REGULATORY ANALYSIS
FOR REPEAL AND READOPTION
OF THE WORKERS' COMPENSATION RULES OF PROCEDURE
7 CCR 1101-3

1.	Description of classes of persons who will be affected by the rules, including classes that will bear the costs of the rules and classes that will benefit from the rules.

The classes of persons affected by the rules are all persons and entities involved in the Colorado Workers’ Compensation system.  This includes, but is not limited to, injured workers, health care providers, insurance carriers, third party administrators and employers.

2.	Description of the probable quantitative and qualitative impact of the adopted rules, economic or otherwise, upon the classes of affected persons.

These rules revise, update or clarify the current rules of procedure.  The main purpose is to update terminology and language of the rules; promote a better understanding of the rules and procedures; ease of use; maintain a logical numbering system and organization of the rules.   

The amendments clarify when a First Report of Injury and a Final Payment Notice should be filed, expand who may send an inquiry letter regarding the injured workers’ restrictions, establish guidelines and procedures for determining when a claim has been abandoned, and specify the cost of a typical division independent medical exam when paid timely or untimely pursuant to the timeline in the statute.  The rules should increase efficiency and assist persons in implementing required actions.  The rule changes should result in a decrease in unnecessary filings with the Division, allow abandoned claims to be closed in a more timely manner, and reduce questions and disputes about the amount due when paying for a division independent medical examination. 

Amendments to Rules 16 and 18 reflect revisions or updates to terminology, billing codes, rule language, dispute resolution procedures, requirements and payments related to the medical fee schedule. 

The primary impact of the new rules is likely to be as a result of changes to the medical fee schedule.  The medical fee schedule sets maximum rates for professional services, and the facility fee schedule applies to all providers who bill facility fees (i.e., hospitals, urgent care facilities, ambulatory surgery centers).  The Division’s analysis of the fee schedule, including the facility fee schedule, shows that the overall impact of the rule will be an approximate one (1) percent increase in total system costs. Premium rates actually charged by carriers to employers vary depending on a variety of underwriting and competitive factors, and are not directly tied to the fee schedule.  

3.	Probable costs to the agency and other agencies of the implementation and enforcement of the adopted rules and any anticipated effect on state revenues.

No impact on costs or revenues is anticipated as a result of the rule changes.  The costs for updating the billing system for the Workers’ Compensation Major Medical Insurance Fund will be absorbed with existing resources by the Division of Workers’ Compensation.

4.	Comparison of the probable costs and benefits of the adopted rules to the probable costs and benefits of inaction. 

Promulgation of a medical fee schedule to be effective January 1 is required by statute, so failing to implement that rule would result in the Division being out of compliance with statute.  Also, the adopted rule excludes CPT codes, the inclusion of which could arguably have been a violation of the American Medical Association’s (AMA) copyright.  Failure to update the rule and remove the CPT codes could have resulted in legal action by the AMA.

The fee schedule will require programming to computer systems, as most billing is performed electronically.  The proposals regarding facility fees are based on Medicare billing methodologies, which are already used by medical facilities, thereby reducing the impact of the necessary programming.  Overall, the increase in predictability, fairness, and cost control should more than repay the costs in computer programming and maintenance. 

Providing small increases in the medical fee schedule for some of the professional areas reflects the recent increases in the cost of medical services.  Not providing incremental increases will result in a larger increase in the future, making it hard for Colorado participants to prepare and include such increases in their budgets.  Such unpredictability is particularly difficult for small businesses that have fewer discretionary dollars in their budgets.  In addition, resulting cost pressure could reduce access to medical care as well as accelerate the consolidation of health services.  

Additionally, without implementation of the amendments Colorado’s medical fee schedule will not have up-to-date medical billing codes which are regularly updated to keep current with medical technology and treatment.  Not having updated codes will require payers and providers to spend more time researching and cross-referencing codes.  The uncertainty or disagreement regarding proper coding will also increase the number of disputes between payers and providers.  

As mentioned above, the other non-medical fee schedule rule changes should decrease uncertainty and increase efficiency.  Therefore, not taking this action would result in a missed opportunity to clarify requirements and increase efficiency.

5.	Determination of whether there are less costly or less intrusive methods for achieving the purpose of the rules.

There are no known less costly or less intrusive means.  Again, the biggest impact of the rule amendments is the updating of the medical fee schedule.  Updating the fee schedule is required by statute and is necessary to provide equitable compensation and assure injured workers’ access to quality health care.  In addition, the issue of including CPT codes and possible consequences was addressed.

6.	Description of any alternative methods for achieving the purpose of the proposed rules that were seriously considered by the agency and the reasons they were rejected in favor of the adopted rules.

In performing the statutorily required updating of the medical fee schedule, different methods were considered.  As discussed above, in terms of the professional fees the purpose is to provide equitable reimbursement that will provide access to quality care, while keeping overall costs as low as possible.  Alternative suggestions as to the amount of any increase were rejected as not being as effective in achieving the purpose.

Different ways to implement the other amendments and increase efficiency were considered, but the current rule amendments were determined to be the clearest and most effective. 

Copies of the Notice of Public Hearing were provided to the:

Colorado Association of School Boards, 
Colorado Counties, Inc.
Colorado Municipal League
Special District Association of Colorado
Colorado Health and Hospital Association
Colorado Association of Commerce and Industry
Mountain States Employers Council
Colorado Self-Insurers Association