March 16, 2005

Workers’ Compensation Insurers’ Task Force

minutes

Members present: Staff members:

David Clark for Dennis Ballinger; Western Jamie Anderson

National Mutual Kate Berger
Robert Farber; Berkley Risk Administrators Scott Brener
Mike Johns; RTW Deb Caswell
Meg Kasting; State Fund Mutual Jim Feckey
Diane Miller for Claire McCoy; GAB Robins Beth Hargarten
Shernon West for David Oertli; Sedgwick CMS Keith Keesling
Curt Pronk; Mayo Foundation Cindy Miner
Rob Rangel; Broadspire Terry Mueller
Laura Simonsen; St. Paul Travelers Marybeth Stoltz
Cindy Van Eyll; General Casualty Cindy Valentine
Gary Westman; MN DOER Jana Williams
Mary Jo Wilson; City of Mpls. Brian Zaidman

Members excused: Visitors:

Kathy Berg; Liberty Mutual Nancy J. Caven; Alaris

Tammy Lohman; MN Dept. of Commerce
Members absent: Kevin Ward; General Casualty

Mary Abraham; Westfield Group

Jody Connor; Wausau
Robert Johnson; Insurance Federation of MN

Co-chairperson Rob Rangel called the meeting to order at 9:07 a.m. The minutes
from the Sept. 15, 2005, meeting will be posted on the department's Web site when they
are finalized.

4) Approval of the agenda

Information about the EDI Release 3 from Marybeth Stoltz was added to the
agenda.

5) Announcements

Rangel announced that Mary Jo Wilson is stepping down as co-chairperson and

Mike Johns will take her place.
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6) Assistant commissioner's update

Beth Hargarten announced that Sandy Keogh passed away this weekend and the
funeral would be today. Keogh was an incredible person to work with. She had great
strength and we will all miss her.

She noted this legislative session has been relatively quiet, so far, but that would
change shortly. The Workers' Compensation Advisory Council (WCAC) bill has been
finalized and Jamie Anderson provided an update later in the meeting.

7) Legislative update

Anderson gave a brief legislative overview. She can be reached at (651) 284-5103
if anyone has questions or would like her to track down a bill.

Anderson said the WCAC bill would be introduced in the House today and the
Senate tomorrow. The Senate authors are Sens. Tom Bakk and Geoff Michel. The House
authors are Reps. Tim Wilkin, Mike Nelson and Bob Gunther. The file numbers will be
available after the bills are introduced.

Anderson reported that the content of this bill is primarily what has been in the
bill for the past two years, because those bills did not pass. Out of 19 sections in the bill,
only five of them are new. The new provisions are:

1. The Department of Health requested language dealing with volunteers in an

emergency management situation.
2. North Dakota asked for a provision for an incidental contacts issue.
3. Language was added that would change the commissioner's jurisdiction to deal
with medical disputes from $1,500, or less, to $7,500.
4. Last year's bill included language that would extend a pilot project to
nonconstruction industries to allow them to collectively bargain claim
administration. Because the bill did not pass, that pilot project was sunset. That
pilot project language has been deleted and new language allows nonconstruction
industries to continue to collectively bargain.
5. In response to language passed a couple of years ago by the Minnesota Insurance
Guarantee Association (MIGA), language has been added to this WCAC bill that
patches a hole in the statutes to ensure options for companies with assets of more
than $25 million whose insurers go bankrupt.

Anderson noted there were other workers' compensation bills that were not
generated by the Department of Labor and Industry (DLI). There are two main ones.
Senate File 564, from Sen. John Marty, is regarding independent medical exams (IMEs),
basically restricting the use of IMEs. This bill was heard in Sen. Lourey's health
committee. It was a fairly extensive hearing and it looked like they were going to vote on
it, but it was laid over for further discussion and never taken up again. Yesterday, Senate
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File 588 was heard in the Senate, the bill prohibits employer misrepresentation of
employees. The carpenters and floor coverers union wanted this bill to address the issue
of employers misclassifying employees as independent contractors and not paying
workers' compensation (and unemployment insurance, child support and taxes). That bill
amends Chapter 181, which is the general employment statute, but it still has to do with
workers' compensation.

Johns asked if Marty had another bill for an exclusive remedy. Anderson said
Marty had a couple of other bills. He had Senate File 559, about mental/mental injuries,
but there was been no hearing yet. There is a bill where the employer can be sued. It is
about the exclusive remedy and would amend the OSHA chapter. Hargarten thought the
language links it to the violation of a safety standard. Anderson noted it is Senate File
325.

Kasting asked if the incidental contact was blood contact. Anderson clarified that
the proposal deals with employees who are hired in North Dakota by a North Dakota
employer, but come to Minnesota to do, for example, a delivery.

