REGULATORY ANALYSIS
FOR AMENDMENTS OF RULES 16 AND 18
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 rules, economic or otherwise, upon the classes of affected persons.

These rules revise, update or clarify the current Rules 16 and 18.  Amendments to Rules 16 and 18 reflect revisions or updates to terminology, billing codes, rule language, procedures, requirements, forms, payments and exhibits related to the medical fee schedule. The rules will increase efficiency and assist persons in implementing required actions.  

The medical fee schedule sets maximum rates for professional services and establishes facility fees applicable to all providers who bill facility fees.  The Division’s analysis of the fee schedule, including the facility fee sections estimates that the overall impact of the proposed rule will be less than a one and one quarter (1.25) 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.  Medical providers are expected, overall, to see a small increase in reimbursement for their services.

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

No impact on costs or revenues is anticipated as a result of the rule adoption.  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 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.  

The fee schedule will require updating of programming to computer systems, as most billing is performed electronically.  The rules regarding facility fees were 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 when appropriate for some of the professional areas reflects the recent increases in the cost of medical services.  Not providing incremental increases could 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.  

The other non-fee changes will decrease uncertainty and increase efficiency.  Therefore, not taking this action would have resulted 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.  Updating the fee schedule is required by statute and is necessary to provide equitable compensation and assure injured workers’ access to quality health care.  

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

In performing the statutorily required updating of the medical fee schedule, different methods were considered.  As discussed above, in terms of the professional and facility fees the purpose was to provide equitable reimbursement that will provide access to quality care, while keeping overall costs as low as possible. Providing regular updates of codes and relative value systems is necessary for efficient budgeting and maintenance by the workers’ compensation community. 

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 Hospital Association
Colorado Association of Commerce and Industry
Mountain States Employers Council
Colorado Self-Insurers Association
				   Colorado Medical Society