CONTENTS

3 Free publications available online

4 Anderson, Feckey in new positions at DLI

5 Workers’ compensation medical costs in Minnesota: A summary

of the Minnesota Department of Labor and Industry’s Medical Costs
Task-force activities and recommendations

8 New MNOSHA 75/25 program saves money, promotes safety

9 Special Compensation Fund: Change to insurers report of benefits paid

9 From the State Register: Minnesota Health Care Programs

provider participation list available

10 Seminar announcement: Rethinking workers’ compensation disputes;

effective dispute-resolution in changing times

D-1 Court decisions: October through December 2003

Summary:
Free Work comp
publications medical costs Court decisions:
available in Minnesota October through
online December 2003
3 5 D-1
 Free publications available online
These publications — and others — are available on the Department of Labor and
Industry Web site at www.doli.state.mn.us (specific addresses provided below).

Minnesota Workers’ Compensation System Report 2001

• Report highlights: http://www.doli.state.mn.us/wn02dec1.htm
• Full report: http://www.doli.state.mn.us/rsreport.html — PDF

Minnesota Workplace Safety Report, 2001

• Full report: http://www.doli.state.mn.us/rsreport.html — PDF

Prompt First Action Report on Workers’ Compensation Claims, 2003

• Full report: http://www.doli.state.mn.us/pubwkcp.html — PDF

Collection and Assessment of Fines and Penalties, 2003

• Full report: http://www.doli.state.mn.us/pubwkcp.html — PDF

An Employee’s Guide to the Minnesota Workers’ Compensation System, 2000

• Complete guide: http://www.doli.state.mn.us/guide.html

An Employer’s Guide to Employment Law Issues in Minnesota, 2000

• Complete guide: http://www.dted.state.mn.us/00x04-f.asp
(published by the Department of Trade and Economic Development)

Publications are also available in printed versions. To request a copy,

contact Customer Assistance by phone at (651) 284-5030, by fax at
(651) 296-9634 or by e-mail at DLI.brochure@state.mn.us.

COMPACT is online-only:
Sign-up for e-mail notification of new editions of COMPACT
COMPACT is a quarterly, online publication of the Minnesota Department of Labor and Industry. Its purpose
is to provide department news and workers’ compensation case information to professionals who work
within the Minnesota workers’ compensation system.

For e-mail notification about new editions

Send an e-mail message, with “COMPACT” in the subject line and the subscriber’s name and e-mail address
in the body of the message, to DLI.Communications@state.mn.us. An e-mail notification will be sent when
each quarterly edition of COMPACT is available online.
Upon request, COMPACT will be made available in alternative formats such as Braille, large print or audiotape.

Jamie Anderson
DLI Legislative Affairs director
Jim Feckey
DLI Special Compensation Fund
executive director
4 • COMPACT • February 2004
Anderson, Feckey in new positions at DLI
The Department of Labor and Industry (DLI) recently appointed two
new directors: Jamie Anderson as legislative affairs director and Jim
Feckey as executive director of the newly combined Special
Compensation Fund and Investigative Services unit.
As an assistant to the commissioner, Anderson will monitor all legislation
that impacts the agency and inform DLI staff members about the activity
at the capitol.
Anderson is new to the agency, but is familiar with the agency’s work
and the activity at the capitol. Before coming to DLI, she worked as
the administrator for the Committee on Jobs and Economic Development
Finance in the House of Representatives. Prior to working in the House,
she was an account executive for Himle Horner, Inc., a public affairs
firm in Bloomington, Minn.
Anderson earned her law degree at California Western School of Law
in San Diego and a bachelor’s degree at the University of St. Thomas
in St. Paul, Minn.
Jim Feckey is a familiar face around the agency, working for the
Investigative Services unit for nearly 11 years, the past seven years as
its director. Now, as the director of the Special Compensation Fund,
Feckey is charged with the administration of the indemnification and
investigation of uninsured workplace injuries, the second injury and
supplemental benefits program, the Investigative Services unit and the
assessment process to fund the aforementioned programs.
As director of Investigative Services, Feckey oversaw the investigation
of workers’ compensation criminal fraud cases, mandatory coverage
and penalty assessment cases and the investigation of first reports of
injury submitted against uninsured employers.
Before coming to the Department of Labor and Industry, Feckey spent
more than 22 years as an investigator and supervisor in the Vice,
Homicide, Sex Crimes and Child Abuse units of the St. Paul Police
Department. He was also involved in the research and development
aspect of police management and as an instructor and supervisor in the
St. Paul Police Recruit Academy.
Feckey attended the University of Minnesota and Metro State University,
earning a bachelor’s degree in criminal justice. He also attended the
FBI National Academy (128th Secession) in Quantico, Va., for
advanced police investigation and administration, and completed the
FBI Instructor Development Course.
 J a n u a r y 2004
workers' compensation

