MONTANA SELF INSURERS' ASSOCIATION

January 2022 Update

20 Issues for 2022 – Out Front Ideas
WCCM to Meet 1/18 – MT Benefit Structure to be Discussed
ERD Data Dashboards – COVID Claims, TTD Durations and More
WCRI Flash Report: Telemedicine: Patters of Use and Reimbursement
US Supreme Court to hear Medicaid Third Party Lien Case

First and foremost – we hope you and your families are well and enjoyed a healthy, safe and fun Christmas and New Year. Please stay well and stay safe.

20 Issues for 2022

Out Front Ideas, with Kimberly George of Sedgwick and Mark Walls of Safety National presented their annual 20 Issues webinar on January 11. Typically, George and Walls go through the top issues they see in workers’ compensation coming up in the next year. This year’s list, in no particular order, and with a bit of my take on it:

Vaccine Mandates – obviously this is causing and will continue to cause employers issues
2022 Elections – here we go again –the US House and Senate are important, but watch the statehouses and governor races as they will more immediately have an impact on our business
Talent Challenges – just the first item along the lines of staff, staffing, training and customer service – acquiring, training and keeping talent are more and more challenging. The Great Resignation, or the Re-Shuffle, when combined with the advanced Boomer retirements (like mine) is expected to have lasting changes on what employment means.
ESG – Environmental, Social and Governance – customers and regulators are reviewing how companies address these three issues, and are beginning to question how they’re vendors deal with them as well
Technology & Data – customers are looking for improved communication channels and carriers are using more artificial intelligence systems to help make claims decisions all while trying to maintain that personal touch (see 11, 12, 18 & 19 below)
COVID – over the past two years, we have learned that we will not know the full impact of COVID on the WC line, or any business, for some time – stay flexible
Impact of the Economy – inflation is the new watchword for 2022. Although it is projected to be in the 2.5% range by the end of the year, getting there will be an interesting ride
Independent Contractors v. Employees – this is a given to be on any annual list of WC issues – we may have to accept that there is no clear solution, and if you are in California, good luck in trying to figure it out
Expansion of Mental Health Access – something WC has routinely shied away from is now something we may need to address head on (George & Walls recommend the Center for Workplace Mental Health)
PTSD & Presumptions – presumptions turn WC on its head, providing coverage without having to demonstrate work was the proximate cause – with PTSD presumptions for first responders in states like FL or MT, we find ourselves in a situation where some employees have coverage while others are prohibited because mental/mental injuries are not covered (Bob Wilson made this point at the 2021 MSIA Annual Meeting).
Employee Benefits Integration – more on staffing issues, employees are now looking for, and getting, richer employment benefits – health & recovery plans must be incorporated into WC claims efforts
Labor Shortage Impact on WC – as we ask people to do more we run the risk of overexertion, safety issues, dissatisfaction in the workforce, decreases in premium based on reduced payroll and reduced training opportunities because we have to get the job done – it is estimated there are 4 million fewer workers today than in February 2020
Return to Office – the impact on corporate culture cannot be minimized in our changing work environments – again, training, safety and the potential of tax issues for home offices versus corporate office space are impacted
Future of Communicable Diseases in WC – WC was designed to address injuries as a result of work, then we added occupational diseases. Now we are adding widespread social issues, like communicable diseases to our list of presumptions for WC coverage. Some state presumptions are not limited to COVID, but other communicable diseases as well.
Social Inflation – this relates more to jury awards that are not necessarily based on actual dollars, nor their value
Evolving Risks and Insurance Coverage Gaps – with the pandemic impacts, Business Interruption and Events Cancellation policy contracts are changing, but the impacts are being felt in other coverages as well
Ransomware/Cyber – in the last year alone, technology, food production, insurance, energy and health care, just to name a few have been hit with ransomware. It may be not a question of if, but when…
Burden of Bureaucracy – George and Walls call WC the most regulated line of coverage. The pandemic helped us see some of the issues of antiquated laws and procedures – there will be more particularly as WC is expected/required to do more to address issues never intended in the WC systems
Evolving WC – our customers and regulators are expecting us to do more – better communication tools, greater efficiency, faster decision making and more interactive services (but retaining that personal touch) will be the norm
Workplace Violence – it is no longer the estranged spouse, but add to that customer attacks on transportation workers and flash mobs who attack any employee who gets in the way

Some on the list are perennials, some are new. However, it is always an interesting take on what we will be dealing with within the next year.

