Winter 2020/2021

State of the States

State of the Nation


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

A Look Back and What’s in Store for 2021

As we close out the year, it is a good time to consider the many challenges we faced this year and look towards the future for what is next. To say 2020 was overwrought with some of the most difficult challenges we have ever seen as a nation is not an overstatement.

COVID-19 sidelined so many families and businesses in ways we have never seen. In a few weeks, a faraway virus we knew little about led to a complete lockdown of non-essential businesses, shelter in place orders, empty grocery shelves, and record unemployment rates.

In many parts of the country, hospitals were overwhelmed by COVID-19, and interruptions to our supply chain impacted the availability of protective equipment for healthcare workers, while others with non-emergency medical needs were turned away from care.

Compounding this, after two months of struggling with the impacts of social distancing, multiple incidents across the nation reignited calls for social justice and civil rights. People became increasingly isolated and politically polarized, and the divide grew larger each month. Mental health became a significant topic of discussion in the workplace and in the news, with the CDC releasing guidance and resources on the impact of COVID-19 on mental health. Add in conflicting reports on the virus, as well as the spread of misinformation, often through self-proclaimed experts on platforms like YouTube, Facebook, and Twitter, and a general wave of uncertainty became hard to avoid.

As a result of all these events, the workers’ comp industry found itself in a difficult spot, one where it needed to immediately mobilize its workforce – many without a suitable space to work at home – while also ensuring injured workers could access medical and pharmaceutical care, and receive assistance from regulatory agencies.

It is a marvel that we all made this happen, knowing under different circumstances this kind of dramatic shift would have taken months or years if not for the urgency. I personally am proud to work in an industry, and for a company, that remains poised to respond quickly to the needs of injured workers and our customers, especially during uncertain times. 

As we look to the future, it is important to note that the closure of major retailers, restaurants and entertainment venues swiftly impacted new claim counts. If these closings remain permanent, that will certainly impact return-to-work rates into 2021.

Some experts believe the economic fallout from COVID-19 may take years to recover from, especially for lower income workers. Factor into this equation one of the most contentious bi-partisan political environments of all time and a close election, and it is like a perfect storm of unpredictability.

But while most storms end quickly, no one can say how soon this storm will pass. Ten months have passed, and though we may not know just what direction the nation will go, we can review other influential issues of 2020 and forecast how they may evolve in 2021.

Paying for COVID-19 Presumptions

While it’s established in workers’ comp that COVID-19 disproportionally impacts healthcare workers and first responders, there is much debate regarding when COVID-19 should be a compensable condition, particularly which occupations might be eligible for benefits if they contract the virus. 

Thirty states and the U.S. Department of Labor passed legislation or issued guidance to insurers that either required coverage of COVID-19 related claims for specific employee classes, or reminded carriers of a rebuttable presumption on coverage for workers who asserted they contracted the virus at work.

An additional directive from NCCI and several of the state rating bureaus proposed to exclude COVID-19 claims from employers’ claims experience, pending regulatory approval. This will leave insurers on the hook for what could be catastrophic losses, without any ability to convert that claims experience into future premium dollars. This presents a huge challenge for the industry and especially for state funded insurers, many of whom insure state employees, teachers, first responders, and county and local municipal workers, all of whom are deemed essential workers and in some cases more likely to be exposed. 

NCCI developed a tracking resources site, including a COVID-19 Hypothetical Scenarios Tool, which allows insurers to look at regulations by state, and perform severity and cost modeling for COVID-19 claims. National Association of Insurance Commissioners has also developed a tracking sheet for all lines of insurance, including workers’ comp, which provides details on coverage requirements, licensing, and other insurer concerns.

Many experts, including those at the CDC and National Institutes of Health (NIH) continue to encourage all to be vigilant in protecting themselves and others by wearing a mask, social distancing, and avoiding large crowds or large groups outside of their immediate household.

Will COVID-19 and its downstream impact remain on our radar in 2021? The answer is 100% yes, and maybe even into 2022.

Telehealth is Here to Stay

There has been a frenzy of regulatory activity related to the allowable rates and availability of telehealth services, including special consideration for services such as teleradiology, teletherapy and telepharmacy.

Though telehealth can be dated back as far as the 1920s, telehealth only became prevalent in institutional settings in the late 1980s and into the 1990s for telephonic consults between physicians, as well as for the transmission and reading of digitized diagnostics such as MRIs and CT scans. Newer technologies such as mobile platforms came onto the scene in the early 2010s, but as a delivery mechanism, telehealth did not take off until nearly ten years later due to the COVID-19 pandemic.

As the Centers for Medicare and Medicaid Services (CMS) and state medical boards relaxed certain communication and privacy standards to improve patient access to telehealth, patients embraced this new way of getting medical care. For many it is a matter of time before they go back to the old way of doing things, but for many more, telehealth is like going from dial up internet to 5G internet.

