I. Workers' Compensation and the Medical Marketplace
A. "Medical Compensation"
B. Employer choice of physician
C. Medical fee schedules
D. Approval of bills subject to the Fee Schedule
II. Managed Care Organizations & "Managed Comp"
A. PPOs, HMOs and UROs
B. "Managed Comp" -- MCO's satisfying the employers'
obligation to provide Medical Compensation
C. Workers' Compensation MCOs.
D. Advantages of "Managed Comp"
III. Prospective Utilization Review
A. The concept of prospective utilization review
B. Limits on preauthorization
C. Physical medicine
D. Rehabilitation Guidelines
E. The Preeminent Role of the Treating Physician
IV. Medical Compensation Dispute Resolution
A. When the employer or insurer is obligated to pay
B. Penalties for untimely payment of medical bills
C. Mediation
Compensable "disability" is not a physical condition, per se, under North Carolina's Workers' Compensation Act (hereinafter, "the Act"). It is the "incapacity because of injury to earn the wages which the employee was receiving at the time of the injury in the same or any other employment". N.C. Gen. Stat. §97-2(9). (For selected portions of this and all sections of the Act cited, see Appendix IV.) "Medical compensation" encompasses all scientifically accepted treatments of body and mind, and vocational rehabilitation, reasonably necessary to relieve the employee of the work-related disability, and the employer of its financial consequences.
(19) Medical Compensation. - The term "medical compensation" means medical, surgical, hospital, nursing, and rehabilitative services, and medicines, sick travel, and other treatment, including medical and surgical supplies, as may reasonably be required to effect a cure or give relief and for such additional time as, in the judgment of the Commission, will tend to lessen the period of disability; and any original artificial members as may reasonably be necessary at the end of the healing period.
N.C. Gen. Stat. 97-2(9). Sess. Laws 1991, Chap. 703 (S.B. 432), hereinafter, "the 1991 Amendments". The definition was created by combining the varying terminology used to describe it in the four different sections of the Act that referred to services due employees injured by accident (§97-25) and occupational disease (§97-59), for total disability (§97-29), and describing those services subject to Medical Fee Schedules (§97-90(1) after the Courts made clear that the Commission could not always interpret them as referring to the same set of services. Roberts v. ABR Assoc., 101 N.C. App. 135, 143, 398 S.E.2d 917, 920 (1990) (costs of rehabilitation could not be recovered by the employer or carrier under their §97-10.2 lien on recoveries from "third party tortfeasors" that caused the compensable injury). The wording of the statutes have changed over the years more than the understanding of people working within the workers' compensation system about the services involved.
What treatment is "reasonably" due becomes a question of fact for the Commission if the injured employee and the employer or carrier cannot agree. The goal of medical compensation is to end "disability" -- that is, to restore the employee to the wage earning capacity he or she had before the injury. But it may not be feasible, for instance, to retrain a worker if there is no aptitude for learning a more valuable skill.
The primary statute governing how medical compensation is delivered is N.C. Gen. Stat. §97-25:
97-25. Medical treatment and supplies.
Medical compensation shall be provided by the employer. In case of a controversy arising between the employer and employee relative to the continuance of medical, surgical, hospital, or other treatment, the Industrial Commission may order such further treatments as may in the discretion of the Commission be necessary.
The Commission may at any time upon the request of an employee order a change of treatment and designate other treatment suggested by the injured employee subject to the approval of the Commission, and in such a case the expense thereof shall be borne by the employer upon the same terms and conditions as hereinbefore provided in this section for medical and surgical treatment and attendance.
The refusal of the employee to accept any medical, hospital, surgical or other treatment or rehabilitative procedure when ordered by the Industrial Commission shall bar said employee from further compensation until such refusal ceases, and no compensation shall at any time be paid for the period of suspension unless in the opinion of the Industrial Commission the circumstances justified the refusal, in which case, the Industrial Commission may order a change in the medical or hospital service.
If in an emergency on account of the employer's failure to provide the medical or other care as herein specified a physician other than provided by the employer is called to treat the injured employee, the reasonable cost of such service shall be paid by the employer if so ordered by the Industrial Commission.
Provided, however, if he so desires, an injured employee may select a physician of his own choosing to attend, prescribe and assume the care and charge of his case subject to the approval of the Industrial Commission.
Since the employer generally has a financial stake in ending or reducing the injured employee's physical impairments -- e.g., payments are due weekly during temporary total disability per §97-29 -- the Commission may order the suspension (not permanent termination) of compensation when treatment is unreasonably refused. Sanhueza v. Liberty Steel Erectors, N.C. App. No. COA 95-468, 4 June 1996; Hooks v. Eastway Mills, Inc., 74 N.C. App. 432, 435, 328 S.E.2d 602, rev'd on other grounds, 314 N.C. 657, 658-59, 335 S.E.2d 898 (1985); Owens v. Wickes/Collins & Aikman Corp., I.C. No. 936154, 1 February 1993 (suspension authorized during refusal, only). The Commission will exercise its discretion to suspend compensation when an employee refuses medical compensation if the employer seeks such an order (typically on a I.C. Form 24), and it is demonstrated that the proposed treatment carries only
a slight risk of significant adverse effects, ... [and] such treatment is (1) recommended by the treating physician, whose opinion is not shown to be contradicted by the greater weight of competent medical authority; (2) has a high probability of achieving a significant reduction In the period or degree of disability of the particular plaintiff; and (3) would be sought by a reasonably prudent man in similar medical circumstances of his own volition.
Watkins v. City of Asheville, I.C. 623502, 8 May 1989, aff'd, 99 N.C. App. 302, 392 S.E.2d 754 (1990); Johnson v. Jones Group, Inc., No. COA94-1311, 16 July 1996, p.6. The informal (telephonic) hearings authorized by statute to handle I.C. Form 24 motions are generally limited to the issues bearing on whether the employer is entitled to terminate compensation. The sole exception is made for "related issues regarding the selection of medical providers or treatment". N.C. Gen. Stat. §97-18.1(E).
Along with the obligation to provide medical compensation, North Carolina's Workers' Compensation Act gives employers (or the carriers or administrators acting on their behalf) the right to choose the providers of those services, under most circumstances. This is true of a minority of the states, but a growing one. The implications of this reach every corner of the system, often in ways that do not readily come to mind. For instance, it is one of the reasons why an employee given an impairment rating (including release with a "0%" rating) is entitled to a second opinion rating, by a physician of the employee's choice, at the employer's or insurer's expense. N.C. Gen. Stat. §97-27(b). While our State, like most in recent years, has strengthened its comp fraud statutes (see N.C. Gen. Stat. §§97-88.2, 97-88.3, and 97-90(b)), the scandalous fraud "rings" involving contrived diagnoses and multiple physician referrals for bogus treatment, which have caused most of the damage in other states, have not surfaced here. The power to "authorize" (commit the employer to pay for) treatment has also tempted claims handlers and medical case managers to manipulate how or even whether treatment is rendered, causing misery to claimants and creating the vast majority of the very large unnecessary liabilities suffered by employers and insurers that I have witnessed at the Commission. (See III. C., below). For the purposes of this topic, the most important effect of this provision is that employers were able to enter into the simplest form of what is known today as "managed care" -- the "preferred provider" contract -- before any special legislation. That is, since they were capable of directing most of their patients to physicians of their choice, employers and their insurers could contract with them in advance for special access and pricing. Most insurers compiled lists of physicians, by geography and specialty, with good track records for providing successful treatment and usable information for the return to work process, and some formalized the relationship by contract.
There are important limitations on the employers right to choose providers, and these require forethought and planning by parties to an MCO contract, which is grounded in the idea that the employee will normally be treated by providers within the MCO's "network". In an emergency, when the employer's chosen physician is not available (or not known), the employee has the right to find the necessary help at the employer's expense. However, the employee must notify the employer within a "reasonable" time after treatment begins, which gives the employer the opportunity to redirect the employee to its preferred provider, if reasonable under the circumstances. Schofield v. Great Atlantic & Pacific Tea Company, 299 N.C. 582, 264 S.E.2d 56 (1980). The employee may ask the Commission to order a change in physician (or to change back), or for a change in treatment, or for different or additional compensation services at the employer's expense. Hyler v. GTE Products, Co., 333 N.C. 258, 263, 425 S.E.2nd 698 (1993). The employee may choose his or her own physician and seek authorization from the Commission "within a reasonable time". If the defendant is denying liability or otherwise failing to provide treatment later deemed reasonable and compensable, the "reasonable time" can be as late as the hearing. Forrest v. Pitt County Board of Education, 100 N.C. App. 119, 394 S.E.2d 659 (1990); Davis v. City of Charlotte, I.C. No. 865291, 8 March 1991. If, on the other hand, the employer or insurer was offering adequate treatment, the employee is at grave risk of having to bear the cost of treatment, and certainly if the treatment fails to "effect a cure, give relief or shorten the period of disability". There is nothing prohibiting an injured employee from obtaining medical care at his or her own expense, although compensation could be suspended if interfered with what is deemed more appropriate treatment rendered.
The Commission's Rules for Managed Care Organizations (effective January 1, 1996) (hereinafter "MCO Rules") require that the contract address whether the employer/insurer or the MCO will be responsible for arranging "out-of-network" care. MCO Rules VI (8) and VI. Few MCOs have contracted with providers of every conceivable service covered by medical compensation, and most employers will have employees traveling on business outside the geographic area of their MCO's network at least occasionally. In addition to preventing the employee from being left without treatment if they "drop the ball between them", this requirement should also give employers and insurers occasion to consider which has better knowledge of the out-of-networks providers they are likely to need, which is in the better position to bargain for those providers' services, etc. In some instances, it will be advantageous for the employer/carrier to pay the MCO to act as their agent to obtain out of network services.
The following is a brief overview of the issues and trends affecting the legally mandated process of reviewing charges for medical compensation services, which amount to over half of comp benefit costs. The paper for this program by Chief Medical Fee Examiner Nick Davis details when and how the schedules are applied. Commissioner Bolch's paper includes the Commission's memos explaining the Medical Fee Schedule revisions effective 1/1/96, and permitting electronic transmitters and payers directly applying the schedule to handle outpatient hospital bills.
