Summer 2023

State of the States



Sandy Shtab, Healthesystems AVP of Advocacy and Compliance, comments on regulatory activity around the country.

Spring Leap for State and National Legislatures

Spring has sprung and that means Congress and many State legislatures are in session. Public policy debates are well underway on healthcare topics such as provider shortages, drug pricing, mental health and post-COVID economic impacts.

Provider Shortages and Burnout

Provider availability continues to be the #1 industry challenge in workers’ compensation, as reported by healthcare executives during Healthe’s 2023 Industry Insights Survey. One major driver of low provider availability voiced across healthcare is post-COVID provider burnout.

Emergency Department (ED) physicians cite staffing shortages, extended wait times, and sometimes even violence in the ED as the major factor causing physicians to leave clinical practice in favor of more administrative work or to retire earlier. Data from the Mayo Clinic indicates that 63% of physician were reporting burnout, with many suffering from emotional exhaustion, increase in work-life integration and depression, all complicating factors that impact provider availability.1

It’s not just physician shortages that are a concern; home health agencies (HHA) and home health workers are similarly impacted. After CMS released its final reimbursement rule on home health reimbursement in October 2022, HHAs were surveyed to determine the expected impact. Nearly 63% of respondents said they would be somewhat impacted in terms of profitability and 44% believed the final rule would inhibit their ability to attract and retain staff.2

Interestingly, the Bureau of Labor Statistics reported that one-third of projected job growth over the next decade will fall into the healthcare and social services sector. With a rising demand for healthcare workers and many existing healthcare workers leaving the industry, it becomes even more necessary to leverage technology to address patient needs, without sacrificing quality of care.

Drug Pricing Debate Brings Focus on PBMs

Drug pricing continues to be a prominent concern for consumers and workers’ comp payers alike. The national focus on this ever-present issue has put the spotlight on drug manufacturers, pharmacy benefit managers (PBMs), and pharmacy suppliers.

Specifically regarding PBMs, the Inflation Reduction Act of 2022 addresses CMS drug price models and competition, a House Committee probe filed discovery on PBM business practices, and the Federal Trade Commission is reviewing the competitive environment of PBMs in the marketplace.

It is worth noting that many of the criticisms directed at PBMs often do not apply to workers’ comp claims. For example, prior authorization delays and formulary development – two subjects noted by many critics – are often regulated by individual states’ workers’ comp systems or defined in agreements between insurers and their PBM. This issue is essentially null in workers’ comp, but far more complex in group health.

Regardless, this national spotlight could have unintended effects on workers’ comp, though what those effects may be remain uncertain at the moment.

Mental Health & PTSD

The 2023 legislative session is brimming with bills that could further distinguish first responders from other occupations in terms of presumed compensability for post-traumatic stress disorder (PTSD) and other mental health conditions.

Supporters assert that PTSD is particularly prevalent for first responders due to the nature of their work, which can regularly expose them to traumatic events. Firefighters and police are most likely to witness the death of a colleague or civilian in the line of duty or bear witness to disturbing events. 

However, it is difficult to understand if this assertion is accurate due to the lack of studies on presumptions for first responders. While the National Council on Compensation Insurance (NCCI) has been closely monitoring these system changes, it is difficult to analyze the actual data, as many public entities employing first responders are self-insured, which means they do not report claim data to NCCI.3

This year, bills have been filed in ten states to expand coverage for first responders specifically for PTSD. Connecticut, Indiana, Kansas, Maryland, Nebraska, New Mexico, New York, Oklahoma, Virginia, and West Virginia will decide this session how to move forward on this matter, and it’s likely these bills could become law by end of this year.

Currently, there are 26 states which allow mental health claims like PTSD without a physical injury as compensable, regardless of employee classification.  

COVID Public Health Emergency Set to Expire, Leading to Downstream Concerns

President Biden announced his Statement of Administration Policy earlier this year, declaring the COVID Public Health Emergency (PHE) over, with former expiration dates on March 1st and April 11th extended to May 11, 2023. The declaration was intended to align with the former administration’s commitment to provide advance notice of at least 60 days prior to termination.

Some experts predict the end of the PHE may have downstream impacts on providers and healthcare systems, leading to a loss of public funding for government programs and millions of newly uninsured individuals.

Additionally, impending changes to national telehealth policy could lead to provider access issues across healthcare, including workers’ comp.

What is unclear is how future CMS policy might proceed regarding regulation and reimbursement rules, both of which will likely impact access to specialty care and mental and behavioral healthcare, especially for underserved or rural populations. Congress has delayed decision making on this until 2025. 

Considering the constant political, social, and economic adversity our nation has faced in the last few years, there continues to be stability and steady improvement in how our industry manages and delivers services to injured workers, employers, and payers in the workers’ comp system. Our industry is evolving and adapting to labor market changes, placing much needed focus on mental and behavioral health as a factor in overall worker outcomes. The insurance marketplace is robust and well positioned to take on these challenges as opportunities to grow stronger.

