GSIA Digest
February 25, 2008

SITF bill would end assessments decades earlier.
The House Industrial Relations Committee will take up legislation this week that would hasten close-out of the Subsequent Injury Trust Fund and still keep assessments below current levels.  The General Assembly passed legislation in 2004 to phase-out the SITF, and subsequently set June 30, 2006 as the last date of injury eligibility for reimbursements from the Fund.

Current law provides that the proportion of each insurer and self-insurer’s assessment must be based on the total payout of claims from the previous year. An actuarial study shows that this assessment formula will not be adequate to pay down the $900,000,000 obligation until some time after 2070. Current law mandates that the SITF be terminated by December 31, 2020.

Introduced by Industrial Relations Chairman Mike Coan, HB 1186 would allow the Trustees of the SITF to set the assessment at a level sufficient to close out the Fund by the end of 2020. According to Trustees, the annual assessment for any insurer or self insurer would still be less than they currently pay.

Subcommittee to hear “data mining” bill.
A House Insurance subcommittee will take up HB 661 tomorrow.  This bill would require the State Board of Workers’ Compensation to set up a data base which a New York Company could then “mine” and sell the information to health insurers.  Self insured employers would then be required to “make direct reimbursements to health insurers when the health insurer can reasonably demonstrate that it has paid medical claims for a work-related injury.”

GSIA plans to testify against HB 661 at the hearing.  Georgia law already provides for third party reimbursements.  Moreover, the overwhelming majority of misfiled claims are almost certainly non-work-related injuries inappropriately filed in the Workers’ Compensation system – not the other way around.  There is considerable incentive for a claimant to file a Workers’ Compensation claim instead of a group health claim for a non-work-related injury.  There are no deductibles and no co-pays in the Workers’ Compensation system, and there is an income benefit for lost time cases.

Perhaps the most negative aspect of HB 661 for employers is that the involvement of the third party would make settlements much more difficult to achieve.  For employees, the bill raises serious concerns about privacy as the “mining company” would have access to their records at the State Board.

GSIA members should consider contacting their State Representatives to express their views on this legislation.

April 23, 2007

The 2007 Georgia General Assembly adjourned sine die at midnight Friday, ending one of the longest and most contentious legislative sessions in state history.  Not since the major reforms of 1992 has workers’ compensation been such a hotly contested issue.  In the end, no legislation harmful to employers was approved, and several beneficial provisions will become law with the Governor’s signature.

Comp bill amended and passed.
Late on the last day of the legislative session, the Senate agreed to House amendments that removed from HB 424 two troublesome provisions previously added in the Senate Insurance and Labor Committee.  The bill now awaits the Governor’s signature.

Three new provisions were added to HB 424 in the Senate.  One of those includes alligator farms under the agriculture definition and thus exempts them from the mandate to provide workers’ compensation coverage.  That provision remained in the final bill. The other two provisions would have:

• Required the State Board to provide an elaborate database that health insurers could use to compare claims and shift health care claims to the workers’ compensation system.
• Required the State Board to hold “stakeholder” meetings and extensive public hearings before adding any providers to a medical fee schedule.

Both of these provisions were deleted in the House and are not in the bill as passed.  Both would have added costs to the system and led to higher assessments on self-insured employers.

Also excluded from the bill was any provision to exempt burn centers from the fee schedule. GSIA vigorously opposed creation of such exemptions, which would inevitably lead to an unraveling of the fee schedule and markedly higher costs for employers.  Attempts to add such an exemption ended when the State Board of Workers’ Compensation negotiated new levels for certain DRG codes under the fee schedule.

The centerpiece of HB 424 is a clarification that the State Board of Workers’ Compensation may include prescription drugs under a fee schedule.  Prescription drugs account for 15 to 18% of the $550 million in medical costs under workers’ compensation.  Currently, drugs in workers’ compensation cases are priced at 120% of the average wholesale price – far higher than in any other health care setting. Combined with an anticipated requirement for the use of generic drugs, this measure promises to bring substantial savings to the workers’ compensation system.