Since 1929, the Commission has had a fee schedule, listing medical procedures and prices for most services. For a period of some thirty years, ending in mid-1987, the Commission approved per diem fees for trauma centers and teaching hospitals -- fixed amounts roughly equal to the per day average cost of treating accident cases at each hospital -- offsetting their higher overhead. After being subject to only the fee schedule for 2 1/2 years, hospitals that so chose were essentially exempted the from fee schedules, effective 1990, and restricted only to the fees they listed as their "regular" prices -- although few large, capable payers with bargaining power actually paid them. Charges for workers' compensation patients escalated faster than even the shocking rate of medical inflation in the early 1990s, in part because hospitals were able to shift costs to comp while making preferred provider contracts to secure "market share". The Commission sought to reinstitute a per diem system (with prices for five levels of treatment), effective 1993, to deter overutilization. After a court challenge to that plan, which concluded with a Supreme Court interpretation our depression-era statute that would not clearly give the Commission authority to administer even the most conventional type of fee schedule, it was re-written as a part of the Workers' Compensation Act of 1994 (hereinafter, "the 1994 Reform Act"). Charlotte-Mecklenburg Hospital Authority v. North Carolina Industrial Commission, 336 N.C. 200, 443 S.E.2d 716 (1994); N.C. Gen. Stat. §97-26. The Commission was given broad authority to set appropriate fee limits on other providers, but in a political compromise, fees for hospitals were strictly tied to fees allowed by the State Employees Health Plan (SEHP). Although SEHP could not use its potential bargaining power (it had been forced to abandoned plans to enter into preferred provider contracts with the most competitive hospitals under political pressure to do business with all of them), both payers and hospitals felt certain that such a high profile organization would not stray far from normal prices.
The Commission had resisted such linkage in the past, but in 1994 SEHP was about to begin calculating payment for in-patient services by setting benchmark prices for "diagnostically related groups" (DRGs) of medical procedures. Like per diem, a DRG system tends to remove the incentive to overutilize services by paying a given rate for a course of treatment, rather than for each procedure performed. The revision of the fee schedule for other providers scaled fees within major categories according to a "relative value system" to more fairly compensate work performed, and to reduce the financial incentive to use one treatment rather than another that has been observed to influence medical judgment.
Out-patient SEHP bills (and therefore compensation bills) are simply discounted five percent off the billed price. This was a poor cost containment technique in the "sellers market" of medical care that we became accustomed to in the eighties and early nineties. That is, if the bill was $100.00 last year, comp paid $95.00, and if the bill is $200.00 this year, comp pays $190.00. In the first six months after SEHP installed their DRG system for in-patient charges, those were up two percent, and out-patient charges went up seventeen percent.
By contrast, private employers' health insurance costs actually went down in 1995 for the first time in memory. The reason on everybody's lips: managed care organizations. They not only sought the right amount of services, but their sharp eye on the bottom line set a reference point for provider/payer bargaining generally. Very recently, a major North Carolina medical center dropped their "regular" prices to reduce the difference between them and the those charged under preferred provider contracts.
Thus a vast change is occurring in the medical marketplace. The competitive atmosphere has begun to moderate pricing. Mechanisms are in place in the comp fee schedules (excepting outpatient hospital) that can remove the provider incentive to "overutilize" particular services. While these areas always need attention, the upshot is that the comp cost conscious must shift their focus from fair prices to fair billing.
Our problems with the DRG system illustrate the point. Roughly speaking, that system sets a benchmark fee a hospital will receive for a course of treatment, or "diagnostically related groups" (DRGs) of services, including all the generally appropriate and necessary procedures for the patient's primary malady. That figure presupposes a hospital stay of a given number of days. If the patient is transferred to another hospital, leaves early against medical advice, passes away, etc., before receiving the whole course of treatment, and the hospital's bill to the patient's employer has the wrong length of stay (LOS) figure at the bottom of the UB-92 claim form, the employer has been overbilled, often by a huge amount. Unfortunately, bills with this and similar errors were submitted frequently enough, and enough employers and carriers were unprepared to catch them before sending the bill on to the Commission for approval, that the Commission resorted to legislation to limit the damage. The resulting controversy led to legislation in the 1996 Short Session that put a ceiling of 100% and a floor of 90% of billed charges on DRG pricing as an interim answer (sunsetting on July 1, 1997), while the hospitals and payers sort out methodology. Any true solution will include strong incentives for accurate preparation of bills, and/or methods that payers practically can and will use to verify them.
There is absolutely nothing unique to the DRG system about this problem. Since 1929, all comp bills have gone first to the employer or their insurer for scrutiny prior to fee schedule analysis. Terms like "upcoding", "unbundling", "redundancy", "unrelated condition", "overutilization", etc., became a part of medical business language a long time ago. A stated reason for the ET program and allowing the payers to apply our fee schedule was the hope that acquiring the necessary technology would naturally lead to use of the powerful software that assists in the scrutiny of medical bills for these problems. All of these billing errors can be discerned by someone familiar with the course of treatment. When treatment is pre-planned by an MCO that also reviews billings, the probability of discovering errors is enhanced.
Until 1991, all bills subject to approval under the Fee Schedules had to be submitted by the employer or carrier to the Commission medical department for review and any adjustment. Despite having one of the more generous Fee Schedules in the country in terms of listed prices (ours was the third created, and later ones sought not merely to protect payers, but to cut comp costs by giving them deep discounts), our medical costs per case statistics were among the best in the country, in some part due to the fact that our Fee Schedule was actually and consistently applied by the Commission staff. However, as the number of bills grew (to 740,000 a year) while our staff did not, and in hopes of encouraging employers and insurers to utilize the computer programs and other systems for catching other problems with bills (e.g., redundancy, non-relatedness, unbundling, overutilization, etc.) the Commission began programs to involve them more in the fee approval process. The 1991 amendments changed N.C. Gen. Stat. §97-90(a) to make clear that the Commission could do this by "rules, schedules or orders", and amended N.C. Gen. Stat. §97-92(f) to allow transmission and use of medical bills (and all other documents) in electronic format only. (Language about electronic transmission was also included in N.C. Gen. Stat. §§97-81(a) by the 1994 Reform Act.) In 1992, insurers began electronic transmission (ET) of medical bills, effectively inputting bill data into the Commission's computer system, and receiving back the Commission's bill analysis and approval electronically overnight. The ET program, which continues, cut down mailing time and paper handling, and assured accurate analysis, at least to the extent the bill information was accurately transmitted. Effective February 15, 1995, the Commission empowered payers to apply its fee schedule, subject to certain procedural rules, set forth in the Memorandum of January 18, 1995. See Appendix VI and the paper for this program by Chief Medical Fee Examiner Nick Davis.
There are now three distinct methods of calculating the ceiling fees on bills for medical compensation, and three categories exempt from the approval process:
Exempted from fee approval are all bills:
Although it is very rare, the Commission can make an evaluation of appropriate pricing, independent of the fee schedule. A special application or motion can be made to the Commission. I.C. Rule 407(1). Submission to the Commission is the payer's admission that it is liable for the treatment, and the Commission's "bill analysis" is an order to pay the fee schedule amount stated on it. However, either the payer or provider may ask for reconsideration or appeal for a hearing before a Deputy Commissioner. I.C. Rule 703(1).
The descriptions of Managed Care Organizations, with varying degrees of contractual ties, and medical coverage, financial risk, and influence over treatment decisions, has become a bottomless alphabet soup. North Carolina's primary regulator of MCOs, the Department of Insurance's Managed Care and Health Benefits Division, groups them under three labels for certification:
Preferred Provider Organization (PPO) -- Can be as simple as an entity contracting with providers and reselling their services to employers, insurers, etc., with no other impact on care delivered -- a "pure PPO" in the Department's parlance. Currently, the most common MCO contract to treat compensation patients calls for "pure PPO" activity -- giving the employer or insurer a list of physicians and other providers, from which the customer may, or may not, choose. This is what the Commission's MCO Rules define as an "employer network". See Rules I. and II., Appendix II. It attracts its customers with discounted provider fees, and learns that a customer has done business with one of its providers when their bill is received for processing. The Department requires the PPO to do the minimal "credentialing" of physicians (essentially, checking for degrees and problems), but does not require that the PPO "profile" or track treatment outcomes, and has minimal concerns about the availability or accessibility of the network physicians to prospective patients, since customers can go to out-of-network providers at will. On the other hand, PPOs can also offer the most sophisticated care management techniques, and most of those with employer network/pure PPO contracts to serve comp patients have those products and would badly like to sell them to customers that, thus far, have been sold on only discounts.
Health Maintenance Organizations (HMO) -- this is the department's label for any organization that sells benefits on a prepaid (typically, "capitated" or fee per person) basis and bears a portion of the risk that the medically necessary treatment for a given patient during the period of the contract may exceed the premium collected for their coverage. Thus, the HMO has a financial stake in keeping the patient well, and tends to be generous with examinations, tests and wellness programs that will prevent ill health or catch problems at an early and treatable stage. Those things may seem futile against injuries by accident, but one large textile concerned in the Carolinas had good results against comp losses from a wellness program that emphasized physical conditioning. The prevalent image of a HMO is a building where employee physicians see patient members exclusively, but there is only one such single clinic model HMO operating in North Carolina. The rest utilize networks of providers that devote only a part of their time to the HMO's members. Organizations certified as HMOs also have entered into fee-for-service "employer network" contracts with employers.
Utilization Review Organizations (URO) -- UROs are organizations that have met the department's requirements for capabilities, qualified personnel, processes and safeguards to carry out either prospective concurrent or retrospective utilization review. Department regulations require URO functions to be carried out by professionals without conflicting financial interest according to "professionally developed norms of care" specified in a written plan, standard data elements to facilitate review of URO procedures, timely appeals and waivers of adverse preauthorization decisions. HMOs and PPOs typically also hold URO certificates.
All Managed Care Organizations (HMOs and PPOs) that contract to serve workers' compensation patients:
An MCO treating compensation patients MAY also contract to satisfy the employer's duty to provide medical compensation, and choose the treating physician and other providers in place of the employer and insurer. It is not required that the MCO's contract do this. The 1994 Reform Act did not limit or prohibit the pre-existing preferred provider arrangements. (See II.A. above, and Appendix IV.) But that legislation created the opportunity for employers and carriers to transfer their obligation to arrange care and their authority to choose providers to MCOs, which are given much greater latitude to manage the provision of care. "Notwithstanding any other provision" of the Act, "those employees who are covered by the contract ... shall receive medical services for a condition for which the employer has accepted liability or authorized treatment ... in the manner prescribed by the contract and in accordance with the Managed Care Organization's certificate of authority; provided that the contract complies with the rules adopted by the Commission ...." N.C. Gen. Stat. §97-25.2. The contract approved by the Commission and the N.C. Department of Insurance, and the certificate issued by the Department, permits the MCO to form panels of physicians best suited to treat specific types of injuries, to use protocols or guidelines of treatment, and to carry out concurrent and retrospective utilization review, in addition to the pre-authorization services mentioned above. To allow the MCO the opportunity to implement its program, "an employee must exhaust all dispute resolution procedures" of the MCO before bringing the dispute to the Commission. I refer to these care management activities -- which go beyond merely tendering a list of providers to employers or carriers for their choice -- as "managed comp".
