula Pfankuch, a senior manager with BlueCross BlueShield of Illinois, the meeting "really turned out to be a great day." Pfankuch added that BlueCross BlueShield of Illinois is "on board" and plans to participate in the next Claims Solutions Work Group meeting in the Spring. The next in the series of CSWG conferences is scheduled for March 3, 2004, in conjunction with ACA's annual National Chiropractic Legislative Conference (NCLC) in Washington, DC. Source: American Chiropractic Association

President Bush on Monday signed into law the most far-reaching changes in Medicare in nearly four decades.(H.R.1 an act to amend title XVIII of the Social Security Act to provide for a voluntary prescription drug benefit under the Medicare program and to strengthen and improve the Medicare program, and for other purposes) most sweeping changes to Medicare since its creation in 1965. Included in this sweeping legislation in Sec 651 is a provision for DEMONSTRATION OF COVERAGE OF CHIROPRACTIC SERVICES UNDER MEDICARE. To read Sec. 651 view page 436 of the link below.

When appealing a claim denial from an ERISA health plan, it is important to determine the extent of the plan's chiropractic benefits as well as who made the decision to deny the claim and why, said Karen L. Handorf, deputy associate solicitor in the Plan Benefit Security Division of the U.S. Department of Labor (DOL). All of this information is available to patients, and doctors acting as patient representatives, under new DOL regulations. Employers with ERISA health plans are also obligated under the new rules to follow specific steps in the appeals process. Handorf, whose DOL division is responsible for providing litigation and advisory legal services under ERISA, participated in an Oct. 24 teleconference on new ERISA-related court rulings and Labor Department regulations hosted by ACA for chiropractic attorneys and state association representatives. She told the group that, at present, individual doctors and their patients are better off going through a plan's appeal procedure to obtain benefits rather than filing a lawsuit. If you have to file a lawsuit in federal court, the plan's decision is usually reviewed under an "arbitrary and capricious" standard; you are limited to the evidence that was presented to the plan administrator, and you will not be able to obtain anything more than the benefits that were promised. States can regulate insured plans through their state insurance laws, and the courts are interpreting ERISA preemption language to allow for more expansive regulation of insured plans by the states. ERISA, the Employee Retirement Income Security Act, was passed in 1974 and intended to encourage large multi-state employers to provide pension, health care and other compensation to their employees by shielding them from various state laws governing pension and insurance laws and instead requiring compliance with one set of federal laws. The law, however, also made it difficult for individuals to get relief for denied claims or botched treatment. About 80 percent of workers not covered by a government-based health plan receive their health care through an ERISA-protected plan. In response, the DOL this year issued new claim appeal procedures effective for all health benefit plans subject to ERISA regulations. It includes a specific time frame for filing an appeal, spells out the rights of the plan participants and responsibilities of the plans, and requires the plan to indicate why and on what basis a claim was denied. Handorf told participants that the first course of action should be to obtain the health plan's "SPD" or summary plan description, which describes-in plain, understandable terms-what a beneficiary is entitled to and what his or her rights are under the plan. From this, doctors and patients can determine if the denial is based on limitations allowed in the SPD. "It all comes down to how a plan is written..." says Handorf. "I would think that most plans that provide chiropractic benefits would be pretty specific about it." If a claim is denied for reasons of medical necessity, doctors and patients have the right to know the identity of the reviewer (who should have appropriate training and experience in the specific health care field involved) and the reasons for the denial. Once this information is known, doctors should submit any additional evidence supporting their treatment decisions to the health plan to be included in the official administrative record. Attention to such details of the appeals process is essential; otherwise, evidence may not be admissible further down the line.