Kasting asked if the MIGA provision would make it so that those employers do
not have to pay their own workers' compensation. Anderson responded that it allows
those employers to actually pay their own claims and to pay assessments into the Special
Compensation Fund and, as a result, they can be reimbursed by the fund. MIGA will not
pick up those claims. She noted they passed a law a couple of years ago that limited their
liability to companies that had assets of less than $25 million.

EDI Release 3

Marybeth Stoltz is the EDI project manager for DLI in the Information
Technology Services unit. EDI is the electronic data interchange that allows DLI the
ability to exchange First Report of Injury (FROI) claim information with insurers
electronically and to reduce the amount of paper that comes into the agency. They follow
the International Association of Industrial and Accident Boards and Commissions
(IAIABC) standards. DLI has been doing EDI since 1995, under the Release One
standard. In 1997, they created another standard, but only Iowa is using it. It did not
conform to what other jurisdictions and insurers needed, so a new release, called the
combined claim product, also known as Release Three, was introduced and last year
became official. Minnesota decided it wanted to move forward with this new release. It
provides expanded field sizes for names, addresses and accident descriptions. It is also
friendlier for the subsequent reporting that Minnesota does not currently do
electronically, but hopes to do in the future.

DLI has embarked on a project to expand its system to accept Release Three and
hopes to be testing within the next week or two with one of its existing trading partners.
Stoltz encouraged those interested in doing EDI to begin looking at this. They created a
new implementation guide and Stoltz had hard copies available at the meeting. Contact
Stoltz at (651) 284-5613 with any questions.
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DLI also expanded its ability in the EDI environment to communicate with
trading partners. They have always been tied to using the Advantis Van, which means
there is a cost for the insurer to send information to DLI. They added a direct connect
using a secure FTP. They also have software vendors that have products available – that
many insurers and jurisdictions use, so those companies that are familiar with the Red
Oak E-commerce, Bridium or Healthtech can also accept EDI claims through those
software products.

Stoltz said the guide would be posted on the department's Web site later today.

9) Duplicate First Report of Injury forms

Cindy Miner, director of Information Processing Center (IPC) in the Workers'

Compensation Division, said IPC receives all workers’ compensation mail to image and
data enter. She did a study a month ago where she looked at four days’ worth of First
Reports of Injury (FROI) forms that came in. About 6 percent, or 41 FROI forms, were
duplicates. It costs the department about $4.35 to process a FROI form. The duplicate
forms have to be processed almost as much as an original. Consequently, the department
is spending a lot of money to process duplicate FROI forms. In reviewing the forms, it
was learned many duplicates were attached to a Notice of Insurer’s Primary Liability
Determination (NOPLD) form. Some faxed the FROI and followed it up with an original
copy by mail. Miner called some of the claims adjusters to ask them to stop sending
duplicate FROI forms, but was told by several adjustors that it is their policy. Miner
asked why there would be a policy to send the document in more than once. It is
inefficient for the department and costly for insurers. And it is not just for FROI forms,
although that is a big issue; it is also for some other data entry documents. Of the
approximately 12,400 documents that were data entered in February, 1,600 were
duplicates. That is about 12 percent. She asked the task-force members what could be
done to stop all of these duplicates getting into the system.

Members said their companies send in duplicates to avoid penalties. Hargarten

asked what they thought they would be penalized for if they have already filed the form.
Johns said it is in case the fax did not go through; Pronk said they are “covering their
bases” to make sure DLI gets it. They also said they did not get a confirmation that the
FROI form was filed. Wilson discussed putting documentation in the file that states the
fax went through; Farber said those confirmations are not always 100 percent accurate.
Farber said they batch their FROI forms, so there may be 50 of them, and they might not
know which ones went through. Wilson said they do their NOPLD and FROI forms one
at a time so they get documentation.

Miner asked if they are getting penalties on FROI forms they’ve sent, that DLI
says it never received. Pronk, Johns and Farber all agreed they do not want to find out, so
they send duplicates to cover all of the bases. Miner said the majority of the FROI forms
come in with the NOPLD. She sees a FROI form getting faxed in, then the original, then
an NOPLD with another FROI and so it continues on down the line like that.
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Johns said there must be something they can do on their end. They err on the side
of caution, because they do not want to get a penalty. Miner said she looked at the FROI
form duplicates for four days and the major companies she saw were Berkeley, Recovery
and Claims Services, AIG and Gallagher-Basset.

Wilson suggested using a speed-dial setting and sending the forms one at a time,
getting confirmation about each fax.