State of the States

Independent Medical Review outcomes are improving year over year, according to a new report analyzing IMR data from 2021.4 The program is performing well, and 94% of all submitted IMR requests were eligible for consideration, a tremendous improvement from the early research results starting with 2013 data, where 23% of all submissions were deemed ineligible for review. Pharmacy-related submissions remain the largest share of all IMRs at 31%, but that rate has declined steadily since the adoption of the ACEOM MTUS formulary. Prior to 2015, prescriptions accounted for nearly half of all IMR submissions. According to the 2021 data, opioids comprise 27% of all pharmacy related IMRs, with physical medicine and diagnostics accounting for 19% of IMRs each.

The overturn rate remains low at 7%, with behavioral and mental health referrals most frequently overturned. Functional restoration programs and other specialties including dental services are overturned at 12%.

There continues to be a small number of providers submitting the highest percentage of IMR, primarily in the Los Angeles area, the Bay area, and the Central Valley.

Legislators Consider New Regulations for Medical Provider Networkers

Legislation surrounding medical provider networks (MPN) has been proposed for the last several years and 2023 continues that trend. Efforts to amend existing statutes have been a major concern for provider groups, while many MPN network administrators and insurers state that these programs are fulfilling their intended function to improve access to care.

In previous years, a small number of provider groups sought to neutralize the existing MPN legislative framework by promoting the development of a state-run MPN. This effort was eventually quashed because there was no credible evidence of access issues either within the existing MPN systems or amongst non-MPN providers.

This year two bills are gaining notice and could impact injured workers, insurers, and medical providers.

Assembly Bill 1278 proposed new administrative requirements for MPNs and insurers, including additional notice requirements to providers and injured workers.

Senate Bill 697 proposes that the Division of Workers’ Compensation (DWC) conduct a study on value-based care reimbursement models. This bill would require the DWC to conduct multiple stakeholder workshops and consider the viability of linking medical fees to injured workers' medical outcomes.

While tying reimbursement to medical outcomes is not a new concept in the health benefits arena, it has never been adopted into any workers’ comp statutes or fee schedules. The DWC will also need to determine if and how an accountable care organization model could be applied to manage workers’ comp claims.

On December 29th, the Florida Division of Workers’ Compensation (DWC) published its second round of proposed changes to their Health Care Provider Medical Billing and Reporting Responsibilities rule under 69L-7.730 and Insurer Authorization and Medical Bill Review Responsibilities rule under 69L-7.740.5

The proposal includes updated procedural requirements for carrier authorization and payment of physician-dispensed medications. These changes are a result of public workshops held in November 2022, prompted by continued friction and fee disputes between carriers and physician dispensers.

At a public hearing on January 13, 2023, stakeholders voiced numerous concerns about the proposal, and its potential to create even more confusion and inefficiency in the system. A group of carriers and self-insured employers filed a recent rules challenge with the Department of Administrative Hearings (DOAH), asserting the DWC has overstepped its authority in its most recent proposal.

This complicating factor will likely delay the adoption of any changes until such time as the presiding judge shall issue a ruling. Even if allowed to proceed, the DWC may also face an additional obstacle in that the new language proposed is expected to increase costs for the payer community, and as a result, will require legislative ratification before it can become effective.

Florida’s legislative session runs from March to early May in 2023, and it is possible the Legislature may not consider the DWC proposed rule change until such time as the outstanding decision is pending in the DOAH. As a result, there may be no meaningful change in the regulation as it relates to physician dispensing authorization and disputes in 2023.

Results & Accomplishments Report Highlights Pharmacy and Injury Trends

The Florida Division of Workers’ Compensation (DWC) published their 2022 Results & Accomplishments Report,6 highlighting key regulatory data and results including medical, indemnity, financial and regulatory points of interest.

In 2021, $103 million was spent on pharmacy costs, a significant but steady decline from 2017 when pharmacy costs totaled $136 million. Congruent with other data sources, NSAIDs made up three of the top four drugs dispensed in 2021.

The average cost for a physician dispensed drug fell from $220 to $169 between 2017-2019, but has since risen to $233.

Sprains and strains made up 34% of injuries in workers comp, followed by occupational diseases at 20%, with contusions at 10%, fractures at 8%, lacerations at 5%, and other various injuries/illnesses making up the rest.

Activity surrounding marijuana legalization continues across the country, with two states starting 2023 with the introduction of new bills.

Kentucky, which has neither legal medical or recreational cannabis, is considering Senate Bill 51, which would legalize both medical and recreational marijuana simultaneously. This new bill would create a Cannabis Control Board as an oversight agency. Like other states, recreational use would be allowable for individuals 21 and older. Similar to legislation in New York, employers would be prohibited from refusing to hire or discriminate against those who use marijuana during non-work hours.

