There has been a fair amount of discussion about delegation in workers' compensation in recent years. Now come questions and considerations of states delegating authority to the federal government. This is a somewhat unique and therefore interesting perspective on the delegation question. With the changes to Medicare reimbursement, will there be delegation challenges?
Until now, the discussion and litigation context has largely regarded the use of the American Medical Association guides to Permanent Impairment ("the Guides"). It was first addressed here in 2015 in As Florida Waits (September 2015). After that analysis of the Pennsylvania Appellate Court decision, the subject was revisited following the Pennsylvania Supreme Court decision in 2017 in Pennsylvania High Court Magnifies Protz (June 2017). Most involved in workers' compensation are familiar now with the Protz litigation and the interesting analysis of delegation.
Both of those posts provide far more detail regarding these two decisions. But, in a nutshell, the courts concluded that the state may certainly delegate its regulatory authority. By adopting a set of guidelines like the Guides, the state is relying upon work done by some outside, non-governmental, agency or person. The Protz decisions do not cast doubt on that process. However, that adoption must be of some work that is complete at the time of the state's adoption.
In Pennsylvania, the legislature sought to avoid the necessity of periodically re-addressing the issue of adopting Guides, a medical impairment authority produced by someone other than the state itself. It therefore legislatively adopted "the most current edition" of the Guides. Thus, as this outside agency (the AMA) made changes in its perceptions and conclusions regarding impairment, those changes would automatically become effective in Pennsylvania. The Pennsylvania courts concluded that such a statutory adoption of something not as yet existing (a future amendment) was inappropriate and unconstitutional. That was delegating the process of updating or revising to the AMA.
There are several potential impacts of such an analysis on workers' compensation, in addition to the obvious example of impairment guidelines. In recent years, states have similarly adopted tools such as pharmacy formularies and treatment guidelines. It is possible that such adoptions may later undergo amendment or revision and thus require re-adoption in order to effectuate changes. The potential for a challenge is perhaps evident from the prevalence of these adoptions.
Various states have treatment guidelines. Reportedly 23 states have done so. The following is a sampling: Arizona, California, Colorado, Montana, New York, Washington, and Wyoming. Some states have adopted the Official Disability Guidelines (referred to as "the ODG") and others the American College of Occupational and Environmental Medicine (referred to as "ACOEM"). Some states have declined to adopt either of these products and have instead adopted treatment guidelines internally. See Louisiana's Medical Claim Process Upheld (December 2018). According to a study from WCRI, and reported by Business Insurance, there are "vast differences in state's workers' compensation treatment guidelines."
Various states have also adopted pharmacy formularies. The Injured Worker Pharmacy noted these were "a growing trend in workers' compensation" back in 2016. Texas is seen as originating this concept of publishing a list of medications that are presumptively acceptable in workers' compensation, and by inference designating drugs that will instead require additional explanation or documentation for authorization. Since Texas began this experiment, Mitchell reports that "nine states have fully implemented drug formularies and three more have posted draft formulary rules." As with the treatment guidelines, it is practical to consider that some states may adopt a formulary process prepared by an outside agency or person.
With this foundation, and an appreciation for the potential for delegation issues, we turn back to the idea of delegating to the federal government. Recently, WorkCompCentral reported that NCCI Foresees Impact of Changes to Medicare E/M Fee Schedule. These changes affect how Medicare will reimburse providers for medical care. Essentially, the examples cited by WorkCompCentral demonstrate the simplification of office visit charges. There are currently 5 "levels of care" that a doctor might deliver in a clinical setting. Those are defined in terms of the doctor's interaction with the patient and the documentation required to support payment.
In the changes Medicare is adopting for 2021, three intermediate levels of care, labeled "2, 3 and 4," which currently "would be paid . . . $45, $74 or $109, respectively, for an established patient" will be paid instead $90." Though there may be provisions that allow for additional charges specific to services provided in that visit, this is suggestive that at least in some instances doctors will be reimbursed less for medical services. Note that the example above does demonstrate some decrease in physician payment (level "4" decreasing from $109 to $90 means a $19 savings to the payer). However, some codes are similarly increasing (level "2" from $45 to $90 = $45 increase and level "3" from $74 to $90 = $16 increase). The change has the potential to burden or benefit providers.
