Compensation. in Mississippi: Administrative Inventory. in Mississippi: Workers Compensation. Research Institute. Duncan S.

Transcription

1 Workers Compensation in Mississippi: Workers Compensation in Mississippi: Administrative Inventory Administrative Inventory Duncan S. Ballantyne Workers Compensation Research Institute This report is protected under Copyright Law and is subject to the same use restrictions as a work printed on paper.

2 Workers Compensation in Mississippi: Administrative Inventory Duncan S. Ballantyne WC May 2005 Workers Compensation Research Institute Cambridge, Massachusetts

3 copyright 2005 by the workers compensation research institute all rights reserved. no part of this book may be copied or reproduced in any form or by any means without written permission of the workers compensation research institute. Acknowledgments Library of Congress Cataloging-in-Publication Data Ballantyne, Duncan S. Workers compensation in Mississippi : administrative inventory / Duncan S. Ballantyne. p. cm. WC June Includes bibliographical references. ISBN Workers compensation Mississippi. I. Workers Compensation Research Institute (Cambridge, Mass.) II. Title. HD U62M dc I am indebted to many people. Within the Institute, executive director Dr. Richard Victor, deputy director and counsel Ramona Tanabe, and Carol Telles provided valuable advice, support, and internal review. I extend special thanks to Jill McNamee and Stephanie Deeley, who prepared the manuscript with skill, patience, and good humor. Barbara McGowran added her deft editorial touch, and Janet Cocker proofread the report. Technical reviewers Scott McAnally and Ed Welch offered expert comments and probing questions. I thank them all very much. The Institute received excellent and timely cooperation from the Mississippi Workers Compensation Commission (MWCC). I especially want to thank commissioner Lydia Quarles, senior administrative law judge Deneise Lott, executive director Ray Minor, and senior attorney Scott Clark for cheerfully and knowledgeably responding to my many questions and requests for information. Thanks also to senior analyst Dorothy Irving, who patiently and skillfully responded to my frequent requests for data. Many other MWCC staff members (too numerous to name) helped to educate me and deserve my appreciation. The people I interviewed, from both the public and private sectors, helped me to understand how the system functions and to interpret the statute. Their contributions gave the report credibility; but of course they are not responsible for my interpretation of their comments. Any errors in the report are mine. Duncan S. Ballantyne Cambridge, Massachusetts May 2005 publications of the workers compensation research institute do not necessarily reflect the opinions or policies of the institute s research sponsors. v

4 Table of Contents List of Tables List of Figures Executive Summary xi xiii xv 1. Introduction 3 Purpose of the Study / 3 Scope of the Study / 4 Research Approach / 4 Organization of the Report / 5 Change in the System / 6 2. Administration 7 Organization, Functions, and Staffing of the Agencies Administering the Workers Compensation System / 7 mississippi workers compensation commission / 7 Agency Data-Gathering and Analysis Capabilities / Benefits 15 Medical Benefits / 15 medical cost containment policies / 16 medical disputes / 18 Indemnity Benefits / 19 compensation rate / 19 average weekly wage / 19 vii

5 viii table of contents table of contents ix duration, maximum compensation, and coordination of benefits / 23 definition of injury / 25 temporary total disability benefits / 26 temporary partial disability benefits / 26 permanent partial disability benefits / 26 disfigurement benefits / 29 permanent total disability benefits / 29 death benefits / 29 Vocational Rehabilitation Benefits / 30 Second Injury Fund / 31 Initiating and Paying or Denying a Claim / 31 Terminating TTD Benefits / 31 Reopenings / 33 Bad Faith in Claims Handling / Dispute Resolution 37 Dispute Resolution Process / 38 initiating dispute resolution / 38 preparation / 39 assignment and scheduling / 40 frequently disputed issues / 41 Informal Dispute Resolution / 41 Alternative Dispute Resolution / 41 Formal Dispute Resolution / 41 prehearing conferences / 42 formal hearings / 42 Resolving Disputes over PPD Benefits / 42 Appeals Process / 44 appeals to the full commission / 44 appeals to the courts / 45 Attorney Involvement and Fees / System Performance Measures 47 Benefit Payments and Benefit Growth / 47 Special-Fund Revenues and Expenditures / 49 Costs of the System / 49 public administration costs / 49 benefit costs / 52 benefit delivery expenses / 52 Injuries and Utilization / 52 Return to Work / 54 Litigiousness / 54 Agency Workload / 56 Settlement Agreements / 56 Promptness of Reporting and Payment / 59 Speed of Resolution / Implications for Policymakers 61 Current Context / 61 Implications for Mississippi Public Policymakers / 62 is mississippi a high- or low-cost state? / 62 is the mississippi workers compensation commission proactive? / 65 what causes delays in formal dispute resolution in mississippi? / Other Findings on Costs 77 Incurred Benefit Costs and Growth / 77 Frequency of Benefits / 84 Size and Type of Benefits / Attention Points 87 Statistical Appendix 93 References 99

6 List of Tables 2.1 Commissioners Characteristics, Mississippi Workers Compensation Commission, 2005 / Data Collection Activities of the Mississippi Workers Compensation Commission, 2005 / Aspects of System Performance Tracked and Routinely Reported, 2005 / Benefit Characteristics in Mississippi as of January 1, 2005 / Maximum and Minimum Weekly Benefits, / Dispute Resolution Activity, Calendar Year 2004 / Benefