HomeMy WebLinkAboutResolution No. 2013-72Suggested by: Administration
CITY OF KENAI
RESOLUTION NO. 2013 -72
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, SUPPORTING
LEGISLATIVE ACTION TO ADOPT THE RECOMMENDATION CONTAINED IN
RESOLUTION 13 -01 OF THE ALASKA WORKERS' COMPENSATION BOARD.
WHEREAS, the Alaska Workers' Compensation Board is a public organization that is
accountable to the residents, Legislature and Governor of Alaska and that acts as the
lead agency for adjudicating disputes under the Alaska Worker's Compensation Act, to
ensure quick, efficient and fair payments of benefits to injured workers at a reasonable
cost to employers; and,
WHEREAS, despite a 14.2% decline in the frequency of worker's compensation claims
over the past 5 years, Alaska has seen its workers' compensation premium rates climb
to the highest in the nation; and,
WHEREAS, workers' compensation medical costs have increased 25% over the last 5
years and are the primary driver in the increase in premium with $0.75 of every $1.00
spent on workers' compensation benefits being spent on medical cost; and,
WHEREAS, identical medical services paid by a workers' compensation claim versus
private insurance or self -pay is often multiples higher; and,
WHEREAS, the City's workers' compensation rates have increased over 20% in the last
two years primarily driven by increased medical cost incurred by the City's insurer;
and,
WHEREAS, Resolution 13 -01 of the Alaska Workers' Compensation Board identifies
changes needed to address the escalating workers' compensation costs while
protecting the rights of workers to fair and reasonable compensation when injured
while working; and,
WHEREAS, legislative action to implement the changes recommended in Resolution
13 -01 of the Alaska Workers' Compensation Board is in the best interest of the City of
Kenai, its residents, and its employers.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA, the City Council supports legislative action to adopt the recommended
changes outlined in Resolution 13 -01 of the Alaska Workers' Compensation Board.
Resolution 2013 -72
Page 2 of 2
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 20th day of
November, 2013.
ATT
San" digh, Ci Clerk
Approved by Finance:-7---IJ
"Villaye with a Past, C# with a Future"
FINANCE DEPARTMENT
210 Fidalgo Avenue, Kenai, Alaska 99611 -7794
Telephone: 907 - 283 -7535 ext 221 / FAX: 907 - 283 -3014
/ To: Rick Koch, City Manager A/�
/ From: Terry Eubank, Finance Director
Date: November 14, 2013
Re: Recommendation for adoption of Resolution 2013 -72.
Resolution 2013 -72 supports legislative action to reform Alaska' workers' compensation laws by
adopting the recommendations of the Alaska Workers' Compensation Board (Board) contained
in its Resolution 13 -01 which was passed unanimously by the Board on September 13, 2013.
The Board acts as the lead state agency for adjudicating disputes under the Alaska Workers'
Compensation Act, to ensure quick, efficient, and fair payments of benefits to injured works at a
reasonable cost to employers. The Board is a diverse group representing the State, industry, and
labor. Its unanimous passage of Resolution 13 -01 indicates broad support from both employers
and employees.
According to the October 2012 Oregon Workers' Compensation Premium Rate Ranking
Summary, Alaska has the nation's highest workers' compensation rates. Alaska has achieved
this ranking despite a 14.2% decline in the frequency of claims over the last five years. Medical
cost increases have propelled Alaska to its first place ranking. Medical costs represent $0.75 of
every $1.00 spent on workers' compensation benefits. 2011's HB13 amended AS 23.30.097 was
a positive step in reforming Alaska's workers' compensation statute as it removed the
establishment of worker's compensation medical fee schedule from the legislative process.
HB13 made usual, customary, and reasonable the basis for fees charged. APEI, the City's
insurance company, completed an analysis of one year's claims paid prior to adoption of HB13.
The results showed that using the usual, customary, and reasonable fee basis, medical costs
would have been 46% higher. In the two renewal years since adoption of HB13 the City has
seen its workers' compensation rates increase by 11% and 10% respectively and projections are
for another increase for FYI 5.
The recommendations of Resolution 13 -01 will replace usual, customary, and reasonable with a
resource based relative value scale ( RBRVS). RBRVS is the same system utilized by Medicare
and Medicaid. The Board further recommends adoption of a conversion factor to be applied to
RBRVS to compensate providers for the higher cost of providing care in Alaska.
Resolution 13 -01 will assist in containing the costs associated with prescription drugs, and would
provide the Board the ability to adopt regulations relating to prescription of opioids. The Board
is also recommending changes relating to rehabilitation and reemployment of injured workers.
In CY2012 $12.9 million was spent attempting to rehabilitate and reemploy with only 8% of
participants successfully completing the program.
In summary, changes are needed to Alaska's Workers' Compensation Statute to ensure the
quick, efficient, and fair payments of benefits to injured workers at a reasonable cost to
employers. I recommend adoption of City of Kenai Resolution 2013 -72 which supports
legislative changes to adopt the recommendations contained in Resolution 13 -01 of the Alaska
Workers' Compensation Board.
RESOLUTION NUMBER 13 -01
RESOLUTION IN SUPPORT OF ADDRESSING SYSTEM COSTS
UNDER THE ALASKA WORKERS' COMPENSATION ACT
WHEREAS, the Alaska Workers' Compensation Board (Board) is a public organization that is
accountable through its members to the residents, the Legislature, and the Governor of Alaska;
WHEREAS, the Board acts as the lead state agency for adjudicating disputes under the Alaska
Workers' Compensation Act, to ensure quick, efficient, and fair payments of benefits to injured
workers at a reasonable cost to employers;
WHEREAS, Alaska's workers' compensation premium rates are the highest in the nation
according to the October 2012 Oregon Workers' Compensation Premium Rate Ranking
Summary;
WHEREAS, medical costs comprise $35 of each dollar spent on workers' compensation
benefits;
WHEREAS, medical benefit costs have risen 25% over the last 5 years despite a 14.2% decline in
the frequency of workers' compensation claims over the same period;
WHEREAS, research is clear that inappropriate opioid use is an epidemic damaging lives and
driving up costs, as stated in the August 28, 2013 joint policy recommendations of the
International Association of Industrial Accident Boards and Commissions, the American College
of Occupational and Environmental Medicine; the National Association of Insurance
Commissioners, the National Alliance for Model State Drug Laws, and the National Council of
Insurance Legislators;
WHEREAS, rehabilitation and reemployment of injured workers costs employers $12.9 million
in CY2012, with fewer than 8% of eligible injured workers successfully completing retraining;
NOW THEREFORE BE IT RESOLVED that the Board respectfully requests that the Alaska State
Legislature amend the Alaska Workers' Compensation Act to provide the following:
1. That all fees and charges for medical treatment be subject to regulation by the Board;
2. That the physician fee schedule be based on Centers for Medicare and Medicaid
Services (CMS) resource based relative value scale (RBRVS) increased by a board
specified conversion factor;
3. That the outpatient hospital /ambulatory surgical center fee schedule be based on CMS
ambulatory payment classification increased by a board specified conversion factor;
4. That the inpatient hospital fee schedule be based on CMS Medicare severity diagnostic
related group (MSDRG) increased by a board specified base rate;
5. That the Board evaluate board specified conversion factors and rates every two years;
6. That air ambulance services be reimbursed at a board specified rate;
7. That medical providers be required to bill payers within 180 days of date of service;
8. That medical providers must submit a claim for disputed payment within 60 days of the
disputed payment;
9. That reimbursement for out -of -state services be the lower of the workers'
compensation fee schedule in the jurisdiction where the service is provided or the
workers' compensation fee schedule adopted in Alaska;
10. That durable medical equipment not included in a covered medical procedure be
reimbursed at manufacturer's invoice plus a board specified markup.
11. That reimbursement for prescription drugs be based on manufacturers invoice plus a
board specified mark -up and dispensing fee;
12. That prescription drugs dispensed by a physician include the manufacturer's national
drug code (NDC) assigned by the U.S. Food and Drug Administration, and are subject to
the same prescription drug formulary as retail pharmacies; and
13. Authorize the Board to adopt regulations relating to the prescription of opioids.
BE IT FURTHER RESOLVED that the Board respectfully requests that the Alaska State Legislature
amend the Alaska Workers' Compensation Act to authorize the department, in adopting or
amending a regulation that incorporates a document or other material by reference, to
incorporate future amended versions of a document or other material if it is one of the
following:
1. Current Procedural Terminology Codes, produced by the American Medical Association;
2. Healthcare Common Procedure Coding System, produced by the American Medical
Association;
3. International Classification of Diseases, published by the American Medical Association;
4. Relative Value Guide, produced by the American Society of Anesthesiologists;
5. Diagnostic and Statistical Manual of Mental Disorders, produced by the American
Psychiatric Association;
6. Current Dental Terminology, published by the American Dental Association;
7. Resource Based Relative Value Scale, produced by CMS;
8. Ambulatory Payment Classifications, produced by CMS;
9. Medicare Severity Diagnosis Related Groups (MSDRG), produced by CMS;
10. National Correct Coding Initiative Edits produced by CMS; or
11. Any other document or material the board incorporates by reference.
Resolution 13 -01
Page 2
BE IT FURTHER RESOLVED that that the Board respectfully requests that the Alaska State
Legislature amend the Alaska Workers' Compensation Act to provide the following:
1. Transition from emphasis on retraining to emphasis on stay -at- work /return -to -work and
on a voluntary basis, provide an initial consultation with the employer, the employee,
and the employee's treating physician to determine the physical demands of the
employer and the physical capacities of the employee to determine whether a stay -at-
work /return -to -work plan can be implemented.
2. A repeal of the 90 day mandatory reemployment evaluation under AS 23.30.041, and
return to evaluations on the request of either the employer or the employee.
3. Adopt the following:
a. Strengthen criteria by eliminating reemployment services by non - credentialed
individuals and eliminating reemployment services being administered by firms
not principally owned by credentialed individuals.
b. Authorize the Board to establish fees for reemployment specialist services.
c. Increase the benefit under .041(1) from $13,300 to $18,600, and adjust to cpi
annually.
d. If found eligible, provide two choices
I. accept retraining with limit of 2 years and maximum benefit under
.041(1), or
ii. accept a one -time cash payment of the maximum benefit under .041(1)
plus 50 %.
4. Increase evaluation time from 30 days to 60 days.
5. Provide statutory provision for RBA reconsideration with 30 days of decision.
6. Amend the statute to allow employers to controvert based on noncooperation & follow
regular claim process.
BE IT FURTHER RESOLVED that copies of the Resolution be promptly transmitted to the
Governor, the President of the Senate, the Speaker of the House, and the Chairman of the
Senate and House Labor and Commerce Committees.
Resolution 13 -01
Page 3
CERTIFICATION
The Alaska Workers' Compensation Board held a meeting duly and regularly called, noticed,
and convened this 27`" day of September, 2013, and the foregoing Resolution was adopted at
said meeting.
Sig ed th' 27`h day of September, 2013
ichael Monagle,
Chair
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Stacy Allen,
Labor Mornber
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Pamela Cline,
La
Chuck Collins,
Member
Mem
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David Kester,
Indjmt_ry Member
Sarah Lefebvre,
Industry IjAember ,
Lord, V
ry Member
Resolution 13 -01
Page 4
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Ronald Nalikak,
Industry Member
Michael O'Connor,
Industry Member
-,fa Nl,,i s4e
Amy Stee ,
Industry Member
Mark Talbert,
L�o,r Member
Rick Traini,
Labor Member
a Vollendorf,
Member
Robert
Woodman,
)r Member