443 Lafayette Road N.

(651) 284-5000
St. Paul, Minnesota 55155 1-800-DIAL-DLI
www.doli.state.mn.us TTY: (651) 297-4198

Workers' Compensation Advisory Council

Feb. 28, 2007
minutes

Voting members Staff

Don Gerdesmeier Scott Brener

Mike Hickey Debbie Caswell
Glen Johnson Penny Grev
David Olson Patricia Todd
Susan Olson
Reed Pollack Visitors
Gary Thaden
Andrea Trimble-Hart Charles Burhan; Liberty Mutual
Ray Waldron Tom Hesse; MN Chamber
Nancy Larson; MARP
Voting members excused Brad Lehto;
Matthew Lemke; Winthrop & Weinstein
Stan Daniels Bob Lund; State Fund Mutual
Andy Morrison; Koll-Morrison
Voting members absent Robert Otos; The Alaris Group
Pete Thrane; Leonard, Street & Deinard
Wayne Ellefson Jennifer Trone; Liberty Mutual
Julie Schnell David Sullivan; House DFL
Mike Wilde; Local 49
Nonvoting members Kelly Wolfe; Leonard, Street & Deinard

Representative Bob Gunther

Representative Mike Nelson

Nonvoting members absent

Senator Tom Bakk

Senator Geoff Michel

Commissioner Scott Brener called the meeting to order at 10:14 a.m. Roll was called.
There was no quorum for the employee representatives.

Brener made a presentation about a medical cost containment proposal from the
Department of Labor and Industry (DLI) and a handout was distributed. The presentation
provided background information about health care reform issues and focused on ambulatory
surgery centers and service fees. Brener noted that injury rates are declining, but system costs
have been increasing since 2000. Medical benefits now cost more than wage benefits. Similar
injuries cost more in the workers' compensation system than in general health.

This information can be provided to you in alternative formats (Braille, large print or audio tape).

An Equal Opportunity Employer

Workers' Compensation Advisory Council -2- February 28, 2007
Minutes

There are four medical cost drivers.

1) Eroding coverage of the fee schedule.

2) Increasing costs of hospital services.
3) Increasing facility fees at ambulatory surgery centers.
4) High cost of surgical implants and orthotics.

The PowerPoint version of the Medical Cost Containment Proposal is available online at
www.doli.state.mn.us/pdf/costcontainment0207.pdf.

Olson asked if the big fear was that there would be access problems if they reduced costs.
Waldron confirmed that it was. Brener clarified that the fear was that you paid someone so little
that they refused to take the client. Based upon data from the department and what he has seen in
other jurisdictions, these are healthy allowances. It represents what health care providers are
already getting in general health, including a profit, plus 15 percent. On the inpatient side, he
could not justify the differential. The outpatient side is different and he could understand a higher
cost because you are tying in vocational rehabilitation and other administrative elements
associated with workers' compensation that are different than general health.

The council discussed the possibility of access problems. Gerdesmeier said there have
been times when providers came up with a new payment schedule and the hospital said they
would not take those patients, but they usually get worked out quickly. Olson noted we would
hear if anyone was having access problems and Brener said, if it was problematic, the WCAC
has the discretion to change it. He is premising this off of what they know private sector is
paying for general health in Minnesota.

Brener stated that he would meet with David Olson and Ray Waldron early next week.
He reminded everyone that the next Workers' Compensation Advisory Council (WCAC) meeting
would be at the AFL-CIO headquarters on Wed., March 7, 2007, at 9:30 a.m.

A handout was provided about the QRC legislative proposal, with their original proposal
and a revised proposal from DLI that provides that the commissioner may annually adjust the
current maximum hourly fee of $86.33 by an amount "up to the percentage change in the
statewide average weekly wage." The Minnesota Association of Rehabilitation Providers
(MARP) is considering Brener's proposal.

A summary of DLI's housekeeping proposals was distributed for consideration by the

WCAC.

Waldron asked if we have heard from the hospitals about the presentation. Brener
responded he had not and emphasized that their focus should be what is best for the employees
and employers in workers' compensation.

Brener noted the WCAC saw the Minnesota Nurses Association legislation regarding
patient lifts to prevent ergonomics injuries, which proposed taking money from the department's
workers' compensation Special Compensation Fund. Brener did not support this legislation.
Workers' Compensation Advisory Council -3- February 28, 2007
Minutes

There was new language, as of that morning, that asked that an appropriation from the General
Fund be sent to the commissioner of DLI to offset the purchase of patient lifts. Therefore, the
proposal is no longer a change to Minnesota Statutes §176 and it was off the table for the
WCAC. The Legislature would decide if it wants General Fund money sent to DLI for that
reason.

Olson noted two other workers' compensation bills were introduced recently and asked if
the authors planned to bring them before the WCAC. Brener said he understood that Sen. Ron
Latz had both of them on the senate side. One alters the composition of the WCAC. The other
one basically repeals the 1995 indemnity benefit levels. Waldron said they have not seen those
bills other than the information that was brought to the WCAC at the most recent meeting. Olson
said the WCAC should ask Sen. Latz if he is interested in bringing his proposal to this body and
Waldron agreed to invite him to the meeting on March 7, 2007.

Olson made a motion to adjourn the meeting. Gary Thaden seconded the motion. The
meeting was adjourned at 11:15 a.m.

Respectfully submitted,

Debbie Caswell
Executive Secretary

dc/s