Winter 2022-23

State of the States



Sandy Shtab, Healthesystems VP, Industry and State Affairs, comments on regulatory activity around the country.

National Trends Continue to Shape Workers’ Comp

As we near the end of 2022, it is time to consider what is on the horizon for 2023 and beyond for the workers’ comp regulatory environment.

Despite a three-year disruption from the impact of COVID-19 on our marketplace, the workers’ comp system remains healthy and stable, with claim counts remaining flat and employer premiums on a slight decline. The workforce and our workspaces have shifted significantly from what they once were, and most experts predict things will not return to pre-COVID norms.

From a regulatory and labor perspective, our system continues to respond to economic, political, social and environmental changes. Workers have spoken loudly during the Great Resignation and the newer phenomenon, The Quiet Quit, by demanding greater benefits, more flexibility, and higher wages. Here are some additional topics to ponder as we look ahead to how the next generation of workers are influencing the way we manage claims and patient outcomes.

Influence of New Regulatory Leadership

For years, our industry has been preparing for a wave of Boomer retirements by developing strategies to attract Millennial and Gen Z candidates. In 2022, 20% of state workers’ comp agencies reported newly appointed executive leaders, most of whom are Gen X.

Most of these personnel changes were internal promotions of well-qualified, seasoned agency staff. However, this new generation of leaders is bringing fresh eyes to some antiquated processes, and an openness to evolving systems and processes through technology and automation. While some state workers’ comp agencies have expanded remote work options to increase employee retention or to attract new talent, others are doubling down on automation and efficiency to relieve the gaps left by vacant positions.

Regulators are enabling carriers to send electronic notices to employers and injured employees, and they are embracing the use of electronic signatures and remote participation in stakeholder meetings. Implementing these kinds of improvements not only positions leaders of regulatory agencies to deliver more service with less staff, but this can also open the door for new types of jobs in our industry. Careers that focus on business process improvement could ultimately attract new generations to workers’ comp.

Mental Health and the Rising Impact of Mobile Apps

Mental health has long been an important but undermanaged component of injured worker care and return to work. However, incremental changes are happening in the industry, in part attributed to younger generations who are talking more openly about mental health.

Social media influencers, professional athletes, and celebrities are publicly sharing their mental health struggles in a way that continues to chip away at the stigma. This is a societal shift that has opened the door for claims and medical professionals to have more authentic interactions about unaddressed mental health issues, with recognition that when these issues are left unchecked, they can be a barrier to injured worker recovery.

One way employers and carriers can close the gap on employee mental health needs is to offer mobile apps that address symptoms such as insomnia, anxiety, and depression.

The American Psychological Association estimates there are now between 10,000-20,000 mental health apps available, some touting interventions used in workers’ comp claims, such as cognitive behavioral therapy. With telehealth as an option for injury triage, office visits, and physical therapy, it is likely that mental health apps will be more widely available to injured workers as an adjunct to more traditional talk or behavioral therapy.

From a regulatory perspective, the biggest obstacle is standardization and oversight, as well as legal liability. Expect to see more regulations on health and wellness apps as they seek to fill an unmet need in the marketplace. The next generation of workers and claims professionals not only want this, but they expect it.

PBM Regulation & Oversight Trends

Pharmacy benefit managers have been subject to greater regulatory requirements due to increasing national scrutiny on escalating drug costs. While many states have market oversight into PBM business practices, states are expanding the regulatory requirements for PBMs, now requiring more data reporting, details on contract terms, minimum pharmacy payments, and dispensing fees.

The latest wave of regulations impacting PBMs and workers’ compensation claims include network and transactional data reporting in Minnesota, New York, and most recently West Virginia.

The inclusion of workers’ comp claims within PBM oversight laws can be viewed as a form of dual regulation, because there are often duplicative or overlapping requirements, and at times conflicting regulations between workers’ comp laws and PBM laws. It is unclear exactly how the collected data will be used, or how that data may impact drug costs or utilization. Some experts cite concerns around confidentiality of trade secrets and contracted rates, while some predict increased transparency could have a chilling effect on competition.

