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State of Minnesota

Medical Services Review Board


Oct. 14, 2004
443 Lafayette Road N.
St. Paul, MN

MSRB members present: Beth Baker, M.D., chairperson


Lynn Ayers
Barbara Baum
Jeff Bonsell, D.C.
Sharon Ellis
Gregory Hynan, D.C.
William Martin
Debra Olson
Robin Peterson
Andrew Schmidt, M.D.
Ellen Velasco-Thompson

MSRB members excused: Michael Goertz, M.D.


Charles Hipp, M.D.
Bruce Van Dyne, M.D.
Jon Talsness, M.D.

Staff members present: Kate Berger


Beth Hargarten
Sandra Keogh
William Lohman, M.D.
Terry Mueller
Marlana Nierengarten

Others present: David Kune, Minnesota Chiropractic Association


Brian Hicks, Medical Advanced Pain Specialist
Susan McDonaugh, Intracorp
Dave Renner, Minnesota Medical Association
Carolyn Blodgett, CompCost
Rachel Zdgrablny, MMGNA/HRMS
Kathleen Picard, Minnesota Chapter Physical Therapist Association
Mark Skubic, Park Nicollet
Linda Sandvig, Allina

1. Call to order, introductions, announcements

Chairperson Baker called the meeting to order at 4:09 p.m. Members introduced themselves to the group.

2. Approval of minutes – Action item

Minutes for the January 2004 and July 2004 meetings were presented to the board. Members requested minutes be
presented to them in a more timely way.

Lynn Ayers made a motion to approve both sets of minutes. Jeffrey Bonsell seconded the motion. The motion
carried.

3. Assistant commissioner’s update

Assistant Commissioner Hargarten presented an update about the Workers' Compensation Advisory Council.
The council will have monthly meetings from now through December 2004 to assemble its legislative package.
Presumably, it will propose legislation similar to last year. However, no formal decision will be made until after the
December meeting. The council hopes to have its bill drafted by the start of the legislative session in January 2005.
This will permit more discussion with the legislators, right from the beginning. Hargarten encouraged MSRB
members to attend council meetings. Dates and times are listed on the Internet at www.doli.state.mn.us/wcac.html.
4. Meeting schedule

Hargarten gave the tentative meeting schedule for 2005:


Jan. 20, 2005
April 21, 2005
July 21, 2005
Oct. 13, 2005

Sharon Ellis pointed out next year's October meeting conflicts with MEA week. As a result, a new date will be
chosen for the October meeting. Marlana Nierengarten will send a revised meeting schedule to members via
e-mail.

5. Rulemaking

Hargarten emphasized the importance of rulemaking during uncertain legislative times. She drew attention to
two handouts included in member's packets: one about pharmacy costs and the other about managed care. These have
been posted for comments on the Department of Labor and Industry (DLI) Web site for approximately one month.
The department is hoping to publish a formal draft in late November. She also clarified the board's role during the
rulemaking process is to act as a sounding board.

Pharmacy rules

Hargarten began the discussion of this rule by pointing out the proposed change deals mainly with changing the
maximum fee allowed. The existing language stipulates the maximum outpatient fee is limited to the sum of the
average wholesale price (AWP) of the medication on the date the drug was dispensed and a professional dispensing
fee of $5.14. The proposed rule sets the maximum fee at a $3.65 dispensing fee plus the lower of either the average
wholesale price of the drug minus 11.5 percent, the maximum allowable cost set by the federal government or by the
commissioner of the Department of Human Services, or the usual and customary price charged to the public.

Ellen Velasco-Thompson asked if it is possible to include an option requiring employees to use a prescription
card issued by the employer. Dr. Lohman responded there is a difference between encouragement and a requirement.
Encouraging employees to use a prescription card may be acceptable, provided they have access to any pharmacy,
access to any drug approved for workers' compensation and no co-pay. He added that requiring use of a card would
most likely require legislative changes and is beyond the scope of the board.

Lynn Ayers asked if pharmacies would actually lose money if they were paid less than the average wholesale
price (AWP) called for in the proposed rules. Lohman explained the AWP is a fictional number based on a
pharmaceutical company's suggested price for drugs with no generic equivalent. He explained, in reality, it is standard
procedure to discount drug prices so that a pharmacy pays less than the average wholesale price. Drugs with a generic
equivalent are priced according to the maximum allowable cost set by both federal and state government for Medicare
and Medicaid. Baker and Lohman commented that testimony from the medical task-force indicated more pharmacists
were concerned about the reduction in the dispensing fee rather than drug pricing. The pharmacy industry had hoped
to actually increase the dispensing fee.

Dr. Bonsell asked about possible mandates that require insurance companies to report more data. Lohman and
Hargarten stated the department was working with the Minnesota Workers' Compensation Insurers Association
(MWCIA) about voluntary reporting of medical data. Currently, insurers are only required to report indemnity costs.

Kate Berger ended this portion of the meeting by clarifying the formal comment period for this rule had not
started. When it does, the department will publish a notice with a hearing date, if one is set. So far, no comments have
been presented to DLI. Berger speculated that interested parties might wait for the formal comment period to respond.
The department will send information to MSRB members before anything is released to the public.

Managed care

Hargarten began this discussion by acknowledging the amount of work Berger and Sandy Keogh have put into
this project. The rule has not changed since it went into place. The proposed rule changes address some issues that
have come up throughout the years. One of the new proposals would allow managed care organizations to negotiate
fees. This change was part of last year's legislative package that did not pass. Currently, managed care plans must pay
for services according to the rate set by the fee schedule. The new rule would allow them to receive negotiated
discounts from providers.