medical costs
in minnesota

A summary of the Minnesota Department of Labor and Industry's

Medical Costs Task-f orce activities and recommendations

T he Minnesota Department of Labor and Industry convened a Workers' Compensation Medical Costs Task-force
that met seven times between Aug. 26 and Dec. 2, 2003. Twelve representatives from the labor, business, health
care, insurance, hospital and pharmacy industries considered the nature and scope of medical costs in the Minnesota workers’
compensation system (see Appendix A). The department provided briefings of available information and data about medical
costs in Minnesota workers’ compensation, other Minnesota health care systems and other state’s workers’ compensation
systems. The department also presented a series of recommendations to serve as a starting point and focus for the task-
force’s discussions and considerations.

An overview of the department's recommendations:

Pharmacy costs

1. Set maximum allowable fee for medications at:
• maximum allowable charge + $3.65; or
• 86 percent average wholesale price + $3.65, if no
maximum allowable charge price is available.
• time and quantity parameters for the use of selected
drugs for specific conditions (such as nonsteroidal
anti-inflammatories for initial treatment of
musculoskeletal injuries).
Hospital costs

2. Allow an employer/insurer to contract with and
negotiate rates with, a pharmacy network from which
the injured employee must select a pharmacy to fill
prescriptions. Mileage parameters would be included
to ensure reasonable access.
3. Require pharmacy benefit managers to disclose to
employers and insurers any rebates or discounts
received from drug manufacturers or pharmacists.
4. Amend the workers’ compensation treatment
parameters to provide:
• rules for use of specific classes of drugs (such as
use of narcotics for musculoskeletal pain); and
1. For all services not covered by the medical fee
schedule, pay noncritical-access hospitals at the most
recent average overall payment-to-charge ratio for all
hospitals plus 15 percent (53 percent + 15 percent =
68 percent). Adjust this reimbursement rate annually
with updated data from Department of Health.
2. Identify critical-access hospitals for increased
reimbursement. Pay in-patient services at critical-
access hospitals at 100 percent of usual and customary
(U and C) rate. Pay all other services at the medical
fee schedule rate plus 15 percent, if it applies, or at the
average payment-to-charge ratio for all hospitals plus
30 percent, if it does not apply.
 Summary of department's recommendations continued ...
Medical fees

1. The appropriate inflator for the conversion factor is the producers price index for physicians (PPI-P).
Re-adjust the Minnesota workers' compensation medical fee schedule conversion factor to what it would
have been had the PPI-P been used for annual adjustments since 1993 — $62.86 — and in the future
adjust by PPI-P.

2. Pay nonhospital services not covered by the fee schedule at 68 percent of the providers U and C costs.

Utilization control

1. Amend the statute to limit physical medicine modalities and procedures to 24 visits per injury.

2. Amend the statute to define any technology not approved by the FDA prior to the date of enactment as
“not reasonably required” unless approved for use by the Department of Labor and Industry
commissioner in consultation with the Medical Services Review Board (MSRB).

