September 29, 2003

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CMS and Blue Cross Plans Announce Contingency Plans for HIPAA Oct. 16th Compliance Deadline
Last week, both the Centers for Medicare & Medicaid Services and the Blue Cross Blue Shield companies reported that they will continue to accept existing claim formats, in addition to HIPAA compliant transaction, under contingency plans developed. These plans will ensure, at least for these providers, continued processing of claims from Maine providers who may not be able to meet the Oct. 16th deadline.
CMS made its announcement on Sept 23rd, after reviewing statistics showing unacceptably low numbers of compliant claims being submitted.  The contingency plan permits CMS to continue to accept and process claims in the electronic formats now in use, giving providers additional time to complete the testing process.  CMS will regularly reassess the readiness of its trading partners to determine how long the contingency plan will remain in effect.

CMS announced its contingency plan on September 11, but at that time had not made a decision on whether the plan would be implemented.  CMS also encouraged other plans to assess the readiness of their trading partners and to implement contingency plans if appropriate.

The Blue Cross and Blue Shield Association's announcement was based on a survey of the 42 independent BCBS Plans across the country that determined each insurer intended to implement contingency plans as allowed by HHS.  Following Oct. 16th, the Plans will continue to transition their providers to HIPAA compliant transactions.  Each individual plan (Anthem BCBS of Maine, in our case) will make a determination on how long to continue its contingency plan based on the unique business environment of its service area.

According to a July 24th, 2003, guidance issued by the Department of Health and Human Services, payers will not be penalized for accepting existing transactions during a transition period as part of their contingency plan provided they can demonstrate good faith in working with their providers to facilitate compliance.

The new HIPAA transaction and code sets rules represent the most sweeping change ever in the way electronic healthcare claims are processed.  The contingency plans launched by CMS and the Blues reflect the increasing likelihood that many healthcare providers will be unable to meet the Oct. 16th deadline.  Noncompliance with the HIPAA requirements could result in several unintended consequences, the most important of which, would be a return to paper transactions.

The rule taking effect Oct. 16th does not apply to those physician offices which are exempt from HIPAA  AND which do not employ ten or more full-time equivalent employees. 

Click here to read CMS' press release, Medicare Announces Plan to Accept HIPAA Non-compliant Electronic Transactions After October 16, 2003 Compliance Deadline.

Governor Baldacci Announces 11-Member Advisory Council on Health Systems Development
Governor John E. Baldacci, on Sept. 25, announced the appointment of the 11-member Advisory Council on Health Systems Development which was authorized in the landmark Dirigo Health legislation which took effect on Sept. 13th.  Included as one of the appointments is Maroulla S. Gleaton, M.D., the current President of MMA.

The Council will work directly with the Governor's Office of Health Policy and Finance and advise the Governor in developing a State Health Plan.  As part of that process, the Council will create a global budget. 

The 11 members are as follows: 

  •          Maroulla Gleaton, MD
  •          Norman Ledwin, CEO, Eastern Maine Healthcare
  •          Steve Farnham, Executive Director, Aroostook Area Agency on Aging
  •          Brian Rines, Ph.D., Psychologist
  •          Christine Hastedt, Public Policy Specialist, Maine Equal Justice Partners
  •          Andrew Coburn, Ph.D., Director, Institute for Health Policy, Muskie School of Public Service, USM
  •           Robert Keller, M.D.
  •           Lani Graham, M.D.
  •          Edward Miller, Executive Director,  American Lung Association of Maine
  •          John Carr, President,  Maine Council of Senior Citizens
  •          Dora Mills, M.D., M.P.H., Director, Bureau of Health

    Other advisory committees authorized in the Dirigo Health legislation are expected to be appointed in October.  These include the Healthcare Quality Forum and the Commission to Study Maine's hospitals. [return to top]

The AMA's Top 12 Fictions & Facts About Medical Liability Reform: #6
FICTION #6:  It can be cheaper to buy insurance in states without damage caps.

FACT:  Recent claims that damage caps are associated with higher medical liability insurance rates are the result of illogical and misleading manipulation of data.  Claims that physicians in California (a state with effective tort reform) pay more in medical liability insurance premiums, as compared to a state like Arkansas (a state without reforms) reflect comparisons of unweighted averages that do not adjust for the number and specialty mix of physicians in each state.