In addition to providing for the Commission's MCO rules, the statute authorizing managed comp contracts specifies two of the most important rules governing their operations. First, the employee is allowed to choose his or her physician from the panel the MCO has assembled, and to change once without having to seek approval from anyone. (In practice, unless the employee knows of one of the physicians on the panel, the first choice is mainly a matter of chance.) Any further changes have to be carried out under the rules of the MCO. Secondly, once the employee has exhausted the dispute resolution procedures of the MCO -- concerning change of physician, or treatment or any other medical matter -- the employee may apply to the Commission. When that is done, the employee is entitled to a second opinion like that following a rating -- that is, by a physician of the employee's choice, at the employer or insurer's expense. If it does not lead the parties to resolve the dispute, this opinion, along with the MCO's physician's, will aid the Commission in making a decision.
North Carolina employers have perhaps been slow to embrace managed comp. This may be due in part because the "sure bet" discounts satisfied the desire to cut costs with only slight changes in the way things are handled. Choice of physician is a cherished prerogative, although a 1993 study showed that it was only exercised about half the time in the most serious cases. I am aware of instances when claims adjusters have tried to "overrule" pre-authorization decisions by URO physicians chosen by their companies, both to give and deny treatment. Perhaps the MCOs have had difficulty explaining how they would fit into the workers' compensation context.
Contracts with MCOs that provide for more management of care than merely assembling a list of available providers promise several distinct advantages in the workers' compensation setting.
Commissioner Bolch's paper for this program addresses traditional "utilization review" -- the process of evaluating treatment outcomes and utilizing that information to make better choices of providers and therapies in the future -- and the Commission's requirement that all insurers have such a retrospective Utilization Review plan. My purpose here is to discuss the process of making those choices.
One of the most important techniques used by Managed Care Organizations to control cost and improve the quality of treatment are the processes of planning or scrutinizing the planned treatment before it is rendered. Simultaneously, several state's Workers' Compensation Boards -- notably Massachusetts, Washington, W. Virginia and Oklahoma -- have created guidelines for physicians to consider in the treatment of compensable injuries or diseases. The various techniques for doing this -- "protocols of treatment" or treatment guidelines, "pre-certification" or "preauthorization" of treatment based on diagnostic criteria, the use of "gate-keeper" physicians to assure appropriate referrals to specialists, and clinical advisory panels to settle disputes over appropriate treatment -- all fall under the definition in our States' insurance law of "prospective utilization review". North Carolina has not forged into this area as these other entities have, but the 1994 Reform Act gave the Commission wide latitude to do so, and the Commission tentatively intends to study what others are doing with an eye to exercise that authority where and when it would serve the system. However, there are three areas in which the Commission has been active for years that fall under the heading of prospective utilization review.
Historically, the Commission prohibited interference with the authorized treating physician's decision to undertake a given course of treatment, including delaying it or making it subject to "preauthorization" or "pre-certification" requirements, as a breach of N.C. Gen. Stat. §97-25. The Reform Act created an exception to that rule. N.C. Gen. Stat. 97-25.3 authorizes and insurer to require preauthorization "for inpatient admission to a hospital, inpatient admission to a treatment center, and inpatient or outpatient surgery", excluding emergency treatment and treatment for which the insurer is not paying, subject to prescribed "standards". However, an organization certified by the N.C. Dept. of Insurance as a utilization review organization (URO) may impose preauthorization requirements to the extent their regulations allow.
Along with, and as a part of the Medical Fee Schedule provisions concerning chiropractic and physical therapy services are rules that fall under the general heading of prospective utilization review. In the case of chiropractic treatment, the sole rule is that approval of the employer be obtained prior to continuing treatment beyond 30 visits. "Guidelines" for physical therapy include that, and additional requirements for medical assessment, a plan of care and follow-up examinations.
Beginning in 1992, unofficial, "guidelines" drawn by the N.C. Bar Association's Workers' Compensation Committee (regarding primarily litigation issues) and a separate set of guidelines drawn by rehabilitation professionals (addressing primarily the goals and methods of their services) were created and published with the encouragement of your author and many others concerned with the frequency with which rehabilitation became involved with comp litigation, to the decrement of both. The 1994 Reform Act gave the Commission authority to create guidelines for rehabilitation, and after numerous meetings involving representatives of the Commission, rehabilitationists and attorneys representing compensation plaintiffs and defendants, official guidelines were adopted effective January 1, 1996. N.C. Gen. Stat. §97-25.5.
All medical decisions must be made by those licensed to do so. No contract, guideline, MCO arrangement or right to choose the provider abrogates the authorized treating physicians' right and duty to "assume the care and charge of the case". N.C. Gen. Stat. §97-25. I had occasion to write recently:
Because of the very significant decisions affecting treatment that adjusters may legitimately make, the distinction between these and medical decisions have become blurred in the minds of some. Consequently, we wish to make abundantly clear that compensation defendants and those acting on their behalf have absolutely no authority to determine, withhold or alter treatment of an accepted compensable condition recommended by claimant's treating physician(s), unless that decision is based on the contrary expert opinion of a person licensed under Chapter 90 of the N.C. General Statutes to diagnose and treat the condition. Subject always to the Commission's orders and awards, defendants may determine whether they are liable for a particular accident or a particular condition suffered by a claimant that has had a compensable accident; may select the health care providers to take charge of the claimant's care and determine and render appropriate services; may, in non-emergency circumstances, delay proposed treatment for a reasonable time to obtain a second opinion on proposed treatment from another qualified provider; may require pre-authorization (or "pre-certification") by qualified providers or persons under their supervision pursuant to N.C. Gen. Stat. §97-25.3; and, may contract with a qualified Managed Care Organization to fulfill their obligation to provide care that will affect a cure, give relief, and shorten the period of disability, per N.C. Gen. Stat. §§97-2(19) and 97-25.2. These prerogatives -- particularly choice of the physician to take charge of the case -- protect the legitimate interests of the employer and its insurer, but do not permit interference with appropriate treatment for the purpose of financial or litigation advantage.
Hastings v. North-South Textile Enterprise, I.C. 281458, 23 May 1996. Abuses typically take the form of denying or reducing treatment in an attempt to save the insurer money. Ironically, very often the delay in treatment lengthens the period of disability, complicates the medical course, and causes additional litigation, all of which the employer or insurer pays for in the end, with interest. The worst cases involve "chronic pain syndrome" or "reflex sympathetic dystrophy" -- maladies that can result from long periods of unrelieved pain -- whose victims return to work only after intensive treatment, if at all.
An MCO that has contracted with an employer to handle its workers' comp patients only will almost never have any question raised about billing that employer's workers' compensation carrier. Echoing basic contract law, the Act provides that if the employee is directed by the employer or insurer to the provider, the insurer must pay for the treatment rendered at its request, though it later decides to deny liability or even obtains a decision from the Commission that it is not liable. N.C. Gen. Stat. §97-90(e). The insurer is also liable for the authorized treating physician's referrals, unless the physician has been asked to allow the insurer to choose the referral provider, and that can be done without unreasonable delay, under the circumstances. See I.C. Rule 407(4).
If the employee returns of his own volition, and receives treatment after his claim has been denied by the insurer, the provider may bill the employee's group health insurance, even if he is pursuing a claim for workers' compensation benefits. While group policies will not cover workers' compensation injuries, it is not comp until the Commission says it is comp. N.C. Gen. Stat. §97-91. If the case is resolved in favor of the claimant, the group health carrier's contract typically gives it the subrogation right to recover for its services from the comp insurer.
If the employee has no private insurance, the comp insurer has denied liability, and the employee has failed to pursue the claim -- by filing an I.C. Form 33 Request for Hearing (and not merely a Form 18) -- then the provider may bill the employee. If the employee files a request for hearing, the provider must cease billing either party until the Commission determines which is liable. N.C. Gen. Stat. §97-90(e); Lane v. Lane Construction Co., I.C. No. 922331, 10 November 1992. Violation is specifically made a misdemeanor. See N.C. Gen. Stat. §97-88.3(C).
Since the case could quite conceivably be litigated for more than three years before the Commission and the Courts, the law provides that the provider's time for filing suit to recover the fee does not run while the comp claim is pending a final decision. N.C. Gen. Stat. §97-90(E).
As noted above, the insurer is also liable for treatment secured by the employee in an emergency, for a physician or treatment authorized by the Commission, and for a second opinion rating (but not treatment) rendered by a physician of the employee's choice. N.C. Gen. Stat. §§97-25 and 97-27(b).
As discussed in the paper for this program by N.C.I.C. Chief Medical Examiner Nick Davis, I.C. Rule 407 and N.C. Gen. Stat. §97-18(i) set forth rules and procedures for collecting a 10% penalty for slow payment of medical bills. See Appendix IV & V. A provider of medical compensation has standing to bring issues to the Commission involving medical fees. N.C. Chiropractic Association v. Aetna Casualty & Surety Co., 89 N.C. App. 1, 5, 365 S.E.2d 312 (1988). If the payer fails to pay the 10% penalty after it is properly added to the billing, a provider may address a motion order to compel payment to Mr. Davis, with supporting documentation (e.g., postal return receipt) showing the payer has not timely handled the bill. Normally, Mr. Davis will look only at written arguments and documents to make a decision on the motion. The payer can get a rehearing before a Deputy Commissioner on request. I.C. Rule 703 (Attachment V.). However, this should not discourage providers in clear-cut cases. The hearing deputy can order that the payer pay the provider's attorney's fee if he or she feels the request for the penalty was "defended without reasonable ground". N.C. Gen. Stat. §97-88.1. If there are other appeals, the Commission and the Courts have additional authority to assess the attorney's fee under N.C. Gen. Stat. §97-88.
Whether forced to stand by while other parties fight over liability, or locked a billing dispute with a comp payer that potentially is a good client, the MCO or provider firm should seriously consider getting the matter into Mediation, currently the most successful and accepted of the "alternative dispute resolution" techniques.
In 1992, I was course planner for a day of CLE programs designed to acquaint compensation counsel and claims handlers with Mediated Settlement Conferences, and mediators with workers' compensation, in hopes of encouraging its voluntary use in the comp system. As I wrote in my manuscript for that program:
Mediation is a "good fit" for comp. It proceeds with the informality that was once the hallmark of comp hearings, but it has proven successful in complex cases. It is particularly suitable for parties with a pre-loss relationship, and gives them the flexibility to design resolutions beyond the Commission's power to order. It allows the parties to address together the growing list of non-comp issues (e.g., Americans With Disabilities Act rights, group health insurance, Woodson claims, and the liens of Vocational Rehabilitation, Medicare and Medicaid) that affect the parties in these circumstances.
