Interim Committee to Study Issues Related to Pinnacol Assurance (08/31/2009)

Final
STAFF SUMMARY OF MEETING

INTERIM COMMITTEE TO STUDY ISSUES RELATED TO PINNACOL ASSURANCE

Date:	08/31/2009	ATTENDANCE

Time:	09:02 AM to 06:25 PM	Gardner B.	X
		Gerou	X
Place:	HCR 0112	Harvey	X
		Hodge	X
This Meeting was called to order by		Miklosi	X
	Senator Carroll M.	Mitchell	X
		Ryden	X
This Report was prepared by		Tochtrop	X
	Clare Pramuk	Johnson	X
		Meersman	X
		Morrison	*
		Parry	X
		Ross	X
		Simon	X
		Pace	X
		Carroll M.	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Witness Testimony Medical Testimony Transparency for Pharmacy Benefit Managers Claimant Attorney Workers' Compensation Educational Association Injured Worker Testimony		- - - - - - - - -

09:02 AM -- Witness Testimony

Senator Carroll explained the purpose of the committee and stated that the day's agenda would include testimony from medical professionals and injured workers. Those wishing to testify but who did not RSVP, will testify during public testimony.

Michael Byrd, an injured worker, Business Manager of IBEW Local 111 and President of the Colorado State Conference of Electrical Workers testified. (Attachment A) Mr. Byrd was involved in a serious work related car accident on 2/23/2004. He described his treatment, surgical complications and recovery process. He expressed concerns about the registered nurse hired by Pinnacol to attend his rehabilitation and physician appointments. He viewed her as a spy for Pinnacol. He was assisted by an attorney hired by the local union to manage his case. He also expressed concerns about Pinnacol's prescription drug program. Although he will take three medications for the rest of his life, Pinnacol will only fill the prescriptions once per month. He has testified that he had dropped Pinnacol as the insurer of his business. He recommended that Pinnacol treat people with respect, give more respect to doctors on their diagnoses, and undergo continued state oversight.

In response to a question from Senator Tochtrop, Mr. Byrd testified that his doctor was chosen by his attorney and Pinnacol. Representative Miklosi asked for specifics on the nurse following Mr. Byrd's case. Mr. Byrd explained that she was hired by Pinnacol to follow him around. Mr. Simon asked about physician predesignation on Mr. Byrd's policy which he said he had not done. Senator Mitchell complimented Mr. Byrd about taking his business elsewhere. Representative Gerou asked about Mr. Byrd's arm infection. Mr. Byrd stated that no one came back to check on him after surgery, and a nurse was not assigned until after he went back to Grand Junction. Representative Pace said he'd heard cases of Pinnacol "spying" and he asked Mr. Byrd how legislators can deal with this statutorily such as with a post injury survey. Mr. Byrd said he would have liked that. Senator Mitchell asked if he filed a complaint against Pinnacol with the Division of Insurance or the Division of Workers' Compensation which he did not.

09:18 AM -- Medical Testimony

John Hughes from the Colorado Medical Society (CMS) and Chair of the CMS Worker's Compensation Committee testified. (Attachment B) When Pinnacol had a medical director, he was included on the WC Committee but in November 2008, when the medical director resigned, communication between CMS and Pinnacol dropped. CMS has tried to be collaborative. They are meeting with Pinnacol to develop an ongoing relationship. Hugh McCauley, the new medical director at Pinnacol has been invited to sit on the committee. Dr. Hughes shared his concerns about Pinnacol. These included the gap of medical direction, issues with physician requests being denied without a medical explanation, lack of accountability, authorization of care issues, independent medical exams (IME) not aware of a particular treatment, and long-term care being difficult for patients. He mentioned an example of video surveillance of a claimant by Pinnacol.

Representative Miklosi asked how often there is not a match between the injury and IME. Dr. Hughes wasn't sure.

Ken Ross clarified that Pinnacol and CMS will be meeting regularly to provide better medical care. When asked to compare Pinnacol with other carriers, Dr. Hughes responded that Pinnacol's process is the most fair and transparent of carriers in Colorado.