This is evident in the expansion of these platforms to services which were not often done via video, such as physical and occupational therapy, and even pharmacist consultative services, including medication management. Healthesystems worked closely with customers during this time to support the inclusion of telerehab in their physical medicine programs. We also moved to expand our pharmacist outreach program, MedMatters, to help patients better understand their medication regimens when they might not be able to access their healthcare providers as readily.

It can be said that COVID-19 did more to increase telehealth adoption in the last eight months than all other efforts in the last fifty years. Look for this trend to continue as injured workers get more comfortable using their smartphones, mobile devices, and computers to connect with their providers.

I predict we will see sustained increases to telehealth services so long as the regulatory and industry landscape further embraces this way of delivering care; millennials and the often-overlooked Gen Xers will be doing more of this in 2021.

States Continue to Legalize Marijuana (and Other Drugs)

During the Presidential election, several states featured measures on the ballot regarding the legalization of marijuana and other Schedule I drugs. Voters in four states passed measures to legalize recreational marijuana, bringing the total number of states with legalized recreational marijuana to 15. Meanwhile, two states legalized medical marijuana, bringing the total states with legalized medical marijuana to 41.

Arizona, Montana, New Jersey, and South Dakota will allow adults aged 21 and older to possess marijuana for recreational purposes. The language varies for each state, with some allowing adults to cultivate marijuana plants, and the possession limits vary as well, as do taxes and criminal expungements for certain marijuana offenders.

Mississippi and South Dakota both passed initiatives to legalize medical marijuana. The Mississippi measure called out 22 specific debilitating medical conditions, including cancer, epilepsy, seizures, multiple sclerosis, and ALS. According to the ballot, over 228,000 Mississippi residents signed petitions to put this initiative on the ballot. The South Dakota measure was more vague in its language, calling out only seizures and cancer, though this is likely to be clarified later.

Meanwhile, Oregon Measure 110, among several initiatives created to tackle rampant drug addiction, removes drug penalties for the possession of several Schedule I drugs, reducing them to Class A misdemeanors instead of felonies, assuming they do not exceed certain thresholds written in the measure.

This includes the following drugs:


Oregon Measure 109 gives patients legal access to psilocybin, the active ingredient in “magic” mushrooms for mental health treatment in supervised settings, with a complex framework on how this is to be managed.

Washington D.C. passed Initiative 81 to decriminalize psychedelic plants, which covered substances such as psilocybin, mescaline, peyote, and more.

And among all this regulatory action, clinical research surrounding psilocybin and MDMA continues to support potential FDA approval of future drugs. Psilocybin was designated a breakthrough therapy by the FDA for major depressive disorder in November of 2019, based on Phase 2 clinical trials, while MDMA was Fast Tracked by the FDA for use in treating post-traumatic stress disorder, supported by Phase 3 clinical trials.

Though more research is necessary before any definitive answers can be given regarding the clinical effectiveness these Schedule I drugs may have on certain medical conditions, it is clear that the nation has taken a less restrictive approach compared to previous decades. A recent Gallup poll shows legalization of marijuana for adult use has reached new heights with support from 68% of poll respondents. This is a 35% increase from just ten years ago.

As the nation continues to loosen restrictions around Schedule I substances, there are many things to consider in workers’ comp. Issues such as drug free workplace policies, workplace safety standards, questions of measuring impairment, and court interpretations of carriers’ responsibility to pay for marijuana are just a few, and these issues of course vary by state.

When and how will lawmakers be forced to contend with this patchwork of laws, which continue to create conflict and confusion for employers and carriers?

Most experts agree it is federal policy that will eventually change. However, in the meantime there are already a complex set of regulations in place from both federal and state levels that would require major reform, and that is likely too tall an order for 2021. 

State of the States

Wildfires and Worker Safety

In addition to the impacts of COVID-19, California experienced the largest wildfire season in modern recorded history. As of early November, fires have destroyed more than four million acres of land, with air quality so poor that the Cal OSHA reminded employers of its 2019 regulation which requires outdoor workers to be provided with adequate protective equipment, or risk being fined. Cal OSHA also began fining employers who failed to take adequate steps to prevent community spread of COVID-19 to employees, issuing nearly a half million dollars in penalties just in the months of September and October 2020.

Changes to the Fee Schedule

California’s Division of Workers Compensation (DWC) took feedback from stakeholders on its Pharmaceutical Fee Schedule, Medical-Legal Fee Schedule and Copy Services Fees via its rulemaking forum. The Medical Treatment Utilization Schedule (MTUS) Pharmaceutical and Therapeutics Committee met in late October to consider a number of recommendations, including changes to the MTUS drug list, as well as four-day opioid dispensing limits and MME calculations. The DWC also noted upcoming changes to state treatment guidelines, which may soon incorporate guidance on COVID-19.