I could have mentioned other types of litigation that result from serious workplace injuries, especially when they end the employment relationship: claims for Unemployment benefits with the Employment Security Commission, Retaliatory Discharge claims handled by the N.C. Department of Labor (N.C. Gen. Stat. §95-240, et seq.), negligence claims against "third party tortfeasors" in the State trial Courts(with the potential for the employer/insurer to recover comp paid, per N.C.G.S. §97-10.2), and Age and Handicapped discriminatory discharge claims with the EEOC, and Family Medical Leave Act (FMLA) disputes in the Federal Courts. Particularly in cases complicated by multiple parties or issues that would otherwise have to be addressed in multiple forums, Mediation offers the potential for quick, relatively inexpensive resolution of all issues that no single Court or agency can. The consensual nature of the resolution (no one is forced to settle), and the method of reaching it, can be the basis for a comfortable, ongoing business relationship.
In 1993, the Commission received statutory the authority to order cases into Mediation that all the Superior Courts statewide now have. N.C. Gen. Stat. §97-80(C). (That authority has since been made permanent, not expired, as Michie states.) It has proven to be very successful with all segments of the comp system, and is likely to be expanded soon to help deal with our (again) growing backlog of cases for hearing.
* * *
A note about citations and materials for those unfamiliar with comp legal sources: Chapter 97, Article 1 of the N.C. General Statutes is the Workers' Compensation Act of 1929, as amended. The I.C. (for "Industrial Commission") Rules, included in Michie's official Rules of Court volume, as well as West's, are also included in the N.C. Administrative Code, with numbers assigned by its editors, at Title 4, Chapter 10, Subpart 10A, et seq. However, the Commission is wholly "APA exempt", and its rules should be cited as adopted by the Commission and printed in the official Rules of Court volume. The cases cited with "I.C." numbers are decisions of the "Full Commission" -- panels of three Commissioners that review the decisions of our 20 Deputy Commissioners (who hold the trial-like hearings), on the written record of the hearing evidence, with briefs of counsel. See N.C. Gen. Stat. §97-85. Industrial Commission cases are not published in bound volumes, but can be obtained through our electronic "bulletin board" at (919) 715-5920, the Commission web site at "http://www.comp.state.nc.us", or by FAX or mail from Lawyers Weekly (800-283-1093). A Worldwide Web site "N.C. Legal" ("http://www.nclegal.com") has a law review article I wrote and I.C. Mediation rules and forms. The Commission's very active web site also has I.C. forms and other information.
I. I.C. Form 51 (Rev. 1995)
II. The MCO Rules and transmitting memo
III. Commission Minutes concerning application of MCO Rules and transmitting memo
IV. Selected Medical Compensation Statutes
V. Selected I.C. Workers' Compensation Rules
VI. I.C. Memorandum: Permission to Apply I.C. Fee Schedule
FORM 51 Emp. Code No. ________________ R 1/1/96 Carrier Code No. ________________
ANNUAL CONSOLIDATED FISCAL REPORT OF "MEDICAL ONLY"
OR "LOST TIME" CASES
It is the responsibility of the Carrier, Self-Insured Employer, Group Self-Insured as certified by the N. C. Department of Insurance, and Statutory Self-Insured (State Agencies and Political Subdivisions) to submit a consolidated fiscal report yearly to the N.C. Industrial Commission on medical expenses paid without prior submission of the billings to the Commission, due to (1) the charges having been incurred in "medical only" cases, (2) application of the Commission's Fee Schedule by an approved firm, or (3) payment pursuant to a contract with a Managed Care Organization exempt from the Fee Schedule. An MCO, Third Party Administrator, or service company may file on behalf of these parties. A Form 51 covering the preceding July 1- June 30 shall be submitted on or before July 30 of each year.
________________________________________________ Name of Carrier, Self-Insured Employer, Group Self-Insured as certified by the North Carolina Department of Insurance, or Statutory Self-Insured (State Agencies and Political Subdivisions) ________________________________________________
All Must Complete The Following:
1. Total Number Of "Medical Only" Cases: __________
2. Total Amount Paid "Medical Only" Cases: $__________
Complete The Following Section Only If You Are A Managed
Care Insurer Or Are
Directly Applying The Industrial Commission
Medical Fee Schedule To Submitted Medical Bills:
(Exclude "Medical Only")
3. Total Number Of "Lost Time" Cases: __________
4. Total Hospital--Outpatient paid: $__________
5. Total Hospital--Inpatient paid: $__________
6. All other Providers, excluding Rehabilitation: $__________
7. Total Amount Paid For Rehabilitation: $__________
8. Total Medical Comp. Paid (Add lines 4-7): $__________
Address Of Submitting Office:
REPORTING YEAR: JULY 1, 199____ THROUGH JUNE 30, 199____
I. PURPOSE. These rules are intended to facilitate the timely and cost-effective delivery of appropriate medical compensation services to fulfill the employer's duty to provide such services as are reasonably necessary to effect a cure, give relief, or shorten the period of disability resulting from compensable injuries through the use of Managed Care Organizations (MCOs). These rules do not affect existing, informal lists or "employer networks" of providers assembled by employers or insurers for their own referrals. N.C. Gen. Stat. §§97-2(19), (20) and (21); 97-25; 97-25.2; 97-25.3(e); 97-26(b), (c), and (g); and 97-25.4(a).
II. DEFINITIONS. As used in these rules, unless context otherwise dictates:
(1) MANAGED CARE ORGANIZATION (MCO) -- A preferred provider organization (PPO) or a health maintenance organization (HMO) regulated under Chapter 58 of the General Statutes. N.C. Gen. Stat. §§97-2(21) and 58-50-50.
(2) HEALTH CARE PROVIDER (PROVIDER) -- Any medical doctor, chiropractor, other physician, hospital, pharmacy, nurse, dentist, podiatrist, physical therapist, rehabilitation specialist, psychologist and any other person or firm providing medical care pursuant to the Workers' Compensation Act. Payment for services rendered for a workers' compensation patient shall be controlled by contract between the provider and MCO, or if none, by the Commission's Medical Fee Schedules. N.C. Gen. Stat. §§97-2(20); 97-26(b) and (c).
(3) EMPLOYER -- Any person, firm, corporation, or governmental entity obligated by the Workers' Compensation Act to pay or provide indemnity or medical compensation, including any insurance carrier, self-insurance fund, third party administrator or other person, firm or corporation undertaking to pay or adjust claims on behalf of the employer's employees. N.C. Gen. Stat. §§97-2(3) and 97-25.2.
(4) COMMISSION -- The North Carolina Industrial Commission and its employees acting on its behalf. N.C. Gen. Stat. 97-77 and 97-79.
(5) WORKERS' COMPENSATION ACT -- The North Carolina Workers' Compensation Act, Chapter 97, Article 1 (N.C. Gen. Stat. §§97-1 - 97-101), as interpreted and applied by the rules and decisions of the Commission and the courts of North Carolina and the United States.
(6) EMPLOYER NETWORK -- As used in Rule I., means any group of providers assembled by or for an entity liable for medical compensation which agrees to accept the referrals of that entity's workers' compensation patients, and from among whom an adjuster, officer, employee, or insured patient of the entity chooses the initial provider; provided, the entity has no right to sell the services of the providers to a third party. N.C. Gen. Stat. 97-25.
III. QUALIFICATION BY DEPARTMENT OF INSURANCE. Prior to provision of any service for workers' compensation patients pursuant to an MCO contract with any employer, an MCO shall comply with the applicable requirements of N.C. Gen. Stat. Chapter 58, Insurance, and the regulations promulgated pursuant thereto, in addition to these rules, except as they may be interpreted to specifically conflict with the Workers' Compensation Act and these rules; provided, that MCOs with such existing contracts on the effective date of these rules shall comply with this rule on or before February 1, 1996. In the absence of effective and binding regulations administered by the N.C. Department of Insurance setting appropriate and sufficient requirements and standards for health care provider contracts, accessibility of providers, financial ability to meet contract commitments, quality management or quality assurance programs, health care provider credentialing, conflicts of interest, records and examinations, internal auditing, confidentiality and other appropriate matters, every MCO offering medical compensation services shall comply with temporary orders or provisional regulations issued by the Commission, consonant with the Workers Compensation Act, pending further formal rulemaking by the Commission or the Department of Insurance. N.C. Gen. Stat. §97-2(21) and 97-25.2.
IV. QUALIFICATION AND REVOCATION. Upon receipt of documents complying with Rule V., nothing otherwise appearing, the Commission will issue a letter to the MCO acknowledging receipt and stating that the MCO is qualified to contract to serve workers compensation patients while it holds an MCO certificate from the Department of Insurance, subject to renewal at a specified time, not exceeding three (3) years. For good cause, including, but not limited to, ineffective delivery of medical services, failure to comply with applicable laws, rules or regulations, and failure to timely respond to lawful orders of the Commission or other regulatory authorities, the Commission may suspend or revoke an MCO's permission to deal with any particular workers' compensation patients, employers or providers, groups or classes of them, or all of them. N.C. Gen. Stat. §97-25.2.
V. NOTICE TO COMMISSION. Upon contracting with an employer to provide medical compensation services, the MCO shall provide to the Commission (1) a copy of that portion of the contract containing the provisions specified in Rule VI, and the method for determining payment to the MCO, excluding those of its terms kept confidential by the N.C. Department of Insurance, initialed by the employer; (2) a copy of its current certificate(s) issued annually by the N.C. Department of Insurance pursuant to N.C. Gen. Stat. Chapter 58; (3) the name and address of all owners or shareholders, or related groups of owners or shareholders, holding more than 10% interest in the MCO, and whether they are or have any relationship with a provider. Persons or firms are related, for the purposes of this rule, if either has a financial interest in the other; shares officers, agents, or employees; or, if natural persons, are first cousins or closer in kinship. An MCO subject to these rules shall report its medical compensation expenditures annually on I.C. Form 51. N.C. Gen. Stat. §97-25.2.
VI. CONTRACT PROVISIONS. An MCO's contract with an employer subject to these rules shall include these provisions: (1) the principal place(s) of employment of the covered employees, including address(es) and phone number(s) of the workplace(s); (2) the name, title, mailing address, phone number, fax number, and e-mail address, if any, of an officer or responsible employee of the MCO empowered to assent to the treatment or referral of covered employees, capable of obtaining and providing complete business, administrative and medical records generated pursuant to the contract, and empowered to resolve routine disputes with patients, employers and providers under the Commission's jurisdiction; (3) the name, title, mailing address, phone number, fax number, and e-mail address, if any, of an adjuster, officer, agent or employee of the employer empowered to negotiate the resolution of routine medical compensation disputes, and receive orders of the Commission on behalf of the employer; (4) an acknowledgment that the MCO is bound by applicable requirements of N.C. Gen. Stat. Chapters 58 and 97 and these rules, and subject to orders of the Commission to the same extent as the employer; (5) the agreement of the employer that it will cooperate and actively assist in furnishing its employees and supervisors with a phone number and instructions for obtaining emergency treatment and/or contacting the MCO upon injury to any employee during the workday or on the employer's premises requiring physician attention, and with furnishing to its injured employees the information and card hereinafter required in Rule VII; (6) specify a dispute resolution plan in accordance with N.C. Gen. Stat. §97-25.2 and 11 N.C. Admin. Code 12.0914, including provisions for notice of decision in appeals within 30 days, or within 72 hours of appeal when the regular appeals process would cause a delay in the rendering of health care that would be detrimental to the health of the employee; (7) describe physician panels, including specialties represented, and the employee's right to select his or her attending physician from the appropriate panel, and to subsequently change attending physicians once within the members of the panel; (8) whether the MCO or employer will be responsible for securing the services of "out of network" providers when needed. N.C. Gen. Stat. 97-25.2.