Several committee members asked questions about Dr. Hughes' role as a physician advisor for Pinnacol Dr. Hughes doesn't know when a claimant is represented by an attorney but thinks it would be a good idea to know. His opinions are usually respected but not by all claim teams. The cases he reviews tend to be complex and severe.

09:43 AM

Dr. Kathryn Mueller, medical director from the Division of Workers' Compensation gave her presentation. (Attachment C) Dr. Mueller discussed the elements of workers' compensation law affecting physicians. She discussed the two levels of accreditation; medical treatment guidelines; the AMA Guide, 3rd Edition; impairment ratings; and what level of accreditation is required for each step of the medical portion of a claim. She talked about the emphasis on function in evaluating impairment rather than pain and noted that the guidelines don't give points for pain alone.

Dr. Parrry asked if the division is looking at outcomes over long terms. Dr. Mueller replied that they would like to but they don't have the funding for such a study.

Senator Mitchell asked why the division is using the AMA Guide, 3rd Edition and why no one has brought a request to update the volume in statute. Dr. Mueller said that it could be done and would simplify ratings for doctors. Senator Mitchell asked if using the newer edition would have an effect on benefits. Dr. Mueller has not done a comparison but thinks it could reduce spine ratings. Senator Carroll suggested having a comparison done on guides.

When asked about education of patient, Dr. Mueller said there is no system in place but there are incentives for doctors to provide education.

Representative Gerou asked about the division sunset date and whether updating the AMA Guide could be covered in sunset. Dr. Mueller didn't know the date. Representative Gerou asked if the reference to the edition could it be taken out of statute and Dr. Mueller said it could.

10:11 AM --

Dr. William Woo, an occupational doctor with Exempla testified from his perspective as a medical provider for Pinnacol. He surveyed other network providers, physicians, physical therapists, case managers and a billing specialist and received favorable comments with noted improvement over time.

Dr. Parry asked a series of questions about his participation with Pinnacol. Dr. Woo is a member of SelectNet and approximately 40% of his work is with Pinnacol. Complex medical cases are referred to specialists but coordinated by primary care physician.

Mr. Ross disclosed that he met with Dr. Woo about becoming Pinnacol's medical director.

Senator Carroll asked about ex parte conversations about patients. Dr. Woo state that inquiries from carriers should be in writing.

10:22 AM --

Dr. Chris Ryan, a specialist in physical medicine who is often the physician of last resort, testified. He was involved in the implementation of the workers' compensation law change in 2002. He uses the AMA Guidelines 6th Edition for federal WC claims. Dr. Ryan said Dr. Macaulay (new Pinnacol Medical Director) will be an excellent medical advisor. Dr. Ryan has had a 20-year association with Pinnacol and said that care is often denied. He believes that the many questions he gets from IME's is money poorly spent because IME's rarely win. He's seen hundreds of his patients under surveillance which he said is also money poorly spent. Dr. Ryan wishes he had access to Pinnacol physician advisors. He has never received a call from one but would like their input. He commented that the AMA Guide, 6th Edition is a radical departure and will be difficult to implement and teach physicians. Ratings are quite a bit lower generally but it is well written and uses evidence-based medicine.

Representative Gardner asked for a definition of physician of last resort and posed questions about Dr. Ryan's practice. Dr. Ryan only sees complex cases of people who have seen 10-20 or more doctors. Of his patients, 20 to 30 percent are insured by Pinnacol and 70 to 80 percent are other carriers. Pinnacol is in some ways better, some worse. The physician advisor is critical, and needs to be made available to treating physician. He's not sure if Pinnacol uses surveillance more than any other insurer but thinks its used too much generally.

10:32 AM -- Transparency for Pharmacy Benefit Managers

Brad Young, the Governmental Affairs Director for RxPlus testified about transparency in pharmacy benefits. He handed out an article from Wall Street Journal on Disclosure on Drug Prices. (Attachment D) He also made a presentation about pharmacy-benefit managers (PBM) and their function in prescription drug plans. (Attachment E) He expressed concerns about transparency for PBM transactions. He distributed a bill that passed in Texas, SB 704, that creates a right to audit. (Attachment F) He also distributed a State of Texas Audit Report on PBM contracts (Attachment G).