Bonsell commented that certified care plans would have an advantage because they can require members to use
providers within the network. Lohman explained that after the initial visit with a network provider, an injured worker
could still see any doctor, as long as they have had a prior treating relationship. Dr. Schmidt asked if bringing a
patient initially to a trauma center would constitute a prior treatment relationship. He was concerned about the
potential loss of revenue for the trauma center in this situation. Berger clarified the definition of prior relationship as
one established before the workers' compensation injury. An injured worker may go to any trauma center for initial
treatment of a serious injury. After the emergency is over, he or she must arrange to see another physician if the
trauma center is not a participating provider in the managed care plan. Under the proposed rules, if the injured
worker’s own physician is unavailable, the worker may see a network physician and then switch back to his or her
own doctor. Under the proposed rules, this doctor is reimbursed according to the fee schedule unless the doctor has
negotiated with a managed care plan. Schmidt expressed concern that an injured worker could get lost in this
situation. Ellen Velasco-Thompson explained this was unlikely, because a case manager is provided at the beginning
to manage these situations and ensure rules are followed.

Dr. Hynan had questions regarding managed care certification. He requested clarification of items on page four
of the proposed rule. According to Berger, this addresses specifics concerning provider accessibility. Before a
managed care plan can be certified, it must map out which providers are included in the agreement and where they are
located according to a network map set up by the respective county. This is to ensure an adequate number of each
category of health providers is available and to give employees convenient geographic access to care. Under the
proposed rule, the managed care plan network is presumed adequate if it has 25 percent of the providers in each
category. Lohman added that a managed care organization might set up separate contracts with different providers.

Next, Hynan asked how a health care provider is notified of an insurance claim. Berger answered that the
current practice will still be in place. The only question that may come about is if an insurance claim is denied and the
employee continues to see a managed care provider. Lohman stated the injured worker would know the status of the
claim within 14 days of the date of injury. There is no statutory requirement that compels insurance companies to
directly notify a provider. He added it should become apparent during the billing process. Insurers must provide
payment information within 30 days of receiving a bill. If billing is sent out on a timely basis, the provider will know
within the 30 days if the claim has been accepted. The department has no authority concerning communication
between a provider and his organization's billing department. Ellen Velasco-Thompson related how this is
accomplished in her organization.

Bonsell doubted a change in managed care would lead to lower costs and cited his experience as an HMO
provider. Lohman answered that this situation is different from managed care because an HMO acts as its own insurer.
It seems reasonable that insurers would not use managed care services unless the cost was competitive with
uncertified managed care. He went on to say we would be able to document exact savings if anyone who is a PPO
provider would disclose the amounts they will accept as payment. He clarified that certified managed care was more
than a network; it is subject to regulations uncertified managed care is not.

William Martin and Hyman were concerned administrative costs would negate any potential savings. Lohman
stated this was unlikely. Managed care organizations (MCO) are vendors for insurers and must provide cost reduction
if they want to stay in business. Hargarten added that the costs of dispute resolution would also decrease. Disputes
would be handled through MCO dispute-resolution processes. Only those that could not be resolved would go on to
the Office of Administrative Hearings.

After this discussion, Dr. Schmidt handed out a report he said illustrated the cost of caring for an orthopedic
patient. This study claimed workers' compensation patients required twice the effort of a Medicare patient. Schmidt
related his own experiences and agreed with this assessment. He cited this report as evidence in an area where the
department has little data. Bonsell added the department must develop ways to access more data, even if it means
legislative changes. Lohman welcomed suggestions about ways to get this data from nongovernment sources. He
explained that many state agencies have reviewed this issue and have not been able to develop a plan that asks for
data without violating the employer/insurer contract. They have a right to guard their proprietary processes. Hargarten
then asked Schmidt why workers' compensation claims, aside from the paperwork, take more time. Wouldn't
treatment of any kind of injury require the same amount of time? Both Schmidt and Hynan agreed the majority of
workers' compensation cases were more complex than other injuries. Lohman reminded them that 80 percent of all
workers' compensation cases involve less than one week of treatment. Hargarten ended the discussion encouraging
board members to contact Kate Berger or her with any additional comments.

6. Process toward rulemaking

Hargarten introduced the next section about developing pharmacy treatment parameters. Lohman has developed
a proposal for writing treatment parameters using information from accepted medical literature about this subject.
Specific issues will be defined as detailed questions. Two or three board members will act as a task force for each
question. Most of the work will be done through electronic technology, such as e-mail or conference calls. The task
force will write a report about their issues and present it to other board members. The department will also post the
reports on its Web site. All comments will be collated and given to the board before each MSRB meeting. The board
has the option of either accepting or rejecting the proposal. If rejected, the issue will go back to the task force for
further work. If accepted, department staff members will convert the report to rulemaking language. After this is done,
it will be resubmitted to the board for consensual approval.

Several members asked if language could be changed after the board made its recommendations. Lohman
assured them of Commissioner Brener's commitment to this process. Department staff members will keep the
commissioner informed throughout the proceedings, so there should be no surprises at the end. If Brener has any
concerns, this will be communicated directly to the board.

7. Approval of proposal – Action item

Bonsell made a motion to accept Lohman's proposal. Schmidt seconded the motion. The motion carried.

8. Task-force volunteers

According to Lohman, the commissioner wants the first task-force to deal with parameters of narcotics,
nonsteroidal drugs and muscle relaxants. Baker, Schmidt and Velasco-Thompson volunteered to investigate this issue.
Lohman suggested the task force use the three-month window between MSRB meetings to conduct research and write
its report.

9. New business

There was no new business.

10. Old business

There was no old business.

11. Adjourn – Action item

Velasco-Thompson made a motion to adjourn the meeting. Bonsell seconded the motion. The motion carried’ the
meeting was adjourned at 6:01 p.m.

Respectfully submitted,
Marlana Nierengarten
Executive Secretary

MN/rh

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