A fair analysis would compare two ratios:  the total premium per physician for states with caps compared to the total premium per physician for states without caps.  In the absence of such data, the best alternative is rate comparisons between similar (densely populated) areas of states that have caps and states that do not have caps.  Such a comparison shows that medical liability insurance rates for Los Angeles internists, general surgeons, and obstetrician/gynecologists are typically about half those for the same specialists in New York, Dallas, Houston, and Chicago, which are other large U.S. urban centers in the states without effective tort reform. [return to top]

REMINDER: Proof of Claim Deadline for Aetna Proposed Settlement
Please note that tomorrow, September 30, 2003, is the deadline to complete and return the proof of claim form for the Aetna proposed settlement.  If you do not submit a proof of claim form to the settlement administrator prior to this deadline, the portion of the settlement fund that you are entitled to receive will be donated to a charitable foundation that has been established in connection with the settlement of the class action.  If you need additional copies of the proof of claim form, you may obtain them via the Internet at [return to top]

Hannaford Moves to Reduce Workers' Compensation Fee Schedule
At a public hearing on the 2003 coding and technical update to the workers' compensation medical fee schedule last Thursday,  an attorney representing the grocery store chain Hannaford argued that the fee schedule should be reduced to be on par with the fee schedules of the principal private payers in the Maine marketplace.  The W.C. conversion factor is $60 while the major private payers' conversion factors range from $43 to $48.  A representative of One Beacon Insurance Company also spoke in favor of cutting the fee schedule.

The MMA's comments in opposition to any reduction in the W.C. fee schedule are below.  The written comment deadline for W.C. Board Rule Chapter 5 is Monday, October 6, 2003 at 5 p.m.  If you would like to submit written comments, you should send them to:

Melinda Porter, Workers' Compensation Board, State House Station 27, Augusta, Maine 04333-0027.



Thank you for the opportunity to review and comment upon the 2003 amendments to W.C.B. Rule Chapter 5, the medical fee schedule in the workers' compensation system. The MMA is comfortable with the 2003 coding and technical update and we support the proposed amendments as presented.

Response to the Proposal to Reduce the Conversion Factor and the Fee Schedule:

Based upon the discussion of the proposed rule at the July 1, 2003 Board meeting, I understand that the more controversial issue in this rulemaking proceeding will be whether Rule Chapter 5 is "too generous" in comparison to Medicare, Medicaid, and the principal private insurers in Maine. While the analysis presented below demonstrates that the workers' compensation fee schedule is higher than other payers' reimbursement rates in Maine, the MMA believes that this difference is justified because of the greater demands on practitioners in the workers' compensation system.While all stakeholders in the system - - employees, businesses, insurers, and providers - - share concerns about cost containment, an across-the-board rate cut would undermine the quality, and ultimately to the success, of the system. The MMA urges the Board not to decrease the fee schedule. A reduction in the fee schedule, particularly in the current environment, will discourage physicians from participating in the workers' compensation system and will reduce the great access injured workers historically have enjoyed to the broadest network of practitioners in the state.

At the Board meeting on July 1st, Ms. Inman gave you an overview of the 2003 update to the rule and the history of the fee schedule. In May 1996, the Board contracted with the Maine Health Information Center and the Muskie School of Public Service to develop a resource-based relative value scale (RBRVS) fee schedule. The conversion factor recommended and adopted by the Board at that time has not received an inflationary adjustment since, despite the increase in practice expenses experienced by Maine practitioners during this period.

As I promised in July, I have attached a chart (Attachment 1) listing 38 representative occupational medicine procedure codes with a comparison among the 2002 workers' compensation fee schedule, Anthem, Medicaid, Medicare, and proposed 2003 workers' compensation fee schedule prepared by Jana Purrell, C.P.C., a certified professional coder affiliated with the MMA. This chart indicates that the workers' compensation fee schedule conversion factor is $60.00, as it was in 1996, Medicare is $36.78, and Anthem is $43.50.Medicaid is not a RBRVS fee schedule and the Aetna, Cigna, & Harvard Pilgrim fee schedules are not readily available to the public.Ms. Purrell estimates that the Aetna, Cigna, and Harvard Pilgrim conversion factors are in the range of $45.00-48.00. The discrepancy between the workers' compensation fee schedule and other payers is amplified in this chart because the other payers all have cut their fee schedules since 1996.



Workers' compensation patients simply present harder cases to the practitioner, on average, than do other patients.Their medical issues are complex and they often have a long medical history with prior extensive injuries. More time and professional skill (the "work" component of the RBRVS system) are required of the practitioner to properly treat patients in the workers' compensation system.

Furthermore, the administrative burden on medical practices imposed by the workers' compensation system is substantially greater than by other payers (the "practice cost" component of the RBRVS system).The medical records often are voluminous, the reporting requirements are detailed, and the practitioner's medical judgments often are challenged.Practitioners often experience significant delay in receiving reimbursement. Finally, workers' compensation cases involve practitioners in litigation and present medical-legal issues to the practitioner far more often than do other cases. Participating in litigation in support of the patient and the system is an important duty, but it is time consuming and it diverts the practitioner from providing medical care to attending depositions or administrative or judicial proceedings.

This difference between the professional and administrative cost of workers' compensation cases and other cases is demonstrated by The Effect of Payer Type on Orthopaedic Practice Expenses from the October 2002 edition of The Journal of Bone & Joint Surgery (Attachment 2). The authors of this study found significant differences among payers for orthopaedic practice expenses with the costs for workers' compensation cases being the highest. The authors' findings include:

The total orthopaedic practice expense per episode of care was $123  for self-pay, $195 for an indemnity plan, $148 for Medicare, $178 for PPO, $208 for HMO/POS, and $299 for Workers' Compensation. These differences among payer types persisted even after accounting for patient age, gender, treatment type (nonoperative versus operative), and number of office visits.Nonvalue-added activity expenses differed to a greater degree among the payer types than did value-added activity expenses.Id. at p. 1816.