Senator Mitchell asked about how Pinnacol handles their benefits. Mr. Young noted that the state has some ability to require things with Pinnacol.

Mr. Ross noted that the Texas bill only applies to state agencies, and that private industry is not included. It also refers to health care not workers' compensation. Mr. Young is advocating for something like this for Colorado state agencies and Pinnacol. He is not familiar with how Pinnacol manages pharmacy care for injured workers or what percentage of prescriptions are for workers' compensation. Mr. Ross explained that Pinnacol contracts with ExpressScripts and offered his opinion that the system works well.

Senator Carroll asked what could be earned from more transparency. Mr. Young stated that it would provide transparency about different sources of revenue, conflicts of interest.

10:56 AM -- Claimant Attorney

John M. Connell, an attorney with Franklin D. Azar & Associates, P.C., testified. He has represented inured workers and insurance carriers including Pinnacol. The last four years he has worked on behalf of the injured party side. He discussed issues related to medical care for injured workers. He stated that cost savings are a result/expense of an injured party and affects unrepresented claimants more than represented claimants. An injured worker is allowed a one time change of physician within the list of approved doctors. These are more employer/insurer oriented physicians. Adjusters can talk to physicians. For his clients, he asks that there be no ex parte communications but stated that adjusters and doctors have continued dialogue.

He discussed Pinnacol's employment of nurse case managers (NCM). NCM's may go into a claimant's appointment with a physician and then discuss the case with the physician. This gives the insurance carrier an opportunity to dictate care. Some large employers discuss injured worker cases and include doctors and nurses.

Mr. Connell also discussed impairment ratings and Division Independent Medical Examinations (DIME). Concentra refers to one physician to do impairment ratings which results in cost savings for insurance companies because the impairment ratings for this doctor are lower. With transparency, Pinnacol would be under scrutiny to allow the legislature to monitor what's going on and injured workers would be treated appropriately and given correct impairments ratings. DIME cases generally result in increased ratings.

Mr. Connell pointed out the number of stages in which Pinnacol controls medical treatments for claimants. Pinnacol physician advisors review medical treatments from authorized treating physicians who are already approved by Pinnacol. It is up to the treating physician to push for treatment denied by the physician advisor. He would like Pinnacol to remain a political subdivision of the state so they can be better scrutinized. He likes Pinnacol and says that their claims are well handled. He is concerned that there is too little competition among doctors.

Mr. Johnson, Pinnacol Board Chair and member of the committee, stated that the Pinnacol board hired additional NCMs not as spies but to ensure a physician provides the best care. Their role is to help injured workers. Mr. Connell responded that he understands that's the purpose and that NCM's can be very beneficial. In an average case, the NCM is letting the doctor know what the adjuster feels is necessary. Mr. Connell requests that NCMs not be used for his clients.

Senator Mitchell asked what the response is from Pinnacol when he asks them not to include a NCM. Mr. Connell responded that not by choice in Colorado, a claimant has the right to refuse a NCM.

Dr. Parry asked about physicians as businesses and reaching a balance when competing for business. Mr. Connell spoke to this issue and noted that most clients are treated through Concentra and that complex cases are referred to two specific physicians to close and do the impairment rating.

Representative Miklosi asked about whether Pinnacol steers cases towards physicians who have a high rate of denials. Mr. Connell testified that there are physicians who are more claimant-oriented and others more respondent-oriented. Doctors can make a lot of money testifying on behalf of insurance carriers and he sees the same physicians being called to testify regularly for insurance carriers.

Mr. Simon asked about a link between the size of a claim and the effort of a company to fight it. Mr. Connell doesn't think that is generally the case. The most common occurrence he sees in his practice is denial of request for surgery.

Representative Gardner posed a number of questions about Mr. Connell's practice, his experience with Pinnacol, his compensation and his firm. Mr. Connell works for a plaintiff's firm, Franklin D. Azar and Associates, and receives 20 percent of the settlement for an injured worker. When he worked on the defense side, he was paid by the hour by insurance carriers. He would receive no payment for medical benefit awards. Mr. Connell talked about differences between Pinnacol and other insurers due primarily to size. Pinnacol has people who focus on return-to-work, their own nurse case managers and physician advisors that other insurers don't have. Liberty Mutual moved their claims office to Texas. Overall size means that for clinics like Concentra, they are a substantial part of their business. Having NCM's physician advisors dictating to doctors is a business practice of Pinnacol but not other carriers. This could be detrimental to injured workers.

