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DTCI: Synopsis of House Enrolled Act 1320

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noltemeyer-aubrey-dtci By Aubrey K. Noltemeyer
bushemi-amanda-dtci By Amanda E. Bushemi

On May 11, 2013, Indiana Gov. Michael Pence signed into law House Enrolled Act 1320, a bill authored by Rep. Matt Lehman, R-Berne, and co-authored by Rep. Ed Soliday, R-Valparaiso. The workers’ compensation reform legislation, effective July 1, 2013, not only increases benefit amounts to injured workers, but also, most notably, imposes a fee schedule for the reimbursement of medical service facilities based upon Medicare’s reimbursement rates. The significant changes to the Indiana Worker’s Compensation Act are discussed below, along with comparable provisions from the workers’ compensation statutes of surrounding states.

Reimbursement to medical service facility based on Medicare’s reimbursement rate

HEA 1320 enacts legislation governing payments made under the Act by an employer or an employer’s insurance carrier to a medical service facility beginning July 1, 2014. Under the Act, medical service facility is defined as only the following: (1) a hospital (as defined in Ind. Code § 16-18-2-179); (2) a hospital-based health facility (as defined in Ind. Code § 16-18-2-180); or (3) a medical center (as defined in Ind. Code § 16-18-2-223.4). Ind. Code § 22-3-6-1(j). The new legislation imposes a fee schedule that places a cap on reimbursement at 200 percent of Medicare’s reimbursement rate for treatments or procedures by a medical service facility to a workers’ compensation claimant. Id. at § 22-3-3-5.2(b)(2); see also § 22-3-6-1(k)(2)(B) (defining pecuniary liability). Such fee schedule is applicable unless the amount of reimbursement is otherwise negotiated between the medical service facility and any of the following: (1) the employer; (2) the employer’s insurance carrier; (3) a billing review service on behalf of the employer or the employer’s insurance carrier; or (4) a direct provider network that has contracted with the employer or the employer’s insurance carrier. Id. at § 22-3-3-5.2(b)(1); see also § 22-3-6-1(k)(2)(A) (defining pecuniary liability).

Even after this new reimbursement rate takes effect July 1, 2014, medical service providers, such as physicians, will continue to be reimbursed pursuant to the 80th percentile reimbursement rate that is already established by the Act. Based on the law, medical service provider is now defined as “a person or entity that provides services or products to an employee under IC 22-3-2 through IC 22-3-6.” Id. at § 22-3-6-1(i). The relevant portion of the Act reads:

This subdivision applies before July 1, 2014, to all medical service providers, and after June 30, 2014, to a medical service provider that is not a medical service facility. Payment of the charges in a defined community, equal to or less than the charges made by medical service providers at the eightieth percentile in the same community for like services or products.

Id. at § 22-3-3-5.2(a)(3); see also § 22-3-6-1(k)(1) (defining pecuniary liability).

The following is a brief analysis of the reimbursement rates implemented by surrounding states to compare with Indiana’s new legislation:

Kentucky

Kentucky’s fee schedule is longstanding and consists of two separate fee schedules: one for hospitals and one for physicians. While many states base fee schedules on Medicare or Medicaid’s rate and apply a flat rate, the applicable hospital fee schedule in Kentucky varies by the location of the facility. See 803 Ky. Admin. Regs. 25:091 (2013). The applicable percentage, unique to that facility’s physical address, is applied to the hospital’s bill to determine the maximum reimbursement for the treatment of an injured worker. Id. On the other hand, reimbursement to physicians in Kentucky does not vary by the health care provider’s location. Rather, a standard rate is applied to the particular procedure, resulting in the maximum fee allowed for the service. See id. at 25:089. It should be noted that Kentucky prohibits balance billing, and thus physicians and hospitals are prohibited from attempting to collect reimbursement in excess of that provided under the fee schedule. Ky. Rev. Stat. Ann. § 342.035(2) (2013).

Illinois

Illinois’ basic fee schedule provides for payment of a percentage of the 80th percentile cost of any given procedure, treatment or service. 820 Ill. Comp. Stat. 305/8.2(a) (2011). “The maximum allowable payment shall be 90 percent of the 80th percentile of charges and fees as determined by the Commission utilizing information provided by the employers’ and insurers’ national databases” for compensable treatment rendered on or after Feb. 1, 2006. Id. For treatment rendered on or after Sept. 1, 2011, the maximum allowable payment is 70 percent of the fee schedule amount. Id. at 305/8.2(a-2). The fee schedules make cost modifications based upon geographic location, similar to Kentucky. See id. at 305/8.2(a-1)(a). Nonhospital fee schedule amounts are grouped into four regions by county, and hospital fee schedule amounts are grouped into 14 county-specific regions. Id. If the treatment is extraordinary, it can be reviewed to determine whether an additional adjustment to the maximum reimbursement is necessary. Id. at 305/8.2(c).

