Tag Archives: Workers’ Compensation Commission

Who Is to Blame on Oklahoma Option?

I’ve been highly critical of the Oklahoma Option, the alternative workers’ compensation system that was recently found to be unconstitutional by that state’s Workers’ Compensation Commission. I’ve been critical of the backers of the system, as well as the employers that willingly set up plans in this closed and tightly controlled scheme. And while I’ve questioned how the Oklahoma Insurance Department, headed by Commissioner John Doak, could have approved plans so obviously deficient in comparison to those in the workers’ compensation system, I’ve never accused commissiioners of being otherwise involved. I just assumed it was stupidity, incompetence or slothfulness that allowed plans, required to provide benefits that are “equal to or better” than those provided under the workers’ comp laws of the state, to be approved for use when they were ultimately substandard.

That all changed last week, during the second opt-out session held during the 32nd WCRI Annual Issues & Research Conference. The speaker who changed my point of view was James Mills, director of workers’ compensation and captive insurance at the Oklahoma Insurance Department. Mills went on at length about how proud they were at OID to have developed a “powerful system with options” for employers in their state. I do not recall his mentioning that those options have been found to discriminate against their employees, and were therefore unconstitutional. He did not address that at all. In fact, he spoke so positively about Opt Out that he sounded to me just like the concept’s biggest promoter, Dallas attorney Bill Minick. He was just like Minick’s mini-me, or a mini-Minick, if you will. It became apparent from his presentation that the OID approvals were not borne of incompetence; no, the agency was instead directly culpable in the development and promotion of a scheme that creates discriminatory sub-classes of employees in the state.

See Also: Strategic Implications of the Oklahoma Option

Mini-Minick did not explain how plans that have draconian reporting requirements (most require an incident be reported in 24 hours or less, or all benefits may be denied) got approved when the state system allows for 30 days. He did not explain how plans that exclude a wide variety of injuries or conditions, like asbestos exposure or workplace violence, could be approved when the state system covers them. He did not explain how plans that do not even let an employee testify at an appeal of his denial could get by the OID. Frankly, there are many areas where the alternative plans come up short when compared with the state system, and mini-Minick didn’t explain any of them. He simply touted the OID’s desire to work to preserve these options for employers.

Clearly, Commissioner Doak appears to be a healthy proponent of the Oklahoma Option. This made clear to me why plans that have left everyone around the nation scratching their heads got approved in the first place. Of course, not every action may be intentional. There is obviously room for a little incompetence, as well. This is, after all the same insurance department that in 2012 issued an email announcement that an Insurance Commissioners Award for Tornado Awareness would be given to “the girl with the biggest [breasts].” (Seriously. Click here to read about it if you doubt me). Pesky details like proofreading emails or comparing benefit levels don’t appear to be a top priority in Doak’s department.

I suppose it is appropriate the agency is run by a man whose last name rhymes with the sound Homer Simpson makes when he is completely flummoxed.

I was speaking with some people at WCRI the morning following mini-Minick’s session when this topic came up. One of the people pointed out how employers always take the blame in situations like this, but that what they were doing was approved and legal. The problem was the legislative and regulatory environment that created the system to begin with. There is validity in that view, although the employers still should be held to account for the plans they adopted. “Because I could” was never an excuse that worked for me when I was in trouble as a child, and I suspect it will not be widely accepted in the public eye today (unless, maybe, you are Donald Trump, but that is another topic entirely).

See Also: The State of Workers’ Comp in 2016

For the failures of the Oklahoma Option, there is plenty of blame to go around, but a good deal of it apparently lies with the folks charged with watching the hen house. And it does not sound as though they understand their mistakes, which means they are likely destined to repeat them.

Oklahoma

The Pretzel Logic on Oklahoma Option

As a veteran of the worker’s compensation claims trenches, I saw first-hand how the expensive nature of the system drove employers out of business. It sad to see businesses go belly-up, and it was equally sad for the workers who were suddenly unemployed.

It was definitely a case of lose-lose.

One way to combat the high costs of workers’ compensation was to opt out of the traditionally expensive system in states that allowed it. By opting out, employers were forced to be more engaged in the administration of their program and focus more on the outcome.

The result was a less expensive system, providing quality benefits to the injured workers and improving the overall outcome.

Oklahoma was one of the states that seemed to have found the right mix. So I was quite dismayed to learn of the recent decision by the Oklahoma Workers’ Compensation Commission (WCC).

The case, Vasquez v. Dillard’s Inc., involved a worker for Dillard’s who was denied benefits after a work injury that was determined to be an aggravation of a pre-existing injury.

The WCC declared the opt-out portion of the workers’ compensation system unconstitutional because they felt it created a dual system where the injured worker is treated differently.

The most intriguing facet is how the WCC abandoned its traditional administrative role for that of a judiciary in deciding what law is, and is not, constitutional.