Treatment parameters

1. Add to the statutory definition of“reasonably required treatment”:

• “as defined by any applicable treatment parameter”;
• treatment exceeding a parameter is presumed to be “not reasonably required”; and
• presumption is rebuttable by clear and convincing medical evidence that a reason for departure exists.

2. Require judges and payors to apply the parameters:

• payors must cite parameters in denials of “unreasonable” treatment;
• fact finders must make decisions based on parameters; and
• if parameter was not used in adjudicating a claim, the fact finder must explain why it was not used.

3. Authorize the department to use “expedited” rule-making to update and extend parameters with legal
standard that parameter must reflect evidence-based medical practice and be developed in consultation
with MSRB.
Managed care

1. Certified managed care plans be allowed to negotiate fees with participating providers.

2. Make peer review, utilization review, case management and dispute resolution optional features
of certified managed care.

3. Redefine when there is a prior treating relationship.

4. Require the employee to use the certified managed care plan’s designated provider for the first
14 days of treatment.

5. Even when the employer does not have a managed care plan, allow employer to select initial
health care provider for the first 14 days of treatment.

Summary of medical task-force's recommendations

The labor representatives were universally opposed to any changes in the status quo, consistent with their
opinion that there was no medical cost problem and their concern that the proposed changes would all have
negative impacts on the injured workers’ access to health care services.

The pharmacy representative also opposed any changes to the current system.

The health care provider representatives unanimously opposed any reductions in payments for services, but
frequently endorsed recommendations aimed at controlling inappropriate utilization and strengthening the
treatment parameters.

Only two of the health care provider representatives offered any comments about the department’s managed
care recommendations.They both opposed any changes – especially allowing managed care plans to negotiate
rates of payment with participating providers.

A majority of the employer representatives generally endorsed the department’s recommendations or offered
no comment.

Note: The task-force agendas, testimonials and minutes can be found on the Department of Labor and
Industry Web site at www.doli.state.mn.us/medcost.html.
 New MNOSHA 75/25 program saves money, promotes safety
By Patricia Todd
Director of MNOSHA Compliance

Seventy-five and 25 have become important

numbers to Minnesota employers looking to save
money and keep employees safe, through a new effort by the Minnesota
OSHA Compliance program.

In a continuing effort to reduce injuries and illnesses in the workplace, MNOSHA

Compliance has implemented a new program – 75/25. An employer may now obtain
a 75 percent reduction in penalties, if it also reduces workers’ compensation claims by 25
percent within a one-year period, providing employers in Minnesota with an added economic incentive to
reduce accidents and protect employees from harm. Participation in this program does not preclude an employer
from using consultation services, in fact, it is encouraged.

Employers selecting this option receive a 75 percent reduction in penalties assessed as a result of a compliance
inspection, provided the MNOSHA citations issued are not “willful,” “repeat” or “failure to abate” citations. In
addition, the compliance inspection cannot be a result of a fatality, serious injury or catastrophe.

To qualify for this program, certain terms must be met:

1. The initial penalty assessed must be greater than 6. The company must implement “A Workplace
$5,000. Accident and Injury Reduction” (AWAIR) Program
and a safety committee.
2. The employer must contest the original citations
and attend an informal conference with MNOSHA 7. Minnesota OSHA Compliance will contact the
to define the terms of the settlement agreement. As employer quarterly to discuss the employer’s
with all settlement agreements, employees may progress.
appeal the results.
8. One year after the completed settlement
3. Twenty-five percent of the original penalties must agreement, a paper review of the actual workers’
be paid within agreed upon terms. compensation claims submitted to the employer’s
insurance provider will be conducted with the
4. The employer must reduce, by 25 percent, the employer, the appropriate employee representative
number of workers’ compensation claims submitted and MNOSHA Compliance.
to its insurance provider during the 12 months
following the completed settlement agreement. 9. If the employer fails to meet a claims reduction of
25 percent, it will owe a percentage of the original
5. Management of the company must agree to penalties, based on a sliding scale.
training. The training to be obtained will be agreed
upon during the informal conference.