Michigan

In general, Michigan’s reimbursement rate to a health facility or health care provider is the lesser of either: (1) the maximum fee by a health facility or health care provider established in the localized fee schedule; or (2) the customary charge that the attending health facility or health care provider typically charges for such treatment. Mich. Comp. Laws Ann. § 418.315(2) (2013); see also Mich. Admin. Code R. 418.10101(1)(b), (k) (2013). Similar to the fee schedule for physicians in Kentucky, the maximum allowable payment is derived from use of a relative value unit and a conversion factor. See Mich. Admin. Code R.418.101002a(1). Michigan uses the Medicare Resource-Based Relative Value Scale to determine the relative value unit, which takes into account the resources used to provide each service as well as the geographic location, thus enabling Michigan prices to be more accurately reflected. Id. at R. 418.10106(3). As in Indiana, there are instances when Michigan’s fee schedule is deemed inapplicable, including when a carrier and provider have a contractual agreement providing for alternative reimbursement below that which the fee schedule would provide. Id. at R. 418.10101(4).

Wisconsin

In Wisconsin, the reimbursement standard for fees charged to an employer or its insurer by health service providers is not based upon an established fee schedule but rather is based upon “reasonableness” in relation to comparable services. See Wis. Stat. Ann. § 102.42 (2013).

Disputes as to the reasonableness of a fee charged by a health service provider for medical services provided to an injured employee who claims benefits under Wisconsin’s Worker’s Compensation Act are resolved by the Wisconsin Department of Workforce Development. Id. at § 102.16(1m)(a), (2)(a); see also id. at § 102.18(bg)(1). When the reasonableness of reimbursement is disputed, the employer or its insurer must provide the Department of Workforce Development with information about fees charged by other health service providers for comparable services, obtained from a database certified by the department. Id. at § 102.16(2)(c). The standard used by the department in its reasonableness determination is the following: “a disputed fee is reasonable … if that fee is at or below the mean fee for the health service procedure for which the disputed fee was charged, plus 1.2 standard deviations from that mean, as shown by data from a database that is certified by the department.” Id. at § 102.16(2)(d). Thus, anything below the mean fee plus 1.2 standard deviations is deemed reasonable unless the health service provider proves, as in Illinois, that a higher fee is justified because the relevant treatment was unusually difficult or complicated. Id.

Reimbursement for implant furnished to employee

Leaving our neighbors aside, the following is an expansion on the additional implications of HEA 1320, which deals also with pecuniary liability for medical implants furnished to injured workers. The Act now places a cap on the price of implants using the actual cost to the medical service provider. Payment to a medical service provider for an implant furnished to an injured employee under the Act may not exceed the invoice amount paid by the medical service provider plus 25 percent. Ind. Code § 22-3-3-5.2(c).

Reimbursement for repackaged prescription drug furnished to employee

In response to the rapidly increasing costs of physician-dispensed prescription drugs for injured workers, HEA 1320 also provides new regulations regarding the reimbursement amounts for repackaged prescription drugs. The new law states that whenever a prescription covered under the Act is filled using a repackaged (as defined in Ind. Code § 25-26-14-9.3) legend drug (as defined in Ind. Code § 25-26-14-7), the maximum reimbursement amount for the repackaged legend drug is computed using the average wholesale price set by the original manufacturer. Ind. Code § 22-3-3-4.5(c). Thus, such drugs cannot be sold for a price higher than the average wholesale price established by the original manufacturer. It should be noted that this is not applicable to a retail or mail order pharmacy. Id. The additions to the Act also provide that if the National Drug Code for a legend drug cannot be determined from the medical service provider’s statement or billing, then the maximum reimbursement amount for the repackaged legend drug is the lowest cost generic for that legend drug. Id. at § 22-3-3-4.5(d).

Increased benefit amounts for injured workers

The enactment of HEA 1320 also increases the benefit amounts for injured workers covered under the Act with regard to dollars per degree for permanent partial impairment and the maximum amount of nonmedical compensation. In addition, the maximum and minimum average weekly wages are increased.