Mr. Ross asked Mr. Connell if he was familiar with how many claims are filed with Pinnacol, and the denial rate. Mr. Connell responded that he did not know, but didn't think it was relevant to what he's talking about.

11:39 AM -- Workers' Compensation Educational Association

John Sbarbaro from the Workers' Compensation Education Association testified that they would like Pinnacol to remain as quasi-public. Pinnacol has not done enough to lower premiums and provide higher rebates to subscribers. Corrective legislation could add a premium tax and caps on premiums and surplus. Remaining quasi-public gives Pinnacol a level of transparency it wouldn't have as a private company.

Senator Mitchell asked questions about the effect of Pinnacol's affiliation with the state. Mr. Sbarbaro said that it has afforded transparency and that if Pinnacol were private we wouldn't know what their surplus was or why.

Mr. Ross and Mr. Sbarbaro had an exchange about reserves, premium taxes, rate decreases, surplus, dividends and being the insurer of last resort.

Representative Pace asked about how the legislature could place a cap on surpluses and what would it be. Mr. Sbarbaro suggested forming a committee to address it.

Dr. Parry asked about the effect on care of injured workers if Pinnacol was a private company and Mr. Sbarbaro said that care would suffer because we wouldn't have transparency.

Senator Harvey asked a number of questions about information reported to the Division of Insurance and Mr. Sbarbaro's background.

Representative Gardner commented on the attempt by the General Assembly to take $500 million from Pinnacol to balance the state budget and asked if WCEA supported this. Mr. Sbarbaro said that WCEA thinks the money belongs to the individuals who paid premiums or injured workers who were not provided adequate health care.

Mr. Simon asked Mr. Sbarbaro what he saw as the impact of making Pinnacol a true state agency but Mr. Sbarbaro hasn't considered that.

01:30 PM -- Injured Worker Testimony

The following people testified on injuries they sustained at work and the care they received from Pinnacol through the workers compensation system:

01:31 PM -- Sergeant James Brand, of the Mountain Village Police Department, described hearing loss resulting from not using ear plugs while on the firing range during training. He responded to questions from the committee.

01:42 PM -- Radean Hahn described her injuries sustained in 2007. She was declared maximum medical improvement (MMI), but eventually returned to work.

01:51 PM -- Carolyn Kelly-Gray described injuries her husband, James Gray, sustained in 2007 as a truck driver at a concrete construction plant. She also described subsequent injuries sustained when he went back to work while still recovering from the initial injury. She suggested that the committee investigate the number of head and neck injuries denied by Pinnacol. Rep Pace asked whether Ms. Kelly-Gray believed that her husband was sent back to work too soon. She replied that her husband was injured on April 20 and returned to work on April 24. Sen Tochtrop commented that the employer seemed to be at fault for not calling 911.

02:13 PM -- Steve Stahl, a firefighter from Durango, talked about his experiences dealing with Pinnacol over 8 years. He described working on the June 2002 Mission Ridge fire, and injuries to his spine that became evident 4 months later. He noted the investigations of Pinnacol into his health. He specifically cited the need for a patient advocate and the lack of truly independent medical examinations. He suggested that Pinnacol should be subject to bad faith claims and the insurance premium tax.

02:31 PM -- Leonard Delgado, former employee of the Colorado Mental Health Institute in Pueblo, working in the maximum security section, spoke to the committee about his injuries and his experience in dealing with Pinnacol. Over several years working in the maximum security section, he was injured several times, some of which resulted from attacks by patients. Representative Gerou asked about the dangers inherent in Mr. Delgado's state employment. (Attachment H)

02:50 PM -- David Camacho described injuries sustained in a fall from a ladder while at work and while being electrocuted with 8,000 volts in a 2008 accident. His friend, Jennifer Oliver, described in greater detail the injuries sustained by Mr. Camacho and the experiences in dealing with Pinnacol.