It is not clear how regulators anticipate data reporting will reduce healthcare costs, as mandatory data reporting has been required for more than a decade in group health and hospital systems, but healthcare costs have continued to rise.

What is clear is that increasing regulation of PBMs is here to stay. Amidst the regulatory pressure to report more data, Healthesystems continues to be well positioned in the market by delivering value with patient centric programs that help manage drug costs, and improve claim outcomes, and by providing data insights that improve the patient and claim handler experience.

Covering Breast Cancer for Firefighters

Governor Mike Dunleavy signed Senate Bill 131 into law, adding breast cancer to the list of cancers that are compensable under workers’ comp for firefighters. This bill was an expansion of prior presumptive legislation which provided coverage for firefighters diagnosed with brain cancer, non-Hodgkin’s lymphoma, kidney, and prostate cancer.

While cancer presumption bills continue to gain momentum, some states such as Florida and Colorado have previously implemented programs which offer alternative coverages for firefighters outside of the workers’ comp system. These programs are set up as Benefit Trusts and are funded outside of workers’ comp. They are intended to lower workers’ comp rates for public employers, while improving labor relations.

This new law in Alaska goes into effect January 1, 2023.

Potential Restrictions to Physical Medicine Visits

On July 15th, Healthe attended a Medical Services Review Committee (MSRC) meeting regarding the 2023 Medical Fee Schedule. Committee members discussed physical medicine utilization, including concerns that therapy services are being billed excessively with no restrictions. In order to better manage these services, members recommend a limit to these visits of six weeks or a maximum of 20 visits before requiring a follow-up visit with a physician to review the patient’s condition.

If the MSRC approves the proposal, it will then be reviewed at the special joint meeting of the MSRC and Workers’ Compensation Full Board and then proceed to formal rule making.

Labor Management Meeting Updates Stakeholders on Changes to MTUS and COVID Research

The California Commission on Health and Safety and Workers’ Compensation (CHSWC) met on August 4th and Healthesystems was in attendance.

During the meeting, Division of Workers’ Compensation Executive Medical Director Dr. Ray Meister discussed the upcoming addition of a COVID-19 chapter within the Medical Treatment Utilization Schedule (MTUS) and drug formulary, which would incorporate COVID-19 treatment protocols. Since the enactment of Senate Bill 1159 in 2020, COVID-19 was established as a compensable injury for select worker classifications spurring the need for this update. The timeline for the new chapter’s release as well as the related formulary updates is expected to occur in late 2022.

In a related agenda topic, the committee discussed a recent RAND Research Brief, Evaluating the Effects of Senate Bill 1159, which among other findings revealed the adverse impact on employers and claims administrators who had to respond to a high number of reported claims, with no verification of a positive COVID test. Also noted in the report, there was a high proportion of denials and a significant number of claims filed with no paid medical care. Of note, Senate Bill 1159 is expected to be repealed effective January 1, 2023.

P&T Committee Reviews $50 Cap on Topical Analgesics

The California Division of Workers’ Compensation’s (DWC) Pharmacy & Therapeutics Committee (P&T) continues to meet on its regular quarterly cadence. Some of the committee’s recent activity included discussions on pricing and utilization of topical analgesics and recommendations for a $50 fee cap for topical analgesics. It was also recommended that topical analgesics below this cap be made exempt from prior authorization. Members did not dispute the safety and efficacy of these products, and many were in support of a cap to allow some of these topicals to quickly reach patients when necessary.

The committee will soon determine which drugs should be captured at the $50 cap, and once that has been established, the DWC will need to formally adopt the recommendations into the MTUS formulary. This change is one of several the committee has recommended in 2022, including their earlier recommendation to require prior authorization for the least cost effective NSAIDs which, while clinically effective, were identified as an unnecessary cost driver, with multiple lower cost alternatives available on the market.