A reduction in the workers' compensation fee schedule undoubtedly would discourage practitioners from participating in the system and would decrease the access of injured workers to the broadest network of practitioners in the state, particularly the best practitioners who have the luxury to choose their patients.Also, a reduction would exacerbate the cost shifting that is already a significant contributor to the problems in our health care system.

Maine practitioners traditionally have been very good about accepting patients in the workers' compensation system, despite the difficulties associated with the adversarial nature of the system.I understand that your responsibility is workers' compensation system costs, but Maine practitioners would have to consider your decision to reduce reimbursement in an environment where reimbursement rates have been flat or cut by other payers.A reduction in reimbursement at this time would send a bad message to these practitioners and likely would force practices to re-evaluate their participation in the system by limiting the number of worker's compensation patients accepted or leaving the network altogether. [return to top]

President Urges Medicare Conferees to Complete Work by 10/17/03
Last Thursday, President Bush met with legislative conferees who are attempting to reach a compromise on a Medicare drug bill.  He told conferees that the bill is a high priority for the Administration and urged them to complete the conference report, including final legislative language and scoring by the Congressional Budget Office, by October 17, 2003. 

A revised conference schedule dated September 23, 2003 indicates that the conferees must resolve 9 key policy issues during the weeks of September 22 and September 29 to leave the week of October 6 for the legislative staff to complete drafting and for the CBO to score the bill.  The 9 key issues listed in the scheduling document are health plan competition, means-testing, dual eligibles and the low-income benefit, cost containment, provider payments, revenue provisions such as health care savings accounts, and the creation of a new agency outside of CMS that would run the new competitive plan model, premium support, and a federal fallback for areas in which private plans do not offer a drug benefit. [return to top]

Workers' Compensation Coordinating Council Annual Meeting to Feature Physician Presentation
On November 12, 2003, The Workers' Compensation Coordinating Council will hold its Annual Meeting from 10:00am to 3:00pm at the Augusta Civic Center.  The afternoon portion of the meeting features a presentation by Jennifer Christian, M.D. entitled, "Building Better Relationships between Employers and Community Physicians." 

Dr. Christian, a former Medical Director at Bath Iron Works, is Founder and President of Webility Corporation in Massachusetts. She is board-certified in occupational medicine.  She currently chairs the "Stay at Work and Return to Work Process Improvement Committee" at the American College of Occupational and Environmental Medicine.  She obtained her medical degree and an MPH from the University of Washington in Seattle.

Dr. Christian founded Webility Corporation in 1999 in order to help bridge what she believed to be a communications gap between medical offices and workplaces.  Webility has developed web-based continuing medical education for treating physicians, as well as companion training courses for claims handlers, nurse case managers and employers.  The company also provides management consulting services that help build relationships between major employers and their local medical communities.

A $35.00 registration fee is charged and registration materials are available from Martha F. H. Mayo, WCCC, 83 Green St., Bath, Maine 04530.  Registration closes on Oct. 31. [return to top]

Dr. Maroulla Gleaton and Dr. Lani Graham Nominated for Recognition as "Local Legends" through NIH
U.S. Representative Tom Allen announced last week that he has nominated two Maine physicians for recognition as "Local Legends" through the National Institutes of Health National Library of Medicine's exhibition, "Changing the Face of Medicine;  Celebrating America's Women Physicians."  Dr. Maroulla Gleaton, MMA's President, was nominated in the category of "Patient Care" and Dr. Lani Graham of Portland was nominated in the category of "Public Health and Health Policy."

Dr. Gleaton has maintained a busy ophthalmology practice in Augusta since 1988.  She also serves as a board member of the Maine Health Access Foundation and chaired the subcommittee of Governor Baldacci's Health Action Team that let to the drafting of the Dirigo Health legislation.  She was elected as the first woman President of the Maine Medical Association earlier this month.

Dr. Graham, also an MMA member, has been a leader in Maine's public health community for several years.  As the Director of Maine's Division of Disease Control of the Bureau of Health, and later as Bureau Director, Dr. Graham led Maine's early, pro-active, comprehensive and effective approach to the HIV/AIDS epidemic and other public health threats.  She has also been a past chair of the Maine Coalition on Smoking OR Health and has also performed an admirable record of volunteer work, ranging from international service with the Miskito Indians in Nicaragua to providing care at the Portland Free Clinic.  She is a family physician.

A Capitol Hill reception to formally announce the Congressional nominees will be held later this fall in conjunction with the opening of the NLM exhibition.  Congratulations to both Dr. Gleaton and Dr. Graham.  They serve as important role models for every young Mainer. [return to top]

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