WCCM to Meet 1/18 – MT Benefit Structure to be Discussed

The Workers’ Compensation Council of Montana (WCCM), a new group of labor and business leaders, will be meeting again on January 18 to start a review of the benefit structure in Montana, as compared to other states and they will be asked by MSIA (one of the founders of the WCCM) to also review TTD durations, average payments (including medical) and standards for TTD benefit transitions to either the next benefit structure within the system or to terminate benefits. To look at only one side, does just that, only looks at one side.

Montana’s benefits are generally considered low – that is largely based on the fact that Montanans average weekly wage is low. Our benefit structure however, is on par with most other states – we are not out of step. While our benefit levels are low and our basis for those benefits is in line with other states, our costs are relatively high. We continue to rank in the top 25% of states in terms of WC costs. The basis for benefits is wages. If our wages are low, there should be no surprise that our benefits are low. That is one of the ways any workers’ compensation system in the United States (and other parts of the world for that matter), reflect the economy on which it is based.

One would not expect New York level benefits in Montana. The costs of goods and services in Montana are very different than the costs of the same goods and services in New York. For that matter so is our tax structure – I am not suggesting out taxes are not high, but property taxes are much higher in New York and of course there is an 8% sales tax in NY (more in NYC) that does not exist in Montana. When you compare the costs of almost anything in Montana to New York, we pay less. Whether it is the energy to heat our homes, gasoline to run our trucks, even the food we buy – the costs in Montana are lower than in New York.

What is often missing from the conversation about Montana benefits is how many people are receiving benefits and how long they receive benefits.

When one looks at the statutory benefit levels, at best they are looking at half the picture. We know the Montana workers’ compensation system costs more, because actual payments to injured workers are comparably higher. The balance of benefit levels and actual payments is, and has always been, the tipping point. It is akin to describing the US nickel as having Thomas Jefferson on it. That’s true, but completely ignores the fact that the US Capitol is also on the nickel.

Based on Montanans work being geared toward agriculture and construction (higher hazard industries) and our relatively small population base (dollars spent have to be distributed over fewer people to pay them) our system will always cost more than the US average. However, that’s not to say we cannot do better – and we need to figure out how. It remains a mystery why Montana reports more incidents than neighboring states. Our population base and economy is similar to Wyoming. Yet as a general rule, we generate more incidents per capita than Wyoming reports. For example, according to BLS incident reports, Montana reports 13% more incidents in private industry than Wyoming, 23% more retail incidents and 8% more accommodation and food service incidents than Wyoming. (Please note these are not workers’ compensation claims, only incidents reported to the US Bureau of Labor Statistics.) Why is Montana work more hazardous than Wyoming work?

ERD Data Dashboards – COVID Claims, TTD Durations and More

The Montana Employment Relations Division of the Department of Labor has generated visual information Dashboards for different aspects of our workers’ compensation system. I have found this resource particularly useful and beneficial. I recommend it to anyone interested in how they are doing for certain aspects in comparison to the system as a whole and for those who are looking for an overall quick picture of how the system is operating. This information may be overlooked by some and provides valuable and easily accessed information to those who look at it.

COVID has been in the news for – oh I don’t know – seemingly forever. The ERD COVID dashboard provides details on the number of FROIs and payments, as well as information on what industries generated those COVID-based FROIs. As you know, Montana did not change our laws to make it easier for COVID claims to be compensable as some states have. As a result, our system results are not out of line with what they were prior to COVID. At this point, the number of compensable claims and costs, as reported by the COVID dashboard are easily managed within the system.

As well, there are dashboards for TTD Duration (see WCCM discussion above), Claim Characteristics, Return to Work, Settlements and more. Often these categories are then broken down into finer details for greater specificity of information. My thanks to the folks at ERD for investing the time and resources to provide this kind of information in this format.

WCRI Flash Report: Telemedicine: Patters of Use and Reimbursement

Last month, WCRI released their latest Flashreport, Telemedicine: Patterns of Use and Reimbursement. Culling information from 28 states which represent over 75% of benefits paid in the US (Montana is not a reporting state to WCRI and therefore is not included), WCRI confirmed that telemedicine use took off in 2020, with over 10% of all WC medical bills relating to it. The claims they reviewed were specifically non-COVID related.