Other provisions in the final version of HB 424 include:

• An increase in the maximum weekly income benefit from $450 to $500.  This puts the maximum at about two-thirds of the state average weekly wage. Still, Georgia’s maximum benefit is at or near the bottom for all states.
• A corresponding increase in the temporary partial disability benefit from $330 to $334 per week.
• Clarification that independent medical exams may include psychological examinations. Since psychologists cannot use expensive pharmaceuticals, some employers may prefer to use them rather than psychiatrists.
• A five year limit on the duration of any claim for which no medical or income benefits have been paid or hearings held.  Currently there is no limit.
• A change from 15 to 20 days from the date of notification for an employer to select a rehabilitation provider.

HB 424 was introduced by House Industrial Relations Chairman Mike Coan of Lawrenceville, who also moved to eliminate the troublesome Senate amendments from the bill.  Rep. Coan also opposed any exemptions from the fee schedule.

Lawmakers clarify SITF assessments.
The General Assembly on April 17 gave final approval to legislation that clarifies how self-insured employers will be assessed for their participation in the Subsequent Injury Trust Fund.  SB 131 provides that employers who cease to be self-insured must continue to pay assessments to the SITF for any remaining claims made while they were still self-insured.

Past practice by the SITF has been to end assessments when an employer switched from self-insured status to commercial insurance coverage. This created an inequity for remaining self-insured employers, and that inequity was exacerbated by the phase-out of the SITF.

As SB 131 was moving through the House Industrial Relations Committee, Rep. Tom Knox of Cumming attempted to add an amendment that would have exempted from assessments those self-insured employers who made no claims against the fund in that year.  This amendment would have ignored remaining claims for such employers and shifted their liabilities to other employers.  GSIA testified against this amendment, which was defeated in the committee.

Bill Status Report.
SB 43: Rogers of Woodstock – would prohibit employers from banning firearms in employee parking lots. Held in Senate and recommitted. Will carryover to 2008 legislative session.

SB 96: Golden of Valdosta – amended on the Senate floor to delete references to post accident drug testing and passed without dissent.  As passed by the Senate and House, provides only for the use of saliva samples in employee drug testing programs.

SB 109:  Hudgens of Comer – would include administrators for self-insured health plans in the prompt pay requirements of Code Section 33-23-100. Continues to exempt workers’ compensation plans.  Passed Senate and House.

SB 161: Heath of Bremen – provides that disability retirement benefits of state employees shall be reduced by the amount of workers’ compensation benefits received.  Passed Senate and House.

SB 239: Goggans of Douglas – clarifies the exemption from workers’ compensation for agricultural workers.  Amended on the Senate floor so that it only adds to the exemption those involved in the care, feeding, and training of alligators.  Amended bill passed Senate. Provisions of  this bill were added to HB 424 in the Senate.

HB 408: Knox of Cumming – to provide that captive insurance companies issuing workers’ compensation insurance and associated with an industry or association may participate in the Georgia Insurers Insolvency Pool.  Passed House and Senate.

HB 597: Harbin of Augusta – would exempt from the hospital fee schedule under workers’ compensation certain treatments provided by the burn center in Augusta and at the burn unit of Grady Memorial Hospital.  Remained in House Industrial Relations Committee.

HB 661: Burkhalter of Alpharetta – would create a “workers’ compensation records inquiry service” within the State Board of Workers’ Compensation.  Would allow health insurers to challenge claims they feel should be paid under workers’ compensation. Remains in House Insurance Committee.  Will carry over to 2008 session.

HB 719: Forster of Ringgold – would create a state Occupational Safety and Health Administration.  Remains in House Industrial Relations Committee. Will carry over to the 2008 session.

March 21, 2007

The General Assembly will reconvene on Tuesday, March 27 for its 30^th legislative day. Bills that fail to clear their House of origin by the 30^th day are ineligible for further consideration this year, and will carry over to the 2008 legislative session.

State Board’s bill clears House.
The House of Representatives this week passed HB 424 without a dissenting vote and without amendment. The bill had previously been recommitted to the Rules Committee as an Augusta burn center pushed for an amendment that would exempt them from the fee schedule set by the State Board of Workers’ Compensation.

HB 424 is now in the Senate where it must first clear the Insurance and Labor Committee.  GSIA and other business groups will continue to oppose any amendments that would exempt any medical providers from the fee schedule.  Any such exemption would almost certainly lead to the eventual unraveling of the fee schedule as various provider groups seek exemptions through legislation.