Clarifying Requirements for MPN Directories

The California Division of Workers’ Compensation (DWC) published a notice to clarify provider directory requirements for medical provider networks (MPNs). The DWC wants to ensure that MPNs do not include non-compliant providers in provider listings, as non-compliant providers cannot legally provide medical services to injured workers.

The DWC will disapprove MPN submissions with names of non-professional organizations, management services, scheduling and coordinating companies, cost-containment firms, or other non-provider entities.

The Florida Division of Workers’ Compensation (DWC) is currently conducting rulemaking workshops to address reimbursement and utilization review requirements for physician dispensed medications.

These workshops were established in response to a withdrawal of a bulletin from March 31, 2020 where the DWC stated that providers cannot deny authorization for prescriptions solely because they were dispensed by physicians. Earlier this year, a group of Florida carriers filed a challenge with the Division of Administrative Hearings that claims the Division of Workers’ Compensation (DWC) is enforcing a state policy that requires carriers to authorize physicians and other providers to dispense medications directly to injured workers.

The 2020 bulletin was overturned, with new policy to be based on the workshops’ consensus.

The Kentucky Department of Workers’ Claims adopted fee schedule updates for physicians, including updates to the pharmaceutical section. The update specifically addresses how to reimburse bills for compounded or repackaged drugs that do not include NDCs. Payers can utilize AWP of the lowest price equivalent drug product, calculated on a per unit basis.

These changes resulted from comments submitted by Healthesystems requesting alignment of the fee schedule with the rule.

The New York Workers’ Compensation Board proposed an update to their Pharmacy Fee Schedule, which would allow insurance carriers to deny payments for prescriptions if the carrier previously informed patients and the out-of-network pharmacy that prescriptions were out of network.

This proposed update would effectively allow carriers to require the use of a pharmacy network. If approved, this change is expected to decrease disputes and delays. The public comment period for this proposal closed at the end August, and regulators are currently reviewing proposal feedback.

The Oregon Workers’ Compensation Division (WCD) previously invited stakeholders to participate in the rulemaking advisory committee meeting for the review of their proposed medical services and payment rules. Preliminary agenda topics included updates to the fee schedule via temporary rules, along with the review of Form 4909 – Pharmaceutical Clinical Justification for Workers’ Compensation for potential updates.

Form 4909 was originally introduced in 2014 and has not been updated since that time. The form was intended to be submitted by providers to insurers when prescribing more than a five-day supply of seven high cost, brand name medications. Since 2014, all of the medications went generic or have been pulled from the market, prompting the advisory committee to ask stakeholders for input on the utility of the form going forward.

Public comments were recorded, and the WCD is aiming for a follow-up meeting in November or December at which time it is expected they will either recommend changes to the form or render it obsolete.

Rhode Island Governor Dan McKee signed House Bill 7593 into law, legalizing recreational marijuana for adults aged 21 and older. Individuals may possess, purchase, and grow marijuana as soon as December 1st. The bill also creates a Cannabis Control Commission to oversee the regulation, licensing, and control of cannabis use, as well as a cannabis advisory board to recommend policy changes over time.

Additionally, this bill includes automatic expungement of prior civil or criminal marijuana charges by July 1, 2024. A 20% tax rate will apply to cannabis products.

Rhode Island has become the 19th state to legalize recreational marijuana.

The Texas Division of Workers’ Compensation (DWC) proposed a second set of informal revisions to rules governing designated doctor procedures and requirements. Based on feedback from the first informal proposal, the division incorporated changes to designated doctor qualifications for examining workers with certain complex diagnoses.

The division also proposed a template that provides a standardized approach to organizing the narrative report. This would allow parties receiving the report to easily identify exam findings. The agency accepted written comments on these revisions until June 23rd, and after reviewing these comments, the Division is expected to soon propose formal rule revisions.


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.