Some highlights:

There were wide interstate variations in the use of telemedicine in comp for E & M and physical medicine (PT) from 4% in AZ, IN, SC, TN and TX to over 15% in MA and WI. The average was 8% across the study states.
Prices were similar for telemedicine as in-person services (within 10 percent)
Perhaps not surprisingly, those with sprain and strain type injuries, rather than traumatic injuries were more likely to use telemedicine services. Even so, those with sprains and strains saw longer times from injury to first E & M service for both telemedicine and in-person services (1.3 and 1.4 days longer respectively than 2019).
Across the study states, time to the initial E & M service from date of injury was .5 days longer for telemedicine services than in-person services (3.5 days versus 3 days)
Injured workers with a mix of telemedicine and in-person follow up services had more total visits compared to those who only had telemedicine or in-person visits. Similar results were found for a comparison of total number of E & M visits per claim by medical condition, so the findings were not driven by the nature of the injuries.

What does it all mean? I cannot tell that I completely understand the findings. Some are obvious to me - sprains and strains using telemedicine more than traumatic injuries does not surprise me. At the same time, I was a little surprised there were not more telemedicine bills in comparison to the system as a whole. Like so many other societal changes as a result of the pandemic, we have more to learn about how the pandemic will impact our work and world. MSIA has the report and if you would like a copy, please let me know.

US Supreme Court to Hear Medicaid Third Party Lien Case

The following is a summarization from blogs put out on 12/1 (Supreme Court to Decide If Medicaid Can Recoup Lien From Future Medicals (linkedin.com), 12/27 The US Supreme Court Revisits Medicaid Third Party Liability Liens (linkedin.com) and 1/4 (An Analysis of Amicus Briefs filed in US Supreme Court Medicaid Lien Case (linkedin.com) by Rafael Gonzalez of Cattie & Gonzalez, PLLC.

It is not often that a workers’ compensation case gets to the Supreme Court. And in fact, Gallardo v. Marstiller is not a workers’ compensation case but it can have an impact on our business and settlements which cover future medical expenses. The issue is, can a state’s Medicaid system recoup funds from settlements for future medical costs. This is an issue for almost any casualty coverage, including workers’ compensatioon. The Supreme Court heard oral argument on Monday January 10 and the Montana Attorney General’s office (along with 13 other states) submitted an amicus brief arguing that states can recover monies for paid medical benefits (not in question here) and from settlement amounts allocated to future care. To this point, the answer has been no.

When she was 13, Gianinna Gallardo was hit by a truck as she stepped off a school bus, causing severe injuries and she remains in a vegetative state requiring a lifetime of medical care. Ultimately she settled with those responsible for $800,000. The Florida Medicaid system had already paid over $862,000 in medical costs for Gallardo. As part of the settlement, Gallardo allocated $35,368 to past care. Based on state law, the Florida Medicaid system expected $300,000 in recoupment from the settlement. So far, the courts have first agreed with Gallardo, that Florida is entitled to only $35,368, and then on appeal that the state is entitled to the $300,000. The Supremes will decide.

Gallardo argues that the federal Medicaid law limits state systems to reimbursement for the portion of the settlement representing compensation for past medical expenses (Florida Medicaid was not part of the settlement agreement process and under state law has an automatic lien based on prior expenses). Gallardo suggests the federal Medicaid Act is clear on this point, in providing that, “to the extent that payment has been made under the State plan for medical assistance for health care items or services furnished to an individual, the State is considered to have acquired the rights of such individual to payment by any other party for such health care items or services.” 42 U.S.C.. section 1396a(a)(25)(H) (emphasis added). In simple terms, Gallardo argues, the state is limited to recoupment for past medical expenses.

Marstiller (the Secretary for the Florida Agency for Health Care Administration, FAHCA) argues that Medicaid law requires state programs to seek reimbursement from third parties liable for medical care. The law requires mandatory assignment of “any rights to payment for medical care from any third party” as one of the conditions for Medicaid eligilibty (42 U.S.C. Section 1396k(a)(1)(A). Based on that, Florida argues that “…Medicaid’s role as the payer of last resort supports permitting the program to recover costs from all medical damages, not just those unilaterally allocated toward past medical expenses.

I bring this case to you because of the potential impact it could have on workers’ compensation settlements going forward, once it is decided, and as Gonzalez points out, over 81 million Americans are receiving Medicaid benefits. Many of them are also involved in class action, med mal, no-fault, nursing home, products liability, workers’ compensation and wrongful death claims. While an arcane section of the law, and a complex case, it can have significant impact on our work.

Any questions, comments, ideas for future reports? Please don’t hesitate to reach out to me.