VII. INFORMATION FOR EMPLOYEE/PATIENT. The employer shall inform employees of its arrangements with an MCO for providing medical compensation through its usual means of communicating company policies and benefit information, and provide a wallet-size card bearing a phone number to be contacted in case of a work-related injury, and otherwise complying with Department of Insurance regulations. As soon as reasonably possible following the injury, the employer or MCO shall provide to the employee a printed explanation of the system being utilized for his care, suitable for sharing with emergency, "out-of-network", and referral physicians, which shall be filed with any Form 19 submitted to the Commission; provided, that electronic filers may otherwise notify the Commission of the identity of the MCO. This statement shall include the following information: (1) The offices to contact concerning medical treatment for the injury, including a telephone number; (2) if known at that time, the employee's chosen treating physician, including a phone number for seeking medical assistance outside normal business hours if the injury might cause such a need; (3) the applicable methods for choosing and changing treating physicians and resolving disputes concerning physicians or treatment pursuant to N.C. Gen. Stat. §97-25.2; (4) that the MCO can make available physicians in all the fields and specialties licensed by the State of North Carolina; (5) the employer's obligation to pay for treatment for which the employee/patient is referred to the MCO, whether or not the employer admits liability for the injury per N.C. Gen. Stat. §97-90(e); (6) the employee's duty to cooperate in treatment, and right to secure treatment at his or her own expense that does not interfere with the treating physician's treatment; and, (7) the I.C. File Number, if known when filed. Information for providers concerning billing may be included, labeled as such.
VIII. INCLUSIVE PROVIDER PANELS. As soon as reasonably possible following onset or injury, and upon a patient's first request to change attending physician, the MCO shall provide the patient with a list of reasonably accessible and available panel physicians qualified to treat or manage the primary condition for which the employer has accepted liability or authorized treatment from which the employee may select the attending physician. The employer and MCO shall provide for reasonable access and availability to all medical compensation services, and include in its panels, or otherwise make available for the employee's choice, one or more physicians representing all specialties available in the community that are licensed to provide foreseeably necessary treatment for the patient's primary compensable condition, if a physician of that specialty meets the MCO's reasonable credentialing criteria for that specialty and is willing to contract to provide their services on a non-discriminatory basis. N.C. Gen. Stat. 97-2(19), 97-2(20), 97-25 and 97-25.2
IX. QUALITY ASSURANCE AND UTILIZATION REVIEW. An MCO subject to these rules shall comply with the requirements of the N.C. Department of Insurance for quality assurance and utilization review plans, and upon request, provide the Commission with copies of records generated by, or utilized in, the operation of those programs, and copies of plans or amendments to plans not yet filed with the Department of Insurance.
X. WAIVER. For good cause, and in its discretion, subject to statutory requirements, the Commission may waive adherence to any of these Rules. N.C. Gen. Stat. 97-80(a).
December 6, 1995
ATTN: MCOs interested in care of WORKERS' COMPENSATION patients
FROM: Commissioner J. Randolph Ward
RE: N. C. Industrial Commission
RULES FOR MANAGED CARE ORGANIZATIONS
Enclosed are the Commission's first rules governing "employer or carrier contracts with a managed care organization for medical services" which they are obligated to provide under the Workers' Compensation Act, as mandated by N. C. Gen. Stat. §97-25.2, a provision of the Workers' Compensation Reform Act of 1994. The rules were adopted on Thursday, November 30, 1995, following published notices, public comment, and hearings, to become effective January 1, 1996. I sincerely appreciate the considerable input many of you provided during this process, as well as the advice and assistance of the Managed Care Division of the N. C. Department of Insurance, the compensation carriers, and representatives of employers and employees.
MCO contracts for treatment of workers' compensation patients operative after January 1, 1996 are subject to these rules. Parties to contracts existing prior to that date are to comply on or before February 1, 1996. (Rule III.)
The Commission is neither the primary regulator of MCOs in this state -- a duty given to the Department of Insurance -- nor the purchaser/administrator of a system of medical services, such as state Medicaid agencies. Thus the rules on these five pages consist largely of definitions and existing requirements affecting medical compensation drawn from the Workers' Compensation Act and other statutes. In addition, the new rules allow the Commission to identify those involved with the care of injured workers, see that employees and employers are made aware of their rights and duties, and provide for timely resolution of disputes. After consultation with trade groups representing compensation carriers (whose members will ultimately bear the expense in most cases), we require that employees be provided with a card to facilitate timely treatment and notice to the MCO of a workplace injury. (Rule VII.) The prohibition on specialty-wide discrimination against chiropractors and other non-medical doctors seeking to treat maladies within their area of expertise is brought forward in these rules. (Rule VIII. and II(2).) Current informal referral arrangements and two-party preferred provider contracts are left undisturbed. (Rules I & II(6).) This exemption includes provider/employers (they are not "assembled ... for their comp referrals"), unless they are putting their employees into MCO arrangements.
MCO's treating compensation patients are exempted from the Commission's Medical Fee Schedule, but must report, by category, medical fees paid each fiscal year. A revised Form 51 for use after January 1, 1996 is attached.
The main controversy during the rulemaking process concerned whether employers and carriers should be allowed to make contracts with MCOs to treat only their workers' comp patients -- an arrangement employee representatives feared might result in providers focusing on the payers' financial interests to the employee/patient's detriment. It was proposed that only MCOs also offering group health services to all of a firm's employees be allowed to serve the workplace injured. That was resolved in favor of allowing comp-only contracts, after bringing into the rules the requirement for prompt resolution of disputes in the Department of Insurance's current Utilization Review regulations. (Rule VI (6).) In light of the prohibition on treating physicians benefiting directly from cheapening treatment (11 NCAC 12.0561(c)), the ownership disclosure requirements (Rule V(3) ), the employer's counterbalancing interests in timely and successful return to work and credible medical opinions, the prevalence of MCO networks utilizing physician practices that serve a broader group of patients, the unusual requirements placed on providers in workers' compensation cases and their tendency to make special arrangements of resources to meet them, the employer's general right to choose treatment and the employee's special choice rights in an MCO, the Commission's power to change and approve alternative providers, possible limitations on the Commission's authority to limit comp-only MCO contracts, and the desire of the Legislature to make use of MCOs generally available to compensation parties, it was felt the employee's interests could be adequately protected under these rules.
The prospect of an employer contracting with a single MCO for comp and non-comp care prompted some confusion with "24 hour coverage" -- the term for an insurance policy covering all medical conditions. The N.C. Commissioner of Insurance must approve any policies or contracts purporting to assume any part of an employer's compensation liability. "Capitated" rates and other fixed fee MCO contracts, through which MCOs can bear a portion of the risk, must likewise be approved, and the companies offering them financially qualified, by the Commissioner of Insurance. Currently, all MCOs treating injured workers are doing so on a fee-for-service basis. While we have detected some interest in devising capitated rates -- on a per employer basis, taking into account the risk and loss experience of each -- it is doubtful at this time that any MCO would offer to blend fees for all treatments, or that it would be approved. There is certainly reason for anxiety over any system that would charge employers without regard to actual injuries -- nullifying the safety incentive of traditional insurance and spreading the costs of the unsafe workplace to other employers -- but these rules do not address "24 hour coverage", one way or the other. Contracting with the same MCO for all medical services would provide one of the benefits attributed to the "24 hour" product: avoiding delay and confusion over choice of provider when the relationship of the injury to the workplace is in question.
A copy of all the rules adopted on November 30, 1995 may be obtained by "downloading" them from the Commission's "Bulletin Board System" at (919) 715-5920, or contacting Commissioner Thomas J. Bolch. These include a description of revisions to the Commission's Fee Schedule (covering physicians and most other providers, excluding hospitals), Utilization Review Rules, and Rules for Rehabilitation Professionals, all effective January 1, 1996.
JRW:md
Enclosure
Note: Copies sent to all MCOs licensed by the Dept. of Insurance,
with mailing labels provided by it.
cc: Interested parties
June 25, 1996
MINUTES
OF THE NORTH CAROLINA INDUSTRIAL COMMISSION
"Pure PPOs"/"DISCOUNT NETWORKS"/"EMPLOYER NETWORKS" EXCLUDED FROM MANAGED CARE ORGANIZATION REGULATION
The Industrial Commission today finds that contracts with managed care organizations for "pure PPOs", "discount networks" or "employer networks" are not governed by the Industrial Commission's Managed Care Rules (effective 1/1/96) promulgated pursuant to N.C.G.S. §97-25.2, because such contracts do not fit the definition in that section which was enacted as a part of the Workers Compensation Reform Act of 1994 (SB906).
"Pure PPOs", "discount networks", and "employer networks" are terms used for arrangements that simply give employers access to a group of medical providers charging discounted fees and do not choose a panel of medical care providers from which the employee must choose. These firms typically give the employer or claims handler a list of providers from which to choose.
The Commission finds that such "discount networks" may continue to operate as they did under pre-1994 Law, and that they must be distinguished from the managed care contracts anticipated by GS §97-25(2) under which the employer or insurer can satisfy its medical care obligation by giving an MCO its authority to select providers, and the qualified MCO is authorized to manage the provision and access to medical services through a variety of techniques recognized by their primary regulator, the N.C. Department of Insurance.
The Commission finds that contracts enabling employers to choose from among a group of preferred medical providers, at discounted rates, to provide services to their injured employees', and which do not transfer to a Managed Care Organization control over the selection of physicians or other providers, or control over a panel of physicians from which the patient must select, are not subject to the statutes and rules governing Managed Care contracts made by employers to satisfy their obligation to provide medical compensation pursuant to N.C. Gen. Stat. §97-25.
Such discount networks (referred to as "employer networks" in Industrial Commission MCO Rules I and II (6)) were authorized by law prior to the enactment of S.B. 906, and do not satisfy the employer's or insurer's obligation to provide medical compensation pursuant to N.C. Gen. Stat. §97-25. Rather, the employer or insurer remains directly responsible for providing those services under the laws and rules generally applicable. Medical bills must be calculated under the Commission's Fee Schedule (although payment may be discounted, according to contract, as was done prior to S.B. 906). An employee is not required to exhaust the dispute resolution procedures, if any, associated with the discount network or the MCO that created it before applying to the Commission concerning any issue related to medical services. It is not required that the employee be offered a panel of physicians from among whom to choose and change treating physicians, and the employer or insurer may refer the employee to a specific provider, subject to the employee's rights under N.C. Gen. Stat. §§97-25, 97-27, 97-2(19), etc. An insurer (including a self-insured employer) may require preauthorization only for inpatient admissions to a hospital or treatment center and inpatient and outpatient surgery, subject to the general provisions of N.C. Gen. Statute §97-25.3, unless preauthorization services are provided by an MCO certified by the N.C. Department of Insurance (i.e., a "Utilization Review Organization" or "URO") pursuant to N.C. Gen. §97-25.3(e)).