Superintendent of Insurance Gregory V. Serio, along with New York City Police Commissioner Raymond W. Kelly and Brooklyn District Attorney Charles J. Hynes announced on Sunday the arrest of 51 individuals as part of the takedown of a no-fault insurance fraud ring in New York City. The arrests are the first phase of "Operation Gateway," an investigation into a criminal organization that is taking advantage of New York’s no-fault laws by falsifying auto accidents. It is estimated that fraudulent no-fault insurance claims amount to tens of millions of dollars a year in New York State, and hundreds of millions of dollars nationwide. Based on the evidence in this case, the loss is in the tens of millions of dollars. "The elaborate scheme and sophistication of the criminals involved in the case dismantled today proves that criminals are aware of how to circumvent the current no-fault law and make a great deal of money by doing so," said Superintendent of Insurance Gregory V. Serio "The Governor, the Insurance Department and law enforcement agencies, like the New York Police Department and Brooklyn District Attorney’s office, are doing everything within the power of the current law to take these criminals off the street, but until there is legislative action we will continue to see criminals like these who steal tens of millions of dollars from the auto insurance system and cause auto insurance rates to increase for honest New York drivers." A typical no-fault auto insurance scam begins with "runners," or recruiters who arrange to send individuals supposedly injured in an accident to clinics for treatment. The runners obtain phony accident reports and recruit ‘victims’ to send to medical clinics, which are paid off to provide medical tests. Lawyers are also involved who file insurance claims, up to $50,00 per victim which is the maximum amount allowed under New York’s no-fault laws. The organization’s top leaders keep most of the money and paid off those involved. In this case, runners were paid up to $2,500 for every victim they could link to a fictitious accident. The Department participated in the weekend takedown where NYPD detectives posed as insurance company representatives, called them at home to inform them they had been awarded an insurance claim of up to $11,000 and to pick it up in person in Queens. When they arrived to pick up their claim money, they were arrested and charged with fraud. The Department was initially contacted by the New York City Police Department to assist in the investigation in December 2002 after the NYPD received a tip regarding a suspected fraud ring in New York City. Also assisting in the investigation were Liberty Mutual Insurance Company, Kemper Insurance Company, MetLife Insurance Company, Allstate Insurance Company, Progressive Insurance Company, Clarendon Insurance Company, Continental Insurance Company, The Robert Plan, Eagle Insurance Company, GEICO Insurance Company, The Hartford Insurance Company, State Farm Insurance Company, Lancer Insurance Company, the Motor Vehicle Accident Indemnification Corporation, Nationwide Insurance Company, New York Central Mutual Fire Insurance Company, Statewide Insurance Company and Travelers Insurance Company. New York is aggressive in its fight against insurance fraud. To report suspected incidents of insurance fraud call 1-888-FRAUD-NY (1-888-372-8369). It should be noted that an arrest is merely an accusation and that a defendant is presumed innocent until proven guilty.

The Centers for Medicare & Medicaid Services (CMS) announced today that it will implement a contingency plan to accept noncompliant electronic transactions after the October 16, 2003 compliance deadline. This plan will ensure continued processing of claims from thousands of providers who will not be able to meet the deadline and otherwise would have had their Medicare claims rejected. 'Implementing this contingency plan moves us toward the dual goals of achieving HIPAA compliance while not disrupting providers' cash flow and operations, so that beneficiaries can continue to get the health care services they need,' said CMS Administrator Tom Scully. CMS made the decision to implement its contingency plan after reviewing statistics showing unacceptably low numbers of compliant claims being submitted. 'Medicare is able to process HIPAA-compliant transactions,' said Tom Grissom, director of CMS' Center for Medicare Management, 'but we need to work with our trading partners to increase the percentage of claims in production.' The contingency plan permits CMS to continue to accept and process claims in the electronic formats now in use, giving providers additional time to complete the testing process. CMS will regularly reassess the readiness of its trading partners to determine how long the contingency plan will remain in effect. The authority to implement a contingency plan was provided by guidance issued by HHS on July 24. CMS recognized that transactions often require the participation of two covered entities and that non-compliance by one covered entity may put the second covered entity in a difficult position. The guidance stated that covered entities that make a good faith effort to comply with HIPAA transactions and code set standards may implement contingencies to maintain operations and cash flow. CMS announced its contingency plan on September 11, but at that time had not made a decision on whether the plan would be implemented. Today's announcement means the CMS plan will be implemented on October 16, 2003. 'We encourage other plans to assess the readiness of their trading partners and implement contingency plans if appropriate,' Grissom said.