For employers, the centerpiece of HB 424 is a provision to clarify that the State Board can include pharmaceuticals under the fee schedule. Pharmaceuticals used in workers’ compensation cases are priced at about 120% of average wholesale, well above prices for drugs in group health plans.  Prescription drugs make up 15 to 18% of the $550 million of medical costs in Georgia’s workers’ compensation system.  Currently, prescription drugs are the only major component of the medical costs in workers’ compensation that are not governed by a fee schedule.   

Introduced by Rep. Mike Coan, HB 424 will also increase in the maximum weekly income benefit from $450 to $500.  This puts the benefit at about two-thirds of Georgia’s average weekly wage, and more importantly for employers, it keeps the benefit statutory in nature rather than indexed to the average weekly wage.  The insurance industry has estimated the impact of this benefit increase at about 2%, far below the cost savings anticipated from any fee schedule on pharmaceuticals. 

“Bring your guns to work” bill headed to Senate floor?
The Senate Rules Committee is expected to approve legislation Monday that would  prohibit employers from banning guns in employee parking lots. The National Rifle Association has made an all out push for SB 43, which has been languishing in the Rules Committee since mid February.  If approved by the Rules Committee on Monday, the bill will be considered by the full Senate on Tuesday, the crossover deadline for all bills.

Introduced by Senator Chip Rogers of Woodstock, SB 43 was amended in the Judiciary Committee to include a troublesome employer liability provision. As passed by the committee, the bill would make employers liable for actions arising from guns in the parking lot if they “knew or should have known” that such actions might arise.  This creates a “catch 22” for employers, who can be held liable if they act or if they do not act to prevent a potential violent act arising from the presence of a gun in the parking lot.

Under SB 43, employers could still ban guns in employee parking lots if they provide “a secure parking area which restricts general public access through the use of a gate, security station, or other similar means of limiting public access.”  Company vehicles are also exempt from the provisions of the bill.

Employer groups are opposing SB 43 because it diminishes employer property rights as well as their right to set policies for their own operations.  The bill also has implications for Georgia’s status as an “employment-at-will” state, as there would doubtless be litigation over employment termination that could be linked to firearms in vehicles.

Other bills of interest.
SB 96: Golden of Valdosta – would provide for post accident, on-site drug testing and the use of saliva samples by employers with certified drug-free workplaces.  Still in Senate Insurance and Labor Committee.

SB 109:  Hudgens of Comer – would include administrators for self-insured health plans in the prompt pay requirements of Code Section 33-23-100.  Maintains current exemption for administrators of workers’ compensation group funds. Favorably reported by Senate Insurance and Labor Committee.  Recommitted and favorably reported a second time.

SB 131: Hudgens of Comer – to provide that employers who cease to self insure their workers’ compensation coverage must continue to pay assessments to the Subsequent Injury Trust Fund for claims they referred to the SITF while they were self insured.  Passed Senate and now in House Industrial Relations Committee.

SB 161: Heath of Bremen – provides that disability retirement benefits of state employees shall be reduced by the amount of workers’ compensation benefits received.  Passed Senate and first read in House.

SB 239: Goggans of Douglas – clarifies the exemption from workers’ compensation for agricultural workers by further defining “farm laborers” to include those involved in “cultivating the soil or in connection with raising or harvesting any agricultural or horticultural commodity, other than timber, including but not limited to the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, fur-bearing animals, and wildlife. Favorably reported by Senate Insurance and Labor Committee.

HB 597: Harbin of Augusta – would exempt from the hospital fee schedule under Workers’ Compensation certain treatments provided at the burn center in Augusta and at the Grady Memorial Hospital burn unit.  Still in House Industrial Relations Committee

February 26, 2007

The Georgia General Assembly recessed Thursday and will reconvene Tuesday for three legislative days. While no schedule has been finalized beyond Thursday, it appears the lawmakers will then take a long recess – perhaps two weeks – while Congress decides whether to provide further support to the Peach Care insurance program for children without health insurance. The legislature has completed 24 of its 40 legislative days.

Drug fee schedule measure awaits floor action.
The House Industrial Relations Committee this week approved HB 424, the bill to clarify that the State Board of Workers’ Compensation can set a fee schedule for prescription drugs. The measure is now in the House Rules Committee, and could be cleared for consideration by the full Senate this week.  The bill must pass the House by the 30^th legislative day to remain eligible for further consideration.