The Commission also finds that all MCOs and PPOs that may deal with workers' compensation patients are subject to its regulation, whether they contract solely with insurance companies, self-insured employers or third party administrators or any combination thereof.
Rationale and legislative history: The subject question arises from the fact that all organizations contracting with health care providers and reselling their services are, by definition, "preferred provider organizations" (sometimes referred to as "pure PPOs") within the meaning of Chapter 58 of the General Statutes (§58-50-50), and thus the Workers' Compensation Act as well (see N. C. Gen. Stat. §97-2(21)), and are required to comply with regulations of, and obtain a certificate from, the N.C. Department of Insurance to do business in this State, whether or not they actually "manage care". However, neither law requires that all contracts with these organizations give them the authority to select physicians and otherwise manage the patients' care in the manner that would satisfy the requirements of N.C. Gen. Stat. §97-25, as anticipated by the compensation Managed Care statute, §97-25.2.
It is also noted that some confusion over which organizations and/or contracts are covered by the Workers' Compensation statutes and rules has arisen from the fact that the N.C. Department of Insurance does not review contracts between Managed Care Organizations and employers or groups of employers who self-insure their compensation liabilities. The Workers' Compensation Act defines "Managed Care Organizations" as those organizations regulated under Chapter 58, Insurance -- e.g., organizations required to obtain a certificate from the N.C. Department of Insurance. N.C. Gen. Stat. §97-2(21). The employer's Managed Care contract for workers' compensation patients must be with such an organization. N.C. Gen. Stat. §97-25.2. Thus all MCOs dealing with workers' compensation patients are subject to orders of the Commission, and those providing "managed care" in lieu of employer or insurer selection of physicians, etc., are subject to the rights and duties specified for such arrangements.
S/
J. HOWARD BUNN, JR.
CHAIRMAN
S/ S/ S/
J. RANDOLPH WARD THOMAS J. BOLCH DIANNE C. SELLERS
COMMISSIONER COMMISSIONER COMMISSIONER
S/ S/ S/
BERNADINE S. BALLANCE COY M. VANCE LAURA K. MAVRETIC
COMMISSIONER COMMISSIONER COMMISSIONER
July 24, 1996
MEMORANDUM
TO: ALL MCOs GRANTED CERTIFICATES BY THE N.C. DEPT. OF INSURANCE
FROM: J. RANDOLPH WARD, COMMISSIONER
RE: WORKERS' COMPENSATION PATIENTS
N.C.I.C. MINUTES OF 25 JUNE 1996
MANAGED CARE ORGANIZATIONS SUBJECT TO N.C. INDUSTRIAL COMMISSION'S MCO RULES DEFINED
The attached Minutes of June 25, 1996 were adopted to clarify that contracts under which an employer, carrier, or self-insurance group itself chooses physicians from a network of providers is not subject to the qualification requirements of the MCO Rules adopted by the Commission, effective January 1, 1996, even though they may be included in the broad definition of "PPO". These "employer networks" (as they are termed in Rules I and II), which pre-existed the Workers' Compensation Reform Act of 1994, are distinguished from the newly authorized MCO arrangements under which employers' obligation to provide "medical compensation" to injured employees "may be satisfied by contracting with managed care organizations" per N.C.G.S. §97-25.2. Under the latter arrangement, the MCO selects a panel of appropriate physicians from which the employee may choose, and in general is more likely to be involved with management of care as well as costs. The Minutes were adopted by the Commission after consultation with its Advisory Council, made up of representatives of the "stakeholder" groups in the compensation system.
A PPO that leaves to the employer or its comp insurer the choice of physician need not apply to the Commission for pre-qualification of its contract to serve compensation patients. However, it must obtain a PPO Certificate from the N.C. Department of Insurance. N.C.G.S. §97-2(21). It must limit preauthorization requirements for compensation patients to surgery and inpatient admissions, unless it has obtained an URO certificate from the Department of Insurance. N.C.G.S. §§97-25.3; 58-50-60. Charges for medical services may differ from the Commission's Fee Schedule, but all medical expenditures must be reported annually (on the Commission's I.C. Form 51, copy attached) per N.C.G.S. §97-26(g) rules. No workers' compensation claimant sent to a PPO by an employer may be directed by the PPO or "employer network" to any physician or other provider, nor charged any costs associated with treatment due to treating with "out-of-network" providers. N.C.G.S. §§97-90(3); 97-88.3(b)(3)(c). Workers' compensation patients served by MCOs not qualifying under the Commission's rules may seek the Commission's permission to choose or change physicians or treatment at any time, regardless of any contrary dispute resolution rules of the MCO. N.C.G.S. §97-25.
JRW:md
Attachment
cc: Industrial Commission Advisory Council
Managed Care Division, N.C. Dept. of Insurance
N.C. Medical Society & I.C. Liaison Committee
MCO Association
Chairman, Commissioners, Deputy Commissioners, Executive Secretary,
Medical Dept., Claims Dept., Ombudsmen
97-2. Definitions.
97-18. Prompt payment of compensation required; ***
97-18.1. Termination or suspension of compensation benefits.
97-25. Medical treatment and supplies.
97-25.1. Limitation of duration of medical compensation.
97-25.2. Managed care organizations.
97-25.3. Preauthorization.
97-25.4. Utilization guidelines for medical treatment.
97-25.5. Utilization guidelines for vocational and other rehabilitation.
97-26. Fees allowed for medical treatment; malpractice of physician.
97-26.1. Fees for medical records and reports; expert witnesses.
97-27. Medical examination; facts not privileged; refusal to be examined suspends compensation; autopsy.
97-59. Employer to pay for treatment.
97-60. Examination of employees by advisory medical committee; designation of industries with dust hazards
97-68. Controverted medical questions.
97-80. Rules and regulations, subpoena of witnesses; examination of books and records; depositions; costs.
97-88. Expenses of appeals brought by insurers.
97-88.1. Attorney's fees at original hearing.
97-88.2. Penalty for misrepresentation.
97-88.3. Penalty for health care providers.
97-89. Commission may appoint qualified physician to make necessary examinations; expenses; fees.
97-90. Legal and medical fees to be approved by Commission; misdemeanor to receive fees unapproved by Commission, or to solicit employment in adjusting claims; agreement for fee or compensation.
97-91. Commission to determine all questions.
97-92. Employer's record and report of accidents; records of Commission not open to public; supplementary report upon termination of disability; penalty for refusal to make report; when insurance carrier liable.
97-94. Employers required to give proof that they have complied with preceding section; penalty for not keeping liability insured; review; liability for compensation; failure to secure payment of compensation a misdemeanor.
97-99. Law written into each insurance policy; form of policy to be approved by Commissioner of Insurance; cancellation; single catastrophe hazards.
97-2. Definitions.
When used in this Article, unless the context otherwise requires
(6) Injury. A "Injury and personal injury" shall mean only injury by accident arising out of and in the course of the employment, and shall not include a disease in any form, except where it results naturally and unavoidably from the accident. With respect to back injuries, however, where injury to the back arises out of and in the course of the employment and is the direct result of a specific traumatic incident of the work assigned, "injury by accident" shall be construed to include any disabling physical injury to the back arising out of and causally related to such incident. Injury shall include breakage or damage to eyeglasses, hearing aids, dentures, or other prosthetic devices which function as part of the body; provided, however, that eyeglasses and hearing aids will not be replaced, repaired, or otherwise compensated for unless injury to them is incidental to a compensable injury.
(7) Carrier. A The term "carrier or "insurer" means any person or fund authorized under G.S. 97-93 to insure under this Article, and includes self-insurers.
(9) Disability. A The term "disability" means incapacity because of injury to earn the wages which the employee was receiving at the time of injury in the same or any other employment.
(11) Compensation. A The term "compensation" means the money allowance payable to an employee or to his dependents as provided for in this Article, and includes funeral benefits provided herein.
(19) Medical Compensation. A The term "medical compensation" means medical, surgical, hospital, nursing, and rehabilitative services, and medicines, sick travel, and other treatment, including medical and surgical supplies, as may reasonably be required to effect a cure or give relief and for such additional time as, in the judgment of the Commission, will tend to lessen the period of disability; and any original artificial members as may reasonably be necessary at the end of the healing period and the replacement of such artificial members when reasonably necessitated by ordinary use or medical circumstances.
(20) Health care provider. A The term "health care provider" means physician, hospital, pharmacy, chiropractor, nurse, dentist, podiatrist, physical therapist, rehabilitation specialist, psychologist, and any other person providing medical care pursuant to this Article.
(21) Managed care organization. A The term "managed care organization" means a preferred provider organization or a health maintenance organization regulated under Chapter 58 of the General Statutes.
97-18. Prompt payment of compensation required; installments; payment without prejudice; notice to Commission; penalties.
(i) If any bill for services rendered under G.S. 97-25 by any provider of health care is not paid within 60 days after it has been approved by the Commission and returned to the responsible party, or within 60 days after it was properly submitted, in accordance with the provisions of this Article, to an insurer or managed care organization responsible for direct reimbursement pursuant to G.S. 97-26(g), there shall be added to such unpaid bill an amount equal to ten per centum (10%) thereof, which shall be paid at the same time as, but in addition to, such medical bill, unless such late payment is excused by the Commission.
97-18.1. Termination or suspension of compensation benefits.
(e) At an informal hearing on the issue of termination or suspension of compensation, and at any subsequent hearing, the Commission may address related issues regarding the selection of medical providers or treatment under G.S. 97-25, subject to exhaustion of the dispute resolution procedures of a managed care organization pursuant to G.S. 97-25.2. ***
97-25. Medical treatment and supplies.
Medical compensation shall be provided by the employer. In case of a controversy arising between the employer and employee relative to the continuance of medical, surgical, hospital, or other treatment, the Industrial Commission may order such further treatments as may in the discretion of the Commission be necessary.
The Commission may at any time upon the request of an employee order a change of treatment and designate other treatment suggested by the injured employee subject to the approval of the Commission, and in such a case the expense thereof shall be borne by the employer upon the same terms and conditions as hereinbefore provided in this section for medical and surgical treatment and attendance.