The National Council on Compensation Insurance (NCCI) noted that "many states base their maximum allowable (workers' compensation) reimbursements, or MARs, for physician services on Medicare rates." Thus, as the federal government adjusts the amount it will reimburse for services, some state reimbursement manuals or regulations may likewise see a corresponding downward or upward effect. WorkCompCentral reports that "NCCI has estimated that the changes to the E/M fee schedule will increase workers’ comp physician costs by 1% to 4%, and overall medical costs will rise 0.5% to 1.5%."
Some see parallels between the American Medical Association changing its Guides and the federal government changing its reimbursement schedule. They essentially see someone other than the state itself adjusting parameters, with an automatic actualization effected by the state law or regulation that has tied state workers' compensation reimbursement to this federal standard. Others will perhaps voice that this is distinct from the delegation analysis voiced by courts in instances like Protz. They will see the distinction in the "outside agency" being the federal government. There is some tendency toward acceptance because (1) it is the government, and (2) there is a primacy of federal law.
The Florida workers' compensation statute has incorporated Medicare in some instances: "surgical procedures shall be increased to 140 percent of the reimbursement allowed by Medicare," section 440.13(12)(b)5; "reimbursement for a physician . . . 110 percent of the reimbursement allowed by Medicare," section 440.13(12)(b)4. Thus there is a potential for these changes to affect Florida workers compensation providers and payers.
Back in 1972, Scott Camil was criminally charged with possessing Phenycylidine Hydrochloride ("PCP"). The Florida statute under which he was charged did not list PCP as prohibited but incorporated "any other drug to which the drug abuse laws of the United States apply," an adoption of federal law. When the Florida statute was passed in 1967, the drug abuse laws of the United States also did not include PCP, but it was added by Congress in 1970. Thus, Mr. Camil was charged in 1972 under state law, by incorporating a federal definition that changed after the passage of the state law (and the arguable "adoption" by incorporation of the federal standards). Some will contend that "any other" language is a delegation to, or adoption of, a federal standard.
Mr. Camil's case was decided by The Florida Supreme Court in State v. Camil, 279 So. 2d 832 (Fla. 1973). The Court concluded:
"it would be improper to arbitrarily permit a substantive inclusion by reference into the reach of a Florida statute of a particular item embraced in a subsequently enacted or adopted federal law or federal administrative rule."
The Court held:
"It is reasonable that a new statute may be enacted by the Legislature incorporating by reference an existing Act of Congress, but it is contrary to the Constitution that a biennial revision of the statutes lacking title notice, etc., of the particular subject or thing to be incorporated have similar effect."
The decision was not unanimous. Justice Boyd dissented, explaining that the legislative re-adoption of such a law should be presumed to have included an examination of "the list of drugs prohibited on the Federal roster and prohibited by Federal law." Upon that presumption, he concluded that the change in federal law was appropriately adopted and therefore applicable to Mr. Camil's case. See also Presbyterian Homes of Synod of Florida v. Wood, 297 So. 2d 556 (Fla. 1974).
In 2011, the Florida First District Court of Appeal cited Camil regarding "prospectively incorporat(ing) by reference subsequently enacted federal law or" rules. The Court there held that "the OSHA standard in effect on the date the statute was enacted controls." Fossett v. Southeast Toyota Distributors, LLC, 60 So. 3d 1155 (Fla. 1st DCA 2011). It is possible that Florida's courts would view the Medicare schedule changes similarly.
Thus, it is possible that the recently announced changes in Medicare reimbursement may affect workers' compensation providers and payers in Florida. What is persistent in general discussions of workers' compensation is that each state and territory has its own statutory system, and each is governed and influenced by particular state constitutions and precedents.
Whether an affected medical provider or payer seeks to avoid the new Medicare allowance on this basis will be seen in time. But, whether such a challenge would be successful will be dependent upon individual state analysis and constraints. It is questions such as this that make workers' compensation intensely interesting and challenging.