While there was only one dissenting vote in the committee, HB 424 could face vocal opposition on the House floor.  Rep. Buddy Carter of Pooler, a pharmacist, strongly opposed the bill during the committee debate, and pharmacy interests are likely to work in opposition to the bill when it comes up on the House floor. GSIA members are urged to contact their state representatives regarding HB 424. Key points regarding the bill are:

• Prescription drugs are the only component of medical costs under workers’ compensation that are not under a fee schedule.
• Prices for prescription drugs under workers’ compensation are now at 120% of the “average wholesale” price, while the same products are at 86% of average wholesale for the State’s group health plan, and are even lower for many private group health plans.
• Failure to place pharmaceuticals under a fee schedule would drive more self-insured employers to use pharmaceutical benefit management programs.
• Georgia employers and insurers now pay $550 million a year in medical costs under workers’ compensation, and prescription drugs account for 15 to 18% of that cost.
• Savings from the fee schedule are needed to balance the $50 increase in the maximum weekly income benefit provided in the bill.

The actual level of the fee schedule would be set by the State Board.  Employer savings from a fee schedule on pharmaceuticals would be substantial, even if the schedule was no lower than 100% of wholesale. In addition to the fee schedule, the State Board would mandate the use of generic drugs where available.

Cost pressure from the $50 benefit would be minor – about 2% according to insurance industry estimates.

Floor vote set on SITF bill.
On Tuesday the full Senate will consider legislation to require that employers who cease to be self-insured must continue to pay assessments to the Subsequent Injury Trust Fund for claims they referred to the SITF while they were still self insured.  The sponsor of the bill, Insurance and Labor Chairman Ralph Hudgens of Comer, will oppose any amendments to SB 131.

An insurance company had reportedly proposed an amendment to the bill that would have ended the SITF immediately and returned all claims to the employers. Senator Hudgens contends that Georgia employers are not prepared to reserve for the $1 billion in liabilities currently in the SITF.  It now appears unlikely that there will be an attempt to amend the bill on the Senate floor, but stranger things have happened.

Other bills of interest.
SB 43: Rogers of Woodstock – would prohibit employers from banning firearms from cars in employee parking lots unless the parking lot is secured by guards or gates.  Favorably reported by Senate Judiciary Committee and still in Senate Rules Committee.

SB 96: Golden of Valdosta – would provide for post accident, on-site drug testing and the use of saliva samples by employers with certified drug-free workplaces. Still in Senate Insurance and Labor Committee.

SB 109:  Hudgens of Comer – would include administrators of self-insured health plans in the prompt pay requirements of Code Section 33-23-100.  Maintains current exemption for administrators of workers’ compensation group funds. Favorably reported by Senate Insurance and Labor Committee.

SB 161: Heath of Bremen – provides that disability retirement benefits of state employees shall be reduced by the amount of workers’ compensation benefits received.  Still in Senate Retirement Committee.

HB 45: Stephens of Savannah – provides that no “health benefit plan or policy shall require prior approval for a prescription drug if a drug manufacturer utilizing a pricing structure for sales to various classes of trade provides that a community pharmacy is charged the lowest price in the pricing structure for such prescription drug.”  Definition of “health plan or policy” includes workers’ compensation insurance carriers.  Still in House Insurance Committee.

February 15, 2007

The Georgia General Assembly reached the halfway mark of the 2007 legislative session yesterday, completing the 20^th legislative day. 

Bill targets prescription drug costs.
Rep. Mike Coan this week introduced legislation to clarify that the State Board of Workers’ Compensation can set a fee schedule for prescription drugs.  With passage of HB 424, the State Board would not only set fees, but would by rule require use of generic drugs where available.  The bill is now in the House Industrial Relations Committee chaired by Rep. Coan.