Jana Williams said certain staff members send the FROI forms at each company
and the adjuster has nothing to do with that. Later, especially when it starts out as a no-
lost-time claim, you might not have sent the FROI form and later it is assigned to a lost-
time adjuster and they are not sure if the FROI form was sent in, so they attach it to the
NOPLD form. Some of the problems DLI has, other than processing numerous copies of
the FROI forms, are that some files have seven or eight copies of FROI forms, which is
very expensive for everybody. DLI does not let throw any copies away, because they
want to make sure the insurer gets credit for the very first one they filed, because that is
the date DLI looks at. The other problem with a fax confirmation is that it does not say
what you sent; it just says that you sent a couple of pieces of paper. DLI has been using
that when they go to settlement on a penalty objection. If the insurer can show fax
confirmation, DLI is taking that as proof there was an attempt to send the FROI form.

Williams noted another process that may cause problems is when DLI rejects a
FROI form that is missing one of the statutorily required data elements. DLI sends the
form back to the insurer with a rejection letter. DLI keeps a copy of each rejection letter
for six months, in case the follow-up FROI form that comes in is late. The insurer may
show the judge a faxed confirmation sheet from the first rejected FROI form and DLI
would acknowledge it was sent, but that it was rejected because of the missing data
elements.

Kasting noted that the penalties are discretionary in the statute. Years ago, you got
penalties when the payment was late and that is the biggest issue with the injured
employee. She suggested DLI look at whether the payment was timely or not and not
whether the FROI form was filed timely. That is the bigger issue. Members agreed that
when the employee is paid or denied is a fair penalty.

Miner said she appreciated the WCITF’s time to discuss this issue. Johns said he
was committed to finding out what their process is, to try to minimize this as much as
possible. He did not want more work for DLI or for his company. The medical-only’s
that turned into lost time might be a situation where they are sending duplicates.

Cindy Valentine, the department's chief information officer, noted that if you use
EDI, there is an automatic acknowledgement. She asked the task-force members if they
could incorporate this into the system if the department was to host a Web page to see
which forms had been received and accepted. It would be secure and accessed with a
claim number, and only you could look at it. Farber said they would not have a claim
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number on the majority of the ones they file, until after it was sent to the state, but they
do not do EDI. Stoltz said more than 90 percent of the EDI transmissions have a claim
number.

Rangel commented it is not uncommon where some insurers or TPAs have their
own telereporting departments where they might fax that FROI form upon completion
and download it into their own computer system. It is not uncommon, depending on the
jurisdiction, where they might send it directly to DLI. If insurers have this setup at their
department, ask them if they are submitting the FROI form on their behalf, because there
could be a duplicative process there.

8) Rules update

Berger distributed a draft of the litigation rules from OAH and the joint rules, and
gave a progress update. In December, the task force received a Notice of Publication of
the Proposed Rules in the State Register. There were not enough requests for a hearing,
so the rules are proceeding. They are currently at OAH, in the rules division, for
approval; DLI hopes to make them effective by the end of April. The changes to the rules
are on the OAH Web site. Changes primarily clarify language or areas where comments
indicated there was some confusion about how the rule was to be applied.

Berger said members should have received a copy of the rehabilitation rules in
December. Those rules went through; the department received 19 comments and 10
requests for hearing. Of those 10 requests for a hearing, nine related to the change in
qualifying criteria for qualified rehabilitation consultants (QRCs). Most of the comments
and requests for a hearing were about the elimination of the CRRN certification as a
qualifying credential for QRCs. Those rules will be sent to OAH early next week and
will, hopefully, be effective by the end of April.

Berger distributed draft rules that change the reimbursement for medication in the
workers' compensation system. A broad overview is that DLI is looking at going to a
two-tiered reimbursement to encourage the parties to electronically transmit and pay bills.
These rules provide that if the insured and the pharmacy transact business in paper
format, the reimbursement stays the way it is. If they transact business electronically,
according to the federal HIPAA electronic standards, then there is a lower reimbursement
of average wholesale price, minus 11.5 percent and a dispensing fee of $3.65 for each
medication, which is the medical assistance reimbursement rate.

Berger noted these drafts are for discussion purposes and she was certain there
would be more changes.

Berger asked members to look at the draft and if they are working with a
pharmacy or an administrative company have them look at it and get back to DLI.

Rangel asked what the next step would be and Berger said it would be to see what
the problems are. It depends on what issues people raise and how difficult they are to
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resolve. Let her know if you want to be on a list to receive ongoing drafts as they are
generated. It was too early to say when it will be final because they do not know what all
of the issues are.

Hargarten mentioned the Medical Services Review Board (MSRB) and noted a
subcommittee of the MSRB was looking at some treatment parameters in the
pharmaceutical area. There has been no official vote-taking at the MSRB yet. It has been
a long process of reviewing literature, reviewing studies, reviewing best practices, etc.
The MSRB will meet in April and, hopefully, at that point they will have at least one
action item for them to vote on. She anticipated the process for all of the treatment
parameters they were looking at in that area would take a year or more.

10) Future agenda items

There were no suggestions for future agenda items.

The meeting was adjourned at 9:57 a.m.

Respectfully submitted,
Debbie Caswell
Executive Secretary

dc/s