The refusal of the employee to accept any medical, hospital, surgical or other treatment or rehabilitative procedure when ordered by the Industrial Commission shall bar said employee from further compensation until such refusal ceases, and no compensation shall at any time be paid for the period of suspension unless in the opinion of the Industrial Commission the circumstances justified the refusal, in which case, the Industrial Commission may order a change in the medical or hospital service.
If in an emergency on account of the employer's failure to provide the medical or other care as herein specified a physician other than provided by the employer is called to treat the injured employee, the reasonable cost of such service shall be paid by the employer if so ordered by the Industrial Commission.
Provided, however, if he so desires, an injured employee may select a physician of his own choosing to attend, prescribe and assume the care and charge of his case subject to the approval of the Industrial Commission.
97-25.1. Limitation of duration of medical compensation.
The right to medical compensation shall terminate two years after the employer's last payment of medical or indemnity compensation unless, prior to the expiration of this period, either: (i) the employee files with the Commission an application for additional medical compensation which is thereafter approved by the Commission, or (ii) the Commission on its own motion orders additional medical compensation. If the Commission determines that there is a substantial risk of the necessity of future medical compensation, the Commission shall provide by order for payment of future necessary medical compensation.
(1993 (Reg. Sess., 1994), c. 679, s. 2.5.)
97-25.2. Managed care organizations.
The requirements of G.S. 97-25 may be satisfied by contracting with a managed care organization. Notwithstanding any other provision of this Article, if an employer or carrier contracts with a managed care organization for medical services pursuant to this Article, those employees who are covered by the contract with the managed care organization shall receive medical services for a condition for which the employer has accepted liability or authorized treatment under this Article in the manner prescribed by the contract and in accordance with the managed care organization's certificate of authority; provided that the contract complies with rules adopted by the Commission, consistent with this Article, governing managed care organizations. An employee must exhaust all dispute resolution procedures of a managed care organization before applying to the Commission for review of any issue related to medical services compensable under this Article. Once application to the Commission has been made, the employee shall be entitled to an examination by a duly qualified physician or surgeon in the same manner as provided by G.S. 97-27.
If an employee's medical services are provided through a managed care organization pursuant to this section, subject to the rules of the managed care organization, the employee shall select the attending physician from those physicians who are members of the managed care organization's panel, and may subsequently change attending physicians once within the group of physicians who are members of the managed care organization's panel without approval from the employer or insurer. Additional changes in the attending physician or any change to a physician or examination by a physician not a member of the insurer's managed care organization's panel shall only be made pursuant to the organization's contract or upon reasonable grounds by order of the Commission.
(1993 (Reg. Sess., 1994), c. 679, s. 2.1.)
97-25.3. Preauthorization.
(a) An insurer may require preauthorization for inpatient admission to a hospital, inpatient admission to a treatment center, and inpatient or outpatient surgery. The insurer's preauthorization requirement must adhere to the following standards:
(1) The insurer may require no more than 10 days advance notice of the inpatient admission or surgery.
(2) The insurer must respond to a request for preauthorization within two business days of the request.
(3) The insurer shall review the need for the inpatient admission or surgery and may require the employee to submit to a an independent medical examination as provided in G.S. 97-27(a). This examination must be completed and the insurer must make its determination on the request for preauthorization within seven days of the date of the request unless this time is extended by the Commission for good cause.
(4) The insurer shall document its review findings and determination in writing and shall provide a copy of the findings and determination to the employee and the employee's attending physician, and if applicable, to the hospital or treatment center.
(5) The insurer shall authorize the inpatient admission or surgery when it requires the employee to submit to a medical examination as provided in G.S. 97-27(a) and the examining physician concurs with the original recommendation for the inpatient admission or surgery. The insurer shall also authorize the inpatient admission or surgery when the employee obtains a second opinion from a physician approved by the insurer or the Commission, and the second physician concurs with the original recommendation for the inpatient admission or surgery. However, the insurer shall not be required by this subdivision to authorize the inpatient admission or surgery if it denies liability under this Article for the particular medical condition for which the services are sought.
(6) Except as provided in subsection (c) of this section, the insurer may reduce its reimbursement of the provider's eligible charges under this Article by up to fifty percent (50%) if the insurer has notified the provider in writing of its preauthorization requirement and the provider failed to timely obtain preauthorization. The employee shall not be liable for the balance of the charges.
(7) The insurer shall adhere to all other procedures for preauthorization prescribed by the Commission.
(b) An insurer may not impose a preauthorization requirement for the following:
(1) Emergency services;
(2) Services rendered in the diagnosis or treatment of an injury or illness for which the insurer has not admitted liability or authorized payment for treatment pursuant to this Article; and
(3) Services rendered in the diagnosis and treatment of a specific medical condition for which the insurer has not admitted liability or authorized payment for treatment although the insurer admits the employee has suffered a compensable injury or illness.
(c) The Commission may, upon reasonable grounds, upon the request of the employee or provider, authorize treatment for which preauthorization is otherwise required by this section but was not obtained if the Commission determines that the treatment is or was reasonably required to effect a cure or give relief.
(d) The Commission may adopt procedures governing the use of preauthorization requirements and expeditious review of preauthorization denials.
(e) A managed care organization may impose preauthorization requirements consistent with the provisions of Chapter 58 of the General Statutes.
(f) A provider that refuses to treat an employee for other than an emergency medical condition because preauthorization has not been obtained shall be immune from liability in any civil action for the refusal to treat the employee because of lack of preauthorization.
97-25.4. Utilization guidelines for medical treatment.
(a) The Commission may adopt utilization rules and guidelines, consistent with this Article, for medical care and medical rehabilitation services, other than those services provided by managed care organizations pursuant to G.S. 97-25.2, including, but not limited to, necessary palliative care, physical therapy treatment, psychological therapy, chiropractic services, medical rehabilitation services, and attendant care. The Commission's rules and guidelines shall ensure that injured employees are provided the services and care intended by this Article and that medical costs are adequately contained. In developing the rules and guidelines, the Commission may consider, among other factors, the practice guidelines adopted by the boards and associations representing medical and rehabilitation professionals.
(b) Palliative care rules or guidelines adopted by the Commission may require that the provider (i) supply to the employer a treatment plan, including a schedule of measurable objectives, a projected termination date for treatment, and an estimated cost of services, and (ii) obtain preauthorization from the employer, not inconsistent with the provisions of G.S. 97-25.3.
97-25.5. Utilization guidelines for vocational and other rehabilitation.
The Commission may adopt utilization rules and guidelines, consistent with this Article, for vocational rehabilitation services and other types of rehabilitation services. In developing the rules and guidelines, the Commission may consider, among other factors, the practice and treatment guidelines adopted by professional rehabilitation associations and organizations.
97-26. Fees allowed for medical treatment; malpractice of physician.
(a) Fee Schedule. A The Commission shall adopt a schedule of maximum fees for medical compensation, except as provided in subsection (b) of this section, and shall periodically review the schedule and make revisions pursuant to the provisions of this Article.
The fees adopted by the Commission in its schedule shall be adequate to ensure that (i) injured workers are provided the standard of services and care intended by this Chapter, (ii) providers are reimbursed reasonable fees for providing these services, and (iii) medical costs are adequately contained.
Prior to adoption of a fee schedule, the Commission shall publish notice of its intent to adopt the schedule in the North Carolina Register and hold a public hearing. The published notice shall include the location, date and time of the public hearing, the proposed effective date of the fee schedule, the period of time during which the Commission will receive written comments on the proposed schedule, and the person to whom comments and questions should be directed. In addition to publication in the North Carolina Register, the notice may be mailed to parties who have requested notice of the fee schedule hearing. The public hearing shall be held no earlier than 15 days after the publication of the notice. The Commission shall receive written comments for at least 30 days or until the date of the public hearing, whichever is later, after which the Commission may adopt the fee schedule.
The Commission may consider any and all reimbursement systems and plans in establishing its fee schedule, including, but not limited to, the Teachers' and State Employees' Comprehensive Major Medical Plan (hereinafter, "State Plan"), Blue Cross and Blue Shield, and any other private or governmental plans. The Commission may also consider any and all reimbursement methodologies including, but not limited to, the use of current procedural terminology ("CPT") codes, diagnostic-related groupings ("DRGs"), per diem rates, capitated payments, and resource-based relative-value system ("RBRVS") payments. The Commission may consider statewide fee averages, geographical and community variations in provider costs, and any other factors affecting provider costs.
An appeal from a decision of the Commission establishing a fee schedule, by any party aggrieved thereby, shall be to the North Carolina Court of Appeals. The decision of the Commission shall be affirmed if supported by substantial evidence. For the purposes of the appeal, the Commission is a Party.
(b) Hospital Fees. A Payment for medical compensation rendered by a hospital participating in the State Plan shall be equal to the payment the hospital receives for the same treatment and services under the State Plan. Payment for a particular type of medical compensation that is not covered under the State Plan shall be based on the allowable charge under the State Plan for comparable services or treatment, as determined by the Commission. Each hospital subject to the provisions of this subsection shall be reimbursed the amount provided for in this subsection unless it has agreed under contract with the insurer or managed care organization to accept a different amount or reimbursement methodology.
(c) Maximum Reimbursement for Providers Under Subsection (a). Each health care provider subject to the provisions of subsection (a) of this section shall be reimbursed the amount specified under the fee schedule unless the provider has agreed under contract with the insurer or managed care organization to accept a different amount or reimbursement methodology. In any instance in which neither the fee schedule nor a contractual fee applies, the maximum reimbursement to which a provider under subsection (a) is entitled under this Article is the usual, customary, and reasonable charge for the service or treatment rendered. In no event shall a provider under subsection (a) charge more than its usual fee for the service or treatment rendered.
(d) Information to Commission. A Each health care provider seeking reimbursement for medical compensation under this Article shall provide the Commission information requested by the Commission for the development of fee schedules and the determination of appropriate reimbursement.
(e) When Charges Submitted. A Health care providers shall submit charges to the insurer or managed care organization within 30 days of treatment, within 30 days after the end of the month during which multiple treatments were provided, or within such other reasonable period of time as allowed by the Commission [currently, 75 days of the service, extended under certain circumstances, per I.C. Rule 407(2)]. If an insurer or managed care organization disputes a portion of a health care provider's bill, it shall pay the uncontested portion of the bill and shall resolve disputes regarding the balance of the charges in accordance with this Article or its contractual arrangement
(f) Repeating Diagnostic Tests. A health care provider shall not authorize a diagnostic test previously conducted by another provider, unless the health care provider has reasonable grounds to believe a change in patient condition may have occurred or the quality of the prior test is doubted. The Commission may adopt rules establishing reasonable requirements for reports and records to be made available to other health care providers to prevent unnecessary duplication of tests and examinations. A health care provider that violates this subsection shall not be reimbursed for the costs associated with administering or analyzing the test.
(g) Direct Reimbursement. A The Commission may adopt rules to allow insurers and managed care organizations to renew and reimburse charges for medical compensation without submitting the charges to the Commission for renew and approval.