The intent of this program is to have an indirect connection between MNOSHA and workers’ compensation
rates. It is an opportunity for employers, employees and MNOSHA to work together to reduce the
hazards, injuries and illnesses occurring within Minnesota workplaces.

8 • COMPACT • February 2004

 SPECIAL COMPENSATION FUND

Change to insurers report of benefits paid

Notice concerning the workers’ compensation insurers/
self-insurers report of benefits paid during the 12-month
period ending Dec. 31, 2003

The process of assessing workers’ compensation insurers and self-

insured employers for the Special Compensation Fund has changed.
Companies are no longer required to file reports on a semi-annual
basis. The filing will now be done on an annual basis. The next filing,
containing financial information for calendar-year 2003, is due April 1,
2004. The information reported will be used to calculate the
assessment that will be due Aug. 1, 2004, and Feb. 1, 2005. Insurers and self-insured employers that
are liable for the assessment will receive an invoice approximately 30 days prior to the payment due
dates.

In addition, the workers’ compensation insurers/self-insurers report of benefits paid can now be filed
online at www.doli.state.mn.us/scfassessment.

An identification code is required for online filing. Your company’s identification code can be found on
the mailing label of your assessment form. It is printed to the right of the company name.

If you have any questions, contact John A. Kufus by phone at (651) 284 5179 or by e-mail at
john.kufus@state.mn.us.

From the State Register:

Minnesota Health Care Programs provider
participation list available
Notice is hereby given that the Minnesota Health Care Programs provider participation list for Jan. 1, 2004, is
now available. The provider participation list is a compilation of health care providers that are in compliance
with the Department of Human Services (DHS) “Rule 101.” If a provider name is not on the list, the department
considers the provider noncompliant.

The list of providers is separated by provider type, each section is in alphabetical order by provider name and
there is no additional information on the list other than the provider’s name. This list is distributed on a quarterly
basis to the Department of Employee Relations, the Department of Labor and Industry and the Department of
Commerce. To obtain the list, call Rule 101 Specialist Kelly Crawford at (651) 296-0766 or toll-free at
1-800-366-5411.

Minnesota Statutes §256B.0644 and Minnesota Rules parts 5221.0500, subp. 1 and 9505.5200 to 9505.5240,
also known as DHS “Rule 101,” require health care providers that provide medical services to an injured
worker under the workers’ compensation law to participate in the Medical Assistance Program, the General
Assistance Medical Care Program and the MinnesotaCare Program.
February 2004 • COMPACT • 9
 RETHINKING WORKERS’ COMPENSATION DISPUTES:

a y 12, Effective dispute-resolution

M 4
200 in changing times
Practical information for mediating workers’ compensation claims
Sponsored by the Minnesota Department of Labor and Industry at
the Continuing Education and Conference Center, University of Minnesota,
1890 Buford Ave., St. Paul, Minn.

• Mediation research

• Cross-cultural issues

• Mediation advocacy

• Mock-mediation demonstration

• Mediation ethics

• Judicial perspectives

• Claims-management perspectives
See complete seminar information online

Pay just $95 for a full day of mediation information and discussion. Register online at
www.doli.state.mn.us or send a check made out to Department of Labor and Industry
and the registration form below to: Minnesota Department of Labor and Industry,
443 Lafayette Road N., St. Paul, MN 55155-4320, Attn.: Chris Beaubien.
– www.doli.state.mn.us –

Name

Company name

Address

City, state, ZIP

Phone

Fax

E-mail

Bill to

Amount enclosed

For more information, to request special accommodation or to register

by phone or fax, call Chris Beaubien at (651) 284-5478 or call toll-free
1-800-342-5354.