That, I suppose, is another story.

However, the WCC completely ignored the already approved opt-out option and remanded the case back to the administrative law judge within the traditional workers’ compensation system.

Not only am I concerned about that sort of pretzel logic, but I also see it as another attack on exclusive remedy.

Right now, my company doesn’t do business in any of the opt-out states. That doesn’t mean we wouldn’t consider it if that option presented itself down the road.

But that is probably on hold as any state considering moving forward with the opt-out system has now been stopped dead in its tracks. Best to sit tight for now.

As for whether the Oklahoma ruling will change what I do with regard to workers’ compensation remains to be seen. As I’m sure many employers will do now, I’ll wait on the sidelines and see how this plays out.

This is basically what I was doing before the Oklahoma ruling … observing from afar to see if the opt-out system (if it came to my states) was not only cost-effective but also fair to the workers.

I would never consider an alternate workers’ compensation system unless I was convinced it offered our injured workers the same, or better, benefits as the traditional system. I would also need to be convinced that it produced better outcomes.

Laying the Foundation for Drug Formularies

When Texas announced an 80% drop in the cost of “N” drugs prescribed for new injuries, workers’ compensation stakeholders took notice. (Medications designated as “N” in the Official Disability Guidelines are not appropriate for first-line therapy.)

Since that announcement, the implementation of a closed formulary has placed near the top of the list on several state legislative agendas. While the results being reported out of Texas are still fairly recent, the concept of a closed formulary is not a new idea in that state. Although changes in Texas’ work comp medical cost trends appear sudden, the process for achieving these was anything but.

When HB 7 was passed in 2005, it created the Division of Workers’ Compensation (DWC) within the Texas Department of Insurance and, among other things, authorized “evidence-based, scientifically valid and outcome-focused” medical treatment guidelines and a closed formulary for prescription medications. These steps, along with the existing preauthorization and dispute-resolution processes, provided the solid regulatory infrastructure needed to implement a successful closed formulary.

The Texas Closed Formulary (TCF) requires preauthorization for medications identified as “N” drugs in the current edition of the Work Loss Data Institute’s Official Disability Guidelines (ODG). These guidelines are updated on a monthly basis to encompass new medications and new research surrounding current medications. The TCF excludes not only “N” drugs but also any compound medication that contains an “N” drug, as well as experimental drugs that are not yet broadly accepted as the prevailing standard of care.

Naturally, implementing these requirements would mean a substantial change in prescribing habits. (That was the point.) The problem was that immediate and strict implementation could mean that injured workers were suddenly denied previously prescribed medications without allowing proper time for weaning. To counter this problem, the DWC created a “legacy period” during which older claims would not yet be subject to the closed formulary, even while providers had to comply with formulary requirements when treating newly injured patients. This approach allowed providers to adapt to the new preauthorization requirements and adjust their treating habits over time in existing claims. At the same time, it ensured formulary compliance from the outset in new claims.

After the conclusion of the two-year legacy period, all claims became subject to the TCF. In effect, this legacy period was a compromise that allowed Texas to begin implementing the TCF in all of its claims without hurting patients already on long-term prescription therapy.

The first (and, to date, only) state to attempt to replicate the Texas model was Oklahoma. Oklahoma followed the Texas model closely and, in some places, added improvements. For example, while the TCF excludes all compound medications containing an “N” drug, Oklahoma’s closed formulary excludes all compound drugs, regardless of ingredients.

Unfortunately, there are also some drawbacks – the main one being limited application. Because the Oklahoma Closed Formulary is contained within the rules for Oklahoma’s new Workers’ Compensation Commission, it applies only to those cases within the commission’s jurisdiction. The commission has jurisdiction over all claims with a date of injury from Feb. 1, 2014, on. Older claims are handled by the Workers’ Compensation Court of Existing Claims, which has no closed formulary provision. This means that a doctor treating a worker who was injured on Jan. 31, 2014, and another who was injured on Feb. 1, 2014, will only have to abide by evidence-based treatment guidelines for the second worker.

While Oklahoma has adopted medical treatment guidelines and taken steps to require preauthorization, these requirements are relatively new within the Oklahoma workers’ compensation system. As a result, providers, patients and payers are still adjusting to the new system, and there has been a fair amount of confusion.

Implementing a successful closed formulary does not happen overnight. Texas started the process 10 years ago and has been consistently working to ensure that its reforms were successful. After taking the time to establish the necessary regulatory infrastructure, adopt treatment guidelines and create a logical solution to ensure a unified standard of care issue across all claims, the state is finally seeing clinical and economic benefits.

As Arkansas, California, North Carolina, Tennessee and other states start thinking about replicating the results of Texas by implementing their own closed drug formularies, they would do well to have conversations about these principles first.

This article was originally posted at: WorkCompWire.