(h) Malpractice. A The employer shall not be liable in damages for malpractice by a physician or surgeon furnished by him pursuant to the provisions of this section, but the consequences of any such malpractice shall be deemed part of the injury resulting from the accident, and shall be compensated for as such.
97-26.1. Fees for medical records and reports; expert witnesses.
The Commission may establish maximum fees for the following when related to a claim under this Article: (i) the searching, handling, copying, and mailing of medical records, (ii) the preparation of medical reports and narratives, and (iii) the presentation of expert testimony in a Commission proceeding.
97-27. Medical examination; facts not privileged; refusal to be examined suspends compensation; autopsy.
(a) After an injury and so long as he claims compensation, the employee, if so requested by his employer or ordered by the Industrial Commission, shall, subject to the provisions of subsection (b), submit himself to examination, at reasonable times and places, by a duly qualified physician or surgeon designated and paid by the employer or the Industrial Commission. The employee shall have the right to have present at such examination any duly qualified physician or surgeon provided and paid by him Notwithstanding the provisions of G.S. 8-53, no fact communicated to or otherwise learned by any physician or surgeon or hospital or hospital employee who may have attended or examined the employee, or who may have been present at any examination, shall be privileged in any workers' compensation case with respect to a claim pending for hearing before the Industrial Commission. If the employee refuses to submit himself to or in any way obstructs such examination requested by and, provided for by the employer, his right to compensation and his right to take or prosecute any proceedings under this Article shall be suspended until such refusal or objection ceases, and no compensation shall at any time be payable for the period of obstruction, unless in the opinion of the Industrial Commission the circumstances justify the refusal or obstruction. The employer, or the Industrial Commission, shall have the right in any case of death to require an autopsy at the expense of the party requesting the same.
(b) In those cases arising under this Article in which there is a question as to the percentage of permanent disability suffered by an employee, if any employee, required to submit to a physical examination under the provisions of subsection (a) is dissatisfied with such examination or the report thereof, he shall be entitled to have another examination by a duly qualified physician or surgeon licensed and practicing in North Carolina or by a duly qualified physician or surgeon licensed to practice in South Carolina, Georgia, Virginia and Tennessee provided said nonresident physician or surgeon shall have been approved by the North Carolina Industrial Commission and his name placed on the Commission's list of approved nonresident physicians and surgeons, designated by him and paid by the employer or the Industrial Commission in the same manner as physicians designated by the employer or the Industrial Commission are paid Provided, however, that all travel expenses incurred in obtaining said examination shall be paid by said employee. The employer shall have the right to have present at such examination a duly qualified physician or surgeon provided and paid by him. No fact communicated to or otherwise learned by any physician or surgeon who may have attended or examined the employee, or who may have been present; at any examination, shall be privileged, either in hearings provided for by this Article or any action at law.
97-59. Employer to pay for treatment.
Medical compensation shall be paid by the employer in cases in which awards are made for disability or damage to organs as a result of an occupational disease after bills for same have been approved by the Industrial Commission.
In case of a controversy arising between the employer and employee relative to the continuance of medical, surgical, hospital or other treatment, the Industrial Commission may order such further treatments as may in the discretion of the Commission be necessary.
97-60. Examination of employees by advisory medical committee; designation of industries with dust hazards.
*****The Industrial Commission shall designate by order each industry found subject to [hazards of asbestosis and/or silicosis] and shall notify the employers therein .... On and after March 26, 1935, it shall be the duty of every employer, in the conduct of whose business his employees or any of them are subjected to the hazard of asbestosis and/or silicosis, to provide prior to employment necessary examinations of all new employees for the purpose of ascertaining if any of them are in any degree affected by asbestosis and/or silicosis or peculiarly susceptible thereto; and every such employer shall from time to time, as ordered by the Industrial Commission, provide similar examinations for all of his employees whose employment exposes them to the hazards of asbestosis and/or silicosis. ***
97-67. Postmortem examinations; notice to next of kin and insurance carrier.
Upon the filing of a claim for death from an occupational disease where in the opinion of the Industrial Commission a postmortem examination is necessary to accurately ascertain the cause of death such examination shall be ordered by the Industrial Commission. A full report of such examination all be certified to the Industrial Commission. The surviving spouse or next kin and the employer or his insurance carrier, if their Identity and whereabouts can be reasonably ascertained, shall be given reasonable notice of the time and place of such postmortem examination, and, if present at such examination, shall be given opportunity to witness the same. Any such person may be present at and witness such examination either in person or through a duly authorized representative. If such examination is not consented to by the surviving husband or wife or next of kin, all right to compensation shall cease.
97-68. Controverted medical questions.
The Industrial Commission may at its discretion refer to the advisory medical committee controverted medical questions arising out of occupational disease claims other than asbestosis or silicosis.
97-80. Rules and regulations; subpoena of witnesses; examination
of books and records; depositions; costs.
(a) The Commission may make rules, not inconsistent with this Article, for carrying out the provisions of this Article.
***
Processes, procedure, and discovery under this Article shall be as summary and simple as reasonably may be.
(d) The Commission may order testimony to be taken by deposition and any party to a proceeding under this Article may, upon application to the Commission, which application shall set forth the materiality of the evidence to be given, cause the depositions of witnesses residing within or without the State to be taken, the costs to be taxed as other costs by Commission.
97-88. Expenses of appeals brought by insurers.
If the Industrial Commission at a hearing on review or any court before which any proceedings are brought on appeal under this Article, shall find that such hearing or proceedings were brought by the insurer and the Commission or court by its decision orders the insurer to make, or to continue payments of benefits, including compensation for medical expenses, to the injured employee, the Commission or court may further order that the cost to the injured employee of such hearing or proceedings including therein reasonable attorney's fee to be determined by, the Commission shall be paid by the insurer as a part of the bill of costs.
97-88.1. Attorney's fees at original hearing.
If the Industrial Commission shall determine that any hearing has been brought, prosecuted, or defended without reasonable ground, it may assess the whole cost of the proceedings including reasonable fees for defendant's attorney or plaintiff's attorney upon the party who has brought or defended them.
97-88.2. Penalty for misrepresentation.
(a) Any person who willfully makes a false statement or representation of a material fact for the purpose of obtaining or denying any benefit or payment, or assisting another to obtain or deny any benefit or payment under this Article, shall be guilty of a Class 1 misdemeanor. The court may order restitution.
(b) The Commission shall:
(1) Perform investigations regarding all cases of suspected fraud and all violations related to workers' compensation claims, by or against insurers or self-funded employers, and refer possible criminal violations to the appropriate prosecutorial authorities;
(2) Conduct administrative violation proceedings; and
(3) Assess and collect penalties and restitution.
(c) Any person who threatens an employee with criminal prosecution under the provisions of subsection (a) of this section for the purpose of coercing or attempting to coerce the employee into agreeing to compensation under this Article shall be guilty of a Class 1 misdemeanor.
(d) The Commission shall not be liable in a civil action for any action made in good faith under this section, including the identification and referral of a person for investigation and prosecution for an alleged administrative violation or criminal offense. Any person, including, but not limited to, an attorney, an employee, an employer, an insurer, and an employee of an insurer, who in good faith comes forward with information under this section, shall not be liable in a civil action.
(e) The Commission shall report annually to the General Assembly on the number and disposition of investigations involving claimants, employers, insurance company officials, officials of third-party administrators, insurance agents, attorneys, health care providers, and vocational rehabilitation providers.
97-88.3. Penalty for health care providers.
(a) In addition to any liability under G.S. 97-88.2, any health care provider who willfully or intentionally undertakes the following acts is subject to an administrative penalty, assessed by the Commission, not to exceed ten thousand dollars ($10,000):
(1) Submitting charges for health care that was not furnished;
(2) Fraudulently administering, providing, and attempting to collect for inappropriate or unnecessary treatment or services; or
(3) Violating the provisions of Article 28 of Chapter 90 of the General Statutes.
A penalty assessed by the Commission for a violation of subdivision
(3) of this subsection is in addition to penalties assessed under G.S. 90-407.
(b) In addition to any liability under G.S. 97-88.2, any health care provider who willfully or intentionally undertakes the following acts is subject to an administrative penalty, assessed by the Commission, not to exceed one thousand dollars ($1,000):
(1) Failing or refusing to timely file required reports or records;
(2) Making unnecessary referrals; and
(3) Knowingly violating this Article or rules promulgated hereunder, including treatment guidelines, with intention to deceive or to gain improper advantage of a patient, employee, insurer, or the Commission.
(c) A health care provider who knowingly charges or otherwise holds an employee financially responsible for the cost of any services provided for a compensable injury under this Article is guilty of a Class 1 misdemeanor.
(d) Any person, including, but not limited to, an employer, an insurer, and an employee of an insurer, who in good faith comes forward with information under this section, shall not be liable in a civil action.
(e) Information relating to possible violations under this section shall be reported to the Commission which shall refer the same to the appropriate licensing or regulatory board or authority for the health care provider involved.
(f) A hospital that relies in good faith on a written order of a physician in performing health care services shall not be subject to an administrative penalty in violation of this section.
97-89. Commission may appoint qualified physician to make necessary examinations; expenses; fees.
The Commission or any member thereof may, upon the application of either party, or upon its own motion, appoint a disinterested and duly qualified physician or surgeon to make any necessary medical examination of the employee, and to testify in respect thereto. Said physician or surgeon shall be allowed traveling expenses and a reasonable fee to be fixed by the Commission. The fees and expenses of such physician or surgeon shall be paid by the employer.
97-90. Legal and medical fees to be approved by Commission; misdemeanor to receive fees unapproved by Commission, or to solicit employment in adjusting claims; agreement for fee or compensation.
(a) Fees for attorneys and charges of health care providers for medical compensation under this Article shall be subject to the approval of the Commission; but no physician or hospital or other medical facilities shall be entitled to collect fees from an employer or insurance carrier until he has made the reports required by the Commission in connection with the case. Except as provided in G.S. 97-26(g), a request for a specific prior approval to charge shall be submitted to the Commission for each such fee or charge.
(b) Any person (i) who receives any fee, other consideration, or any gratuity on account of services so rendered, unless such consideration or gratuity is approved by the Commission or the court, as provided in subsection (c)...shall be guilty of a Class 1 misdemeanor.
(d) Provided, that nothing contained in this section shall prevent the collection of such reasonable fees of physicians and charges for hospitalization as may be recovered in an action, or embraced in settlement of a claim, against a third-party tort-feasor as described in G.S. 97-10.2.
(e) A health care provider shall not pursue a private claim against an employee for all or part of the costs of medical treatment provided to the employee by the provider unless the employee's claim or the treatment is finally adjudicated not to be compensable or the employee fails to request a hearing after denial of liability by the employer. Notwithstanding subsequent denial of liability or adjudication that the cond