Research Data

The Workers’ Comp Insurance Rating Bureau (WCIRB) released several research studies reflecting preliminary estimates on COVID-19 related claims and the significant regional differences in claim costs.

Of note, the WCIRB found “the largest decreases in pharmaceutical costs have occurred in Southern California regions, which had the highest pharmaceutical spending at the beginning of the study period.” These findings indicate that, while overall spend has dropped significantly, the larger decreases in traditionally higher cost regions like the Los Angeles Basin and Bakersville, is narrowing the gap over time.

Utilization and Reimbursement Dispute Rules

The Division of Workers’ Comp (DWC) held several public workshops and hearings on Utilization and Reimbursement Dispute Rules, drawing interest from stakeholders including bill review firms, pharmacy benefit managers, ambulatory surgical centers, and occupational health providers. There were a number of concerns raised by participants, including use of underlying NDCs for repackaged drug billing, the dispensing of private label topicals, and state license numbers for providers, which are not used for billing but are required for successful state reporting.

Telehealth and e-Billing Rules

The DWC was also looking for stakeholder feedback on two topics, specifically telehealth visits and e-billing. Florida has a unique requirement for all regulation changes to be ratified by the legislature if the overall financial impact of the change exceeds $1 million. This provision has proven to be a challenge for stakeholders, who have attempted to adjust rates within the Health Care Provider Reimbursement Manual a number of times since it was last updated in 2017, based on CMS’s 2016 RVUs and conversion factors.

NCCI Rate Filing

Florida’s Insurance Commissioner David Altimeir issued a memo from the Office of Insurance Regulation (OIR) directed at NCCI. The order recommends an amendment to the NCCI rate filing which would further reduce rates for 2021.

In September 2020, NCCI recommended a 5.7% decrease, and the OIR rejected that recommendation in favor of a 6.6% decrease on rates, contingent on an amended filing from NCCI. This is the second consecutive year the OIR has rejected the original NCCI recommendation in favor of a lower rate. The new rate will take effect January 1, 2021 for voluntary market policies.

Changes to Workers’ Compensation Board

The Workers’ Compensation Board (WCB) has been extremely active in relation to regulation changes and system improvements. In June, WCB Chair Clarissa Rodriquez formally welcomed two new members to the Office of the Medical Director. Dr. Brian Gordon, a neurosurgeon, will take the reins as the Medical Director for the Board, a position vacated by recently retired Dr. Elaine Sobol-Berger. Dr. James Tacci was concurrently appointed as the WCB Executive Medical Policy Director. Both physicians are distinguished in their fields and have prior experience collaborating with the WCB in advisory capacities; one as a consultant on medical-legal issues, the latter as a participant in the crafting of the Board’s initial medical treatment guidelines, which were implemented nearly a decade ago.

WCB Delays Formulary Rules in Light of COVID-19

This summer, the WCB announced it would delay its mandatory deadline related to the transition of injured workers on non-formulary medications, from June 5, 2020 to January 1, 2021. This was done in response to the healthcare challenges presented from COVID-19. Injured workers and providers had different concerns regarding the availability of medical providers for non-emergency care and their ability to wean workers off non-formulary medications during a national healthcare crisis. The new timeline aligned well with the Board’s plan to roll out its new Business Information Project and associated system called OnBoard.

OnBoard Portal to Act as Information Hub for Patients and Providers

The WCB’s new Business Information Projection and associated system, OnBoard, will roll out in the beginning of 2021. The OnBoard system is featured in a series of WCB informational videos posted on YouTube.

The videos highlight the Board’s expanded medical provider initiatives which, when fully implemented, will replace many of the Boards’ legacy systems. OnBoard is said to provide registered users with appropriate access to real-time data, including medical records, medical and pharmaceutical prior authorizations and variance requests, resolution of medical fee disputes, and other reporting requirements, such as first reports of injury.

The system is designed to be available to injured workers, their representatives, carriers, and medical providers, and will eliminate many paper processes in place today. The Board has already adopted or will soon be adopting several of the foundational regulations which will require use of the portal, including mandatory electronic submission of CMS-1500 forms by providers, and variance requests through the new system, which is expected to become mandatory for all providers by July 2021.

Changes to Treatment Guidelines

New York also adopted updates to all current chapters of its medical treatment guidelines, incorporating new chapters on mental health and stress related disorders, such as depression and PTSD, all of which become effective on January 1, 2021. Lastly, the Board offered training to Payers on how it will measure and report on Payer Compliance, both for timeliness and accuracy of benefits. More information on all these initiatives and replays of webinars are available by emailing the Board at


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.