First, the amended legislation includes graduated percentage increases to the compensation schedule for impairment benefits over a three-year period, beginning July 1, 2014. The dollars per degree will increase as follows:

For injuries on and after July 1, 2014, and before July 1, 2015:

1-10 degrees of PPI: $1,517 per degree

11-35 degrees of PPI: $1,717 per degree

36-50 degrees of PPI: $2,862 per degree

51+ degrees of PPI: $3,687 per degree

For injuries on and after July 1, 2015, and before July 1, 2016:

1-10 degrees of PPI: $1,633 per degree

11-35 degrees of PPI: $1,835 per degree

36-50 degrees of PPI: $3,024 per degree

51+ degrees of PPI: $3,873 per degree

For injuries on and after July 1, 2016:

1-10 degrees of PPI: $1,750 per degree

11-35 degrees of PPI: $1,952 per degree

36-50 degrees of PPI: $3,186 per degree

51+ degrees of PPI: $4,060 per degree

Ind. Code § 22-3-3-10(j)(13)-(15).

In addition, the maximum amount of nonmedical compensation, including temporary and permanent disability and impairment benefits, paid to injured workers will increase beginning July 1, 2014. For injuries occurring on and after July 1, 2014, and before July 1, 2015, the maximum amount of compensation, exclusive of medical benefits, may not exceed $347,000. Id. at § 22-3-3-22(t)(11). For injuries on and after July 1, 2015, and before July 1, 2016, the maximum amount of nonmedical benefits paid under the Act is $368,000. Id. at § 22-3-3-22(t)(12). For injuries that occur on and after July 1, 2016, the maximum amount of nonmedical compensation that can be paid to an injured worker is $390,000. Id. at § 22-3-3-22(t)(13).

Finally, the amended legislation increases the average weekly wages used in computing compensation for temporary total or temporary partial disability as well as total permanent disability. The maximum and minimum average weekly wages for injured workers are amended as follows:

For injuries on and after July 1, 2009, and before July 1, 2014: maximum, $975; minimum, $75

For injuries on and after July 1, 2014, and before July 1, 2015: maximum, $1,040; minimum, $75

For injuries on and after July 1, 2015, and before July 1, 2016: maximum, $1,105; minimum, $75

For injuries on and after July 1, 2016: maximum, $1,170; minimum: $75

Id. at § 22-3-3-22(j)(10)-(13).

Confidentiality provisions for data collected by the Worker’s Compensation Bureau

New legislation regarding the confidentiality of information filed with the Indiana Worker’s Compensation Bureau was also enacted when HEA 1320 became law. The bureau may collect data from its members, including the following: (1) claims data; (2) policy data such as policy number, policy term, and employer and employee identification information; and (3) proof of coverage data such as employer identification information, classification information, carrier information, agency identification information, premium information and payroll data. Ind. Code § 27-7-2-40. However, all data collected by the bureau are subject to this new privacy provision and are deemed confidential. Id. Such information “shall not be disclosed or disseminated to third parties” unless consented to by the bureau or specifically stated otherwise in the Act. Id.

Conclusion

Overall, HEA 1320 is an effort by our state to control and contain the ever-increasing costs of medical care for those covered under the Indiana Worker’s Compensation Act. Whereas Indiana previously ranked as one of the highest states in reimbursement rates but one of the lowest in benefits to injured workers, the new legislation makes changes that favor both ends of the spectrum. Not only is there increased transparency and cost containment with regard to reimbursement to medical service facilities, but benefits to injured workers are also increased. The portions of the legislation highlighted in this article curb problems that are still in the forefront of the workers’ compensation systems of many other states. Thus, with the enactment of HEA 1320, Indiana has provided long-awaited reform to our system that helps ensure that injured workers receive adequate health care but, at the same time, provides its medical service facilities with increased incentive to provide workers’ compensation treatment.•

Ms. Noltemeyer is a partner and Ms. Bushemi is an associate in the Indianapolis office of Kightlinger & Gray. They are both members of the Defense Trial Counsel of Indiana. The opinions expressed in this article are those of the authors.

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  1. Applause, applause, applause ..... but, is this duty to serve the constitutional order not much more incumbent upon the State, whose only aim is to be pure and unadulterated justice, than defense counsel, who is also charged with gaining a result for a client? I agree both are responsible, but it seems to me that the government attorneys bear a burden much heavier than defense counsel .... "“I note, much as we did in Mechling v. State, 16 N.E.3d 1015 (Ind. Ct. App. 2014), trans. denied, that the attorneys representing the State and the defendant are both officers of the court and have a responsibility to correct any obvious errors at the time they are committed."

  2. Do I have to hire an attorney to get co-guardianship of my brother? My father has guardianship and my older sister was his co-guardian until this Dec 2014 when she passed and my father was me to go on as the co-guardian, but funds are limit and we need to get this process taken care of quickly as our fathers health isn't the greatest. So please advise me if there is anyway to do this our self or if it requires a lawyer? Thank you

  3. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  4. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  5. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

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