03:07 PM -- Joel Beck discussed his injuries from 2003 on a road construction project.

03:18 PM -- Stan Houston of Ordway talked about injuries sustained while working at a steel plant.

03:25 PM -- Paul and Patrece Snow of Pueblo West talked about Paul's injuries resulting from a 20-ton cement block falling on him. He spoke of the limitations of the workers compensation system. She spoke of the problems they experienced in dealing with Pinnacol and the difficulties resulting from her need to stop working in order to take care of him. Senator Tochtrop commented that injured workers should not need to hire an attorney to receive compensation.

03:50 PM -- Seth and Susie Patterson of Boulder testified to the committee. He is currently the fire chief of all-volunteer Lefthand Fire Protection District in northern Boulder County. His injury incurred in 2008 and resulted from an over-pressurized water hose. He spoke of the need for a patient advocate.

04:05 PM -- The committee recessed.

04:15 PM -- The committee returned to testimony from injured workers:

04:17 PM -- Deb Stirling, a member of the board of directors for the Lefthand Fire Protection District, spoke about the resolution of Chief Patterson's situation. Her district board voted to provide a patient advocate for any future injured firefighter. She suggested two things: effective, independent, and ongoing oversight of Pinnacol; and medical evaluations by professionals that are truly independent of Pinnacol.

04:27 PM -- Robert Morgan, owner of Foremost Flooring spoke of his injuries. (Attachment I)

04:32 PM -- Lester Parker of Parker Excavating in Pueblo spoke as both an employer and an injured worker. He spoke of his positive experiences as an employer and his negative experiences as an injured employee. Stacy Parker testified that the premiums for her company tripled after the injury. (Attachment J)

04:44 PM -- William Galvan, Sr. testified to the committee about the injuries to his son, William Galvan, Jr.

04:51 PM -- Glenn Barricklow of Fort Collins discussed his 2007 injury and his experience in dealing with Pinnacol.

04:54 PM -- Paula Evans of Denver, a state employee with the Ports of Entry, spoke about the repetitive motion injuries she sustained and the challenges she experienced in getting treatment.

05:01 PM -- Frank Rodman of Aurora, a retired police officer with Greenwood Village, spoke about injuries he sustained in 2002 during a work training exercise and in 2003 in a work-related car accident.

05:06 PM -- Maryann Cordova from Littleton shared her story about a 2006 injury.

05:09 PM -- Marjorie Mason-Lott of Aurora described her injuries from a fall.

05:16 PM -- Jandale Carter of Greeley spoke about the loss of her husband Barry in a work accident and her appreciation for the scholarship her son received from the Pinnacol Foundation.

05:18 PM -- Ronald Miller of Salida spoke about his positive experiences with Pinnacol following his injury.

05:24 PM -- Rosalie Wagner of Denver testified about her positive experience with Pinnacol.

05:27 PM -- Harley Bowers of Lakewood spoke of his experiences.

05:33 PM -- Tom Young of Golden discussed his 1990 injuries, his difficulties with the Colorado Compensation Insurance Authority, and his positive experiences with Pinnacol Assurance. He noted that both of his children received scholarships from the Pinnacol Foundation.

05:40 PM -- Debra Peter, a former employee of the Department of Corrections, testified about her injuries and the difficulty she has experienced getting treatment. Her husband, Kenny Ryan, asked the committee to fix the workers compensation system.

05:55 PM -- John Doe presented written testimony and discussed his 2004 injury caused by an accident while he was employed at a private school. He spoke to his difficulties in getting treatment for his injuries. (Attachment K)

06:03 PM -- Dr. Annu Ramaswamy spoke about his experience working with Pinnacol Assurance on behalf of injured workers since 2000.

06:06 PM -- Astrid Elshire of Aurora spoke about her injuries and the denial of her claim by Pinnacol as not being work related.

06:10 PM -- Dr. Hugh Macaulay, recently-hired Medical Director for Pinnacol Assurance, spoke about his past work experience and the things he learned at the hearing, apparently his first day on the job.

06:21 PM -- Devorah Lynn Kappers testified about her situation.

06:25 PM

The committee was adjourned.