The NYSCA officers and downstate board members met with Oxford representative Drs. James Dillard and Bartley Bryt and Triad officers, Drs. Agostino Villani and Santo Sampini during the NYSCA convention in Rye Brook, NY on September 19, 2003. The purpose of the meeting was to discuss NYSCA member issues with Triad handling of care plans over the past nine months. Much of member complaints focused on onerous paper work (first visit submission of care plans with 30 day extensions); down coding; lack of supportive care approval (even though Triad reports approval of this type of care); difficulty in treating the chronic pain patient and the lack of clinical information on care plans on which treatment authorizations are based. An additional issue that was addressed and immediately clarified was the PCP referral. It was explained that once the patient has obtained the PCP referral, providing they remain in the same plan, the patient does not need a new referral after the initial even with lapses or discharge from care. As far as the remaining issues are concerned, Triad reports changes to the forms to be implemented in the new year. They recommend visiting their website to view the provider manual for proper filing of forms as well as being able to download care plans to be filled out on your desktop. Your NYSCA leaders plan to continue discussions with Oxford to assist them in understanding chiropractic in the managed care environment. We will keep communications open with Triad as long as our members have issues. Your responsibility is to communicate your problems with us. We are particularly interested in supportive care denials. NYSCA - working for you - with you.

As part of the Board’s ongoing effort to improve services, increase efficiency, and limit costs, a new centralized mailing address for all mail related to workers’ compensation claims has been established. This P.O. address is in close proximity to the Board’s mail scanning facility in Binghamton, NY. To help the Board improve our efficiency, effective September 8, 2003, all insurers, attorneys, licensed representatives and health care providers involved with claims being processed in New York City, Long Island, Westchester, Rockland, Putnam or Orange Counties must direct all claims related mail correspondence to the following centralized address. Failure to do so could result in unnecessary delays in processing of claims. New York State Workers’ Compensation Board PO Box 5205 Binghamton, NY 13902 All claim related mail for the remainder of the state should continue to be sent to the appropriate district office addresses. All non-claims related mail should be sent to the appropriate department or office.

Superintendent of Insurance Gregory V. Serio and State Health Commissioner Antonia C. Novello announced that thousands of New York State consumers are exercising their health insurance rights and are winning access to necessary care under the State's External Review Law, according to the latest External Review Report released today. "New Yorkers have been empowered by the External Review Law and are availing themselves of this important appeal mechanism when their essential health coverage is denied by the insurer," Serio said. "Since this Law became effective on July 1, 1999, more than 5,000 consumers have requested external appeals. With an average of 46% of external review cases overturned, this means that over 2,000 New Yorkers have access to health insurance care that would not otherwise have been made available to them. This year’s External Review Report illustrates that under Governor Pataki’s leadership consumers are educated on their health insurance rights and using this knowledge to ensure necessary coverage." "Thanks to Governor Pataki, New Yorkers enjoy the most comprehensive patient protections in America," State Health Commissioner Antonia C. Novello, M.D., M.P.H., Dr.P.H., said. "The success of the external review process demonstrates that patients in our State know their rights and are taking advantage of the opportunity for a prompt, independent and professional appeal when they believe an insurer has made an arbitrary decision. This Law better ensures that medical treatment decisions are made by doctors and their patients, and that New Yorkers receive the quality health care they need and deserve." The External Review Annual Report, released by the State Insurance and Health Departments, provides a comprehensive overview of New York's External Review Program and includes a description of external review results from the past year. The report also provides information about the external review programs of other states and compares the experience of other states to that of New York. Highlights from the report include: The Insurance Department has received 5,000 requests for external appeals, over 1,300 in 2002. Since July 1, 1999, 1,110 denials of coverage by health insurers have been overturned in whole, 267 denials have been overturned in part and an additional 722 denials have been voluntarily reversed by health plans before an external appeal agent rendered a determination. 183 expedited external appeal requests have been assigned to agents for review since July 1, 1999. An appeal must be expedited if the patient's physician attests that a delay in treatment would pose an imminent threat to the patient's health. Agents must render a decision on expedited appeals within three days. In 2002, 44% of medical necessity denials were overturned in whole or in part by external appeal agents while 50% of experimental or investigational treatment appeals were overturned. External appeal requests are submitted to the Insurance Department, which screens requests for eligibility and completeness and assigns the appeal to one of the state's three certified external review agents. The External Appeal Annual Report, applications to request an external appeal, and external appeal information are posted on the Insurance Department’s Web site at www.ins.state.ny.us. The Insurance Department’s external appeal hotline, 1-800-400-8882 assists New Yorkers in filing external appeal requests. The Insurance Department also has staff on-call seven days a week to handle expedited appeals.