State of Minnesota

Medical Services Review Board

Jan. 15, 2004
443 Lafayette Road N.
St. Paul, MN

MSRB members present: Beth Baker, M.D. Chairperson

Lynn Ayers
Philip Bachman, M.D.
Barbara Baum
Jeffrey Bonsell, D.C.
Gregory Hynan, D.C.
William Martin
Robin Peterson
Andrew Schmidt, M.D.
Ellen Velasco-Thompson

MSRB members excused: Paul Crowe, M.D.

Sharon Ellis
Sean Flood, M.D.
Chad Hendricksen, D.C.
Jon Talsness, M.D.
Michael McGrail Jr., M.D.
Debra Olson
Andrea Trimble Hart
Bruce Van Dyne, M.D.

Staff members present: Kate Berger

Beth Hargarten
Sandra Keogh
William Lohman, M.D.

Others present:

Carolyn Blodgett, CompCost Inc.

Marsha Thiel, MAPS
Mark Pixler, MAPS

1. Call to order, introductions, announcements

Chairperson Baker called the meeting to order at 4:09 p.m. Members introduced themselves to the group.

2. Approval of minutes – actions item

Dr. Hynan presented a correction for the Oct. 15, 2003 meeting minutes. The discussion about scaling factors was
omitted in error.

Ellen Velasco-Thompson made a motion to accept the minutes with corrections.

Dr. Bonsell seconded the motion.

Motion carried.

3. Assistant commissioner’s update

Assistant Commissioner Hargarten referred to the organizational chart handout. Other advisory boards have
found this information useful, especially since budget cuts have necessitated staff changes.

Hargarten also discussed the Notice of Request for Comments regarding joint rules for Labor and Industry and
the Office of Administrative Hearings. Kate Berger highlighted points of interest, particularly the rules regarding
intervention. Dr. Lohman explained how the rules govern things such a timelines and filing of documents in the
intervention process if an insurance company should challenge a medical bill.
4. Medical task-force report
 Lohman presented a review of the Medical Costs Task-force report. The report begins with the executive
summary that highlights department recommendations and the task-force responses. The report then breaks out
discussions about pharmacy costs, hospital costs, medical fee schedules, managed care and treatment parameters. The
Workers' Compensation Advisory Council received the report at its December meeting. The council will discuss the
report at its February meeting.

Dr. Baker stated she thought the task force was an interesting process. She had originally thought the group
would spend more time building consensus among members. Instead, the department's recommendations and
subsequent testimony took up most of the time.

Lohman explained this group followed the same format as the Ergonomics Task-force. The department made
recommendations to stimulate discussions. There was never an intention to reach consensus among the members. The
department listened to suggestions and made compromises in the original recommendations, including hospital and
pharmacy reimbursements. The proposal now includes critical access, the distance from other hospitals, along with
the number of patient beds as a way to differentiate between types of hospitals. He also cited the increase in pharmacy
reimbursement from the initial recommendation. The new recommendation follows Minnesota Medicaid guidelines
and pays the maximum allowable charge for generic drugs, plus a $3.65 dispensing fee. The formula for drugs not
covered by the schedule is 86 percent of the wholesale price, plus the dispensing fee.

Both Baker and Dr. Bachman had questions regarding therapeutic substitution of drugs. Lohman outlined the
possibility of working with the MSRB group on treatment parameters for pharmaceuticals. The department envisions
using this similar to how an HMO influences how doctors prescribe drugs. The workers' compensation system is
especially amenable to this process because only three classes of drugs are commonly used: nonsteroidal,
opiate/analgesic and anti-inflammatory. However, the parameters would not interfere with the ability of a patient to
get any prescribed drug. It would be the insurance company's role to work with the provider to ensure compliance
with the treatment parameters.

Baker stressed the need for flexibility in the treatment parameters to accommodate new technology. Lohman
agreed there should be a way to include selected new treatments. However, we must balance this need with the need
to protect injured workers from becoming guinea pigs for clinical testing. As a result, the department needs to develop
strategies to accommodate this process.

