At the 2015 NCCI Annual Issues Symposium, a panel of speakers covered a variety of issues facing the workers’ compensation industry. Mona Carter, senior division executive – national policy development for NCCI moderated the workshop. The speakers were Thomas Sullivan, associate director with the Federal Reserve; Ann Bok, practice leader and senior actuary with NCCI; and Lori Lovgren, division executive – state relations with NCCI.
Tom Sullivan spoke to the regulatory role of the Federal Reserve in insurance issues compared to the role of the states. He emphasized that the states remain the main regulatory entity and they alone determine details on how the business of insurance is transacted. The Fed’s interest in the insurance marketplace revolves around ensuring solvency of large carriers. This increased oversight from the Fed came into play following the recession that was prompted in part by financial issues involving insurance carrier AIG. Another reason for the Fed involvement in insurance issues has to do with the fact that the majority of reinsurance for carriers domiciled in the United States comes from reinsurers domicilied outside of the country. This increased globalization of the US insurance marketplace requires a more globally focused regulatory approach.
Legislative / Regulatory Update
Ann and Lori discussed regulatory / legislative changes that NCCI is monitoring. In the first quarter of 2015 NCCI monitored 676 workers’ compensation related bills that were introduced around the country.
In 2014 NCCI was asked by states to provide a pricing impact analysis on 142 bills. In the first quarter of 2015 they reviewed 79 bills. NCCI’s role is to provide an objective evaluation of the impact of the proposed legislation. NCCI also provides retrospective analysis of enacted reforms. For the 2015 bills reviewed to date, most fell into the categories of First Responders, Definition of Employee, Occupational Disease, Fee Schedules, and Indemnity Benefits.
NCCI identified five categories of workers’ compensation legislative proposals to watch in 2015 and beyond:
- Drug Formularies – There are currently 4 states with drug formularies. 5 states considered a drug formulary in 2015.
- Medical Marijuana – Will we see medical marijuana as a viable treatment option in workers’ compensation and what impact will these law changes have on drug-free workplace rules? Arizona passed a law banning insurance reimbursement for medical marijuana.
- Fee Schedules – Most states currently have some type of medical fee schedule. In 30 states that fee schedule is based on Medicare reimbursement rates. In 2015 New Hampshire and Virginia once again attempted to pass fee schedule bills but these never made it out of committee. Both states have introduced fee schedule bills several years in a row that have failed.
- Opt Out – Opt Out legislation was introduced in Tennessee but this failed to make it out of committee. There was an Opt Out bill recently introduced in South Carolina but this is not expected to more forward in the 2015 legislative term.
- Attorney Fees – Several states have pending bills to increase attorney fees. Some argue that if attorney fees are too low, injured workers cannot get adequate representation. There is a pending bill in Oregon that would remove attorney fee caps and NCCI projects the potential impact of this bill is over a 5% increase in pricing. There is a pending case before the Florida Supreme Court on the constitutionality of their attorney fee caps. Similar legislation was previously found unconstitutional in Florida.
Overall, NCCI indicated that the volume of workers’ compensation bills has been relatively low the last two years. There is greater concern right now over the impact of pending court cases and opt out than any pending legislation.