Minnesota’s Senate Bill 73 would expand the state law allowing medical use by allowing recreational use of marijuana. This bill also establishes a new oversight entity called the Office of Cannabis Management to regulate the program. Adults 21 and over would be permitted to grow up to eight plants at home. Like Kentucky’s bill, employers would be prohibited from terminating, disciplining, or discriminating against workers who test positive for marijuana.

Minnesota insurers have been engaged in several legal actions in the last few years, contesting the appropriateness of reimbursement of medical marijuana costs to injured workers. Last year the U.S. Supreme Court rejected appeals to review two cases, leaving insurers unsure of the best path to address the continued conflicts between state and federal law.

With a shortage of healthcare providers and more mental health claims emerging in workers’ comp, Maryland and New York are considering legislation which would expand the scope of care of social workers. Currently, both states’ public health and group health systems recognize social workers as qualified to deliver mental and behavioral health services, however they are not recognized within workers comp as authorized providers.

Maryland House Bill 694 would allow licensed clinical social workers to register as rehabilitation practitioners and authorize them to provide evaluation services for workers’ comp claims related to permanent impairments involving a behavioral or mental disorder.

New York Assembly Bill 852 would allow licensed clinical social workers to treat injured workers upon referrals from authorized physicians. This bill would be a follow up to a law enacted last year that currently allows carriers and self-insured employers to add licensed clinical social workers to their medical provider network so they can treat or evaluate patients with a physician referral.

Assembly Bill 334 is a bill to watch this year, as it could prevent employers and workers’ comp carriers from requiring injured workers to obtain their medications from their contracted network of pharmacies. Currently, injured workers must obtain medications from their employer or carrier’s network of pharmacies.

This new bill authorizes injured workers to choose from any in-state pharmacy, stating that employers may encourage the use of a pharmacy with which it has a contract. However, the bill stipulates that carriers are not responsible for medications filled by out-of-state pharmacies or for non-FDA compounded medications.

This bill could drive up pharmaceutical costs and unravel cost containment reforms which were implemented during the Cuomo administration. However, because there are no co-sponsors nor a companion bill in the Senate, and the bill is widely opposed by the provider and business community, the outlook for this bill to progress is unlikely in 2023.

WCRI Reports on Low Back Patient Outcomes

The Workers’ Compensation Research Institute (WCRI) published a new report, Patient-Reported Functional Outcomes after Low Back Pain – A Comparison of Workers’ Compensation and Other Payors.7

This study compares functional recoveries reported by patients in and out of the workers’ comp system, based on a patient-reported outcome measure that assesses patients’ functional status during the episode of physical therapy.

Approximately 1.3 million episodes of physical therapy and occupational therapy care provided to low back pain patients were analyzed, covering patients under workers’ comp, private insurance, Medicare, Medicaid, auto insurance, other insurance, or self-paid by the patient.

Data was collected at first-and-last visits from a large sample of low-back pain patients who received physical therapy in the United States from 2017 to 2021.

A major finding of this study was that functional status (FS) scores in workers’ comp increased by 9.9 points on average. However, this was the lowest increase across payor types, which averaged increases from 11.1 to 15.1 points.

The study hypothesizes that this lower average in workers’ comp is due to smaller improvements among patient populations that begin physical or occupational therapy with exceedingly low functional ability, likely due to greater injury that is more common in workers’ comp claims versus other types of insurance.


  1. Shanafelt TD, West CP, Dyrby LN, et al. Changes in burnout and satisfaction with work-life integration in physicians during the first 2 years of the COVID-19 pandemic. Mayo Clinic Proceedings. 97(12): 2248-2258. Dec 2022.
  2. Famakinwa J. CMS’ rate cuts have had varying levels of effect on home health providers. Home Health Care News. Feb 9 2023.
  3. Neugent K, Spidell B. Firefighters and first responders: 2023 update on presumptive workers comp benefits. NCCI. Feb 2023.
  4. 2022 independent medical review (IMR) report: analysis of 2021 data. California Department of Industrial Relations. 2023.
  5. Notice: 26664056. Florida Administrative Code & Florida Administrative Register. Jan 2023.
  6. 2022 results & accomplishments report. Florida’s chief financial officer, Department of Financial Services. February 2023.
  7. Thumula V, Liu TC, Lea R, Negrusa S. Patient-reported functional outcomes after low back pain – a comparison of workers’ compensation and other payors. Feb 14, 2023.


Since 2010, the semi-annual RxInformer clinical journal has been a trusted source of timely information and guidance for workers’ comp payers on how best to manage the care of injured worker claimants and plan for the challenges that lay ahead. The publication is an important part of Healthesystems’ proactive approach to advocating for quality care of injured workers while managing the costs associated with treatment.