HB 424 was developed by the Advisory Council to the State Board of Workers’ Compensation. In addition to the provision for a fee schedule on prescription drugs, the bill calls for an increase in the maximum weekly benefit from $450 to $500.  Employer representatives on the Advisory Council supported this increase, as it keeps the maximum benefit at about two-thirds of the State average weekly wage.  The insurance industry has estimated the impact of this benefit increase at about 2%, far below the cost savings anticipated from any fee schedule on pharmaceuticals.  The benefit increase would take effect on July 1, two years after the last increase in the maximum benefit. Other provisions in HB 424 include:

• An increase in temporary partial disability benefit from $330 to $334 per week.
• Clarification that an employer-requested independent medical examination may include psychiatric and psychological examinations.
• Provision that, after July 1, 2007, any claim for which no medical or income benefits have been paid or hearings held for five years “shall stand dismissed with prejudice.”
• Changes from 15 to 20 days from the date of notification for an employer to select a rehabilitation supplier. 

With pharmaceuticals prescribed in workers’ compensation cases typically going for 120% of the average wholesale price, the proposed fee schedule should mean substantial savings for Georgia employers.  Drugs now account for 15 to 18% of the $550 million in medical costs in Georgia’s workers’ compensation system.

SITF measure approved by committee.
The Senate Insurance and Labor Committee this week passed SB 131, a bill providing that employers who cease to be self-insured must continue to pay assessments to the Subsequent Injury Trust Fund for claims they referred to the SITF while they were still self insured.  Insurance and Labor Chairman Ralph Hudgens, who sponsored the bill, said that it was needed to ensure equity for all self insured employers and provide an orderly phase-out of the SITF.

Chairman Hudgens also noted that one insurance company had proposed an amendment to the bill that would have simply brought an abrupt end to the SITF, returning all claims to the employers.  He added that he would oppose any such amendment, as Georgia employers are not prepared to reserve for the $1 billion in liabilities currently in the SITF. An abrupt closure of the SITF would also have serious implications for the Guaranty Trust Fund.

“Bring your guns to work” bill awaits floor action.
Legislation to prohibit employers from banning guns in employee parking lots has cleared the Senate Judiciary Committee and is now in the Senate Rules Committee.  SB 43 could be scheduled for a vote in the full Senate at any time.

 Introduced by Senator Chip Rogers of Woodstock, SB 43 was amended in the Judiciary Committee to include a troublesome employer liability provision. As passed by the committee, the bill would make employers liable for actions arising from guns in the parking lot if they “knew or should have known” that such actions might arise.  This creates a “catch 22” for employers, who can be held liable if they act or if they do not act to prevent a potential violent act arising from the presence of a gun in the parking lot.

Under SB 43, employers could still ban guns in employee parking lots if they provide “a secure parking area which restricts general public access through the use of a gate, security station, or other similar means of limiting public access.”  Company vehicles are also exempt from the provisions of the bill.

Employer groups are opposing SB 43 because it diminishes employer property rights as well as their right to set policies for their own operations.  The bill also has implications for Georgia’s status as an “employment-at-will” state, as there would doubtless be litigation over employment termination that could be linked to firearms in vehicles.

On-site drug testing proposed.
Current Georgia law limits work site drug testing to immediate post-employment situations. A bill introduced by Senator Tim Golden of Valdosta would allow employers with certified drug free workplaces to perform on-site testing where there is reasonable suspicion of drug use or immediately after a work related accident.

SB 96 would also provide for the use of saliva samples in addition to the current provision for urine samples.  Use of saliva samples would make on-site testing far more practical and less controversial.

Now in the Senate Insurance and Labor Committee, SB 96 should help diminish the time required for return-to-work after a workplace injury.  GSIA members interested in this legislation should contact their state senators.

Other bills of interest.
SB 109:  Hudgens of Comer – would include administrators for self-insured health and workers’ compensation plans in the prompt pay requirements of Code Section 33-23-100.  Referred to Senate Insurance and Labor Committee.

SB 161: Heath of Bremen – provides that disability retirement benefits of state employees shall be reduced by the amount of workers’ compensation benefits received.  Referred to Senate Retirement Committee.

HB 45: Stephens of Savannah – provides that no “health benefit plan or policy shall require prior approval for a prescription drug if a drug manufacturer utilizing a pricing structure for sales to various classes of trade provides that a community pharmacy is charged the lowest price in the pricing structure for such prescription drug.”  Definition of “health plan or policy” includes workers’ compensation insurance carriers.  Referred to House Insurance Committee.

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January 16, 2007