Barbara Baum asked if there were templates from other states regarding expedited rules. Lohman stated there
were not. However, other sectors of state government allow expedited rulemaking in very limited, specific instances.
Berger stated that Labor and Industry already has some authority for expedited rulemaking in the areas of the
conversion factor and parts of the fee schedule. Lohman added that the language regarding administrative rules
requires any expedited rule to be evidence-based and developed in consultation with the MSRB.

Baker brought up the discussion about the possibility of adding a rebuttal presumption in the rules. Berger
explained what this means. Currently, compensation judges base decisions on preponderance of evidence. The
presumption is that if the treatment is listed in the parameters, it is appropriate. Conversely, if it is not listed, it is not
deemed appropriate. However, the parameters are not always raised as an issue in a dispute. In practice, judges do not
consider them unless the issue is raised by one of the parties. A statutory change is needed that requires judges to
apply the parameters or make a finding that they do not apply.

Baum requested clarification of the utilization controls presented in the report. She questioned whether the 24-
treatment limit pertained to all situations, even chronic injuries. Lohman stated the 24-treatment limit was the total
allowed throughout all phases of treatment, regardless of the number of providers. This elicited a comment from
Baum that providers would disagree with the recommendation.

Bonsell referred to a statement in the report that noted the department claim that removing scaling factors
without a corresponding change in the conversion factor would raise medical costs by 3.3 percent and system costs
1.2 percent. He requested clarification regarding the application of these factors. Lohman responded that the scaling
factor pertains to all groups except medical doctors. Exact percentages are included on the department's Web site.

Both Bonsell and Hynan had questions pertaining to the data from a study done about injured workers with low
back pain. According to Lohman, the data was collected from insurance companies between the years 1990 and 2000,
and only included simple, acute back pain. Each case was tracked for a period of 16 months to ensure it was one of
short duration, typically four to six weeks. The report compared data about cost per claim for workers treated
exclusively by either a physician or a chiropractor.

Bonsell stated he found the data in figure 9 of the task-force report confusing. He was concerned that without
further clarification, people reviewing this chart would not understand this only pertained to the subset of short
duration, low back pain injuries. He also requested information about the percentage of back strains that are of short
duration.

The data in figure 9 also drew comments from Hynan. He questioned whether the average cost per claim of
$500 is significant in the overall picture and whether other data would be more useful. Lohman responded that even as
the number of claims has gone down, the average cost per claim has doubled since 1993. There is a perception that
severe claims have driven the higher costs. While, in fact, the data shows growth has been across the board and not
unique to any one type of provider or to the high-cost claims.

Baker asked about changes in the managed care section of the report. Lohman responded that the original
recommendations did not include redefining prior relationship and limiting employee treatment to managed care
providers for the first 14 days.

Lynn Ayers requested clarification in situations where an employer did not have a managed care plan. Lohman
explained the employer would be able to designate a clinic the employees must use during the first 14 days of the
claim. Thirty states have already adopted this practice. If the employee goes elsewhere, the insurance company would
not reimburse the claim. Ayers added this would make it especially important for employers to educate their
employees.

Bonsell, Lohman and Baker discussed billing levels. Bonsell commented about the difference between billing
levels and the actual reimbursement. Lohman confirmed Baker's statement that most insurance companies pay claims
at level two or three. Because of the link between workers' compensation reimbursement and Medicare, there are few
reimbursements at levels four or five. Thorough documentation is required to bill at these higher levels. To avoid any
allegations of fraud, large health care organizations have been vigilant in meeting these standards.

The next question from Bonsell concerned the Workers' Compensation Advisory Council's (WCAC) decision-
making process. According to Lohman, the council will decide what, if anything, to do by Feb. 11, 2004. Hargarten
added that the council's recommendations would go first to the Jobs and Economic Committee in the Senate and the
Commerce Committee in the House of Representatives. Where it goes from there depends on the substance of the bill.

Baker observed it would be interesting to see the end result as both labor and medical providers as a whole were
not supportive of the changes. Both Lohman and Hargarten reminded the board that department and task-force
recommendations served only as a starting point for WCAC recommendations. Hargarten added there was really no
way to gauge the WCAC response to the recommendations. Over the years, they have accepted some – but not all – of
the agency's recommendations.

Bonsell asked if it was safe to assume the Office of Administrative Hearings (OAH) would not approve of the
recommendations about treatment parameters. He also questioned the need for changes outlined in the report if OAH
were to follow the treatment parameters already in place. Lohman responded that both employers and heath care
providers promote treatment parameters as a solution to rising costs. He also referenced the dramatic decline in costs
that occurred after the 1993 changes. This provides some evidence the recommendations made at that time work. The
department, however, recognizes the need to contain creeping cost increases.

Bonsell also asked if the department would have alternate recommendations if the council does not act.
Hargarten replied that since 1995, the department has never introduced legislation not approved by WCAC. Baum
then asked about the implications for the MSRB if no change occurs. In the event that happens, both Baum and
Velasco-Thompson questioned whether it would be appropriate to review old priorities or set new ones. Both Lohman
and Hargarten reiterated the department's priority now is on the legislative session. By the next MSRB meeting, there
should be a better understanding of the direction this is taking. Hargarten added she does not expect the council to
agree on everything in the report, but is hopeful they will find some areas of agreement. In the event the council
decides to do nothing, Commissioner Brener will have to re-evaluate his position about rulemaking.

Lohman added that even though the department is waiting to see what happens this legislative session, the board
is free to set its own priorities. He encouraged members to send any pertinent documents to Baker. The department
will collect these from her and provide copies to all members. Both Baker and Velasco-Thompson volunteered to
review old MSRB meeting minutes to recover the list of priorities previously set by the board. Baker responded to
Bonsell's question concerning future agenda items. She suggested members review their specialty group and
corresponding treatment parameters and present any necessary updates or changes at the next meeting. Baker also
stressed the need to improve the board's decision-making process. Traditionally, the board broke out into
subcommittees that reported their findings to the entire group. This proved inefficient as the board discussed the same
topic multiple times. Determining the right process for the task is very important according to Lohman. The board
must balance the need for everyone's involvement against time constraints. He suggested the board use consent
agendas and use the task force as the working group. Technology, such as a secured Web site, will keep members
involved and up to date.

Velasco-Thompson questioned the board's involvement in handling complaints against providers. While the
board does have statutory authority to make these decisions, Lohman confirmed that – in reality – it does not happen.
The department tries to resolve all complaints through stipulation. Sandra Keogh confirmed no provider has ever
refused to honor the stipulated settlement. She also added the department has stopped doing a summary report of this
type of data. William Martin questioned that decision, stating it would be helpful for providers to know what action
the department is taking. Hargarten agreed to discuss this issue with Keogh to determine if we need this report and, if
so, what format it should take. She asked board members to understand there may be certain changes because budget
reductions have eliminated the unit that previously provided administrative support.

5. Meeting schedule

Martin questioned whether the next MSRB meeting should be rescheduled from April to May. He reasoned that
in waiting a month, there would be more information regarding legislation. According to Hargarten, there may be a
long legislative session this year; rescheduling the meeting to June would be a safer option. After discussion, the
board decided to cancel the April meeting and schedule the next one for June 17, 2004, pending availability of the
Minnesota Room. The executive secretary will send a revised meeting schedule to all members.

6. New business

None

7. Old business

None

8. Adjourn – action item

Velasco-Thompson made a motion to adjourn the meeting.

Bonsell seconded the motion.

Motion carried. The meeting was adjourned at 6:51 p.m.

Respectfully submitted,
Marlana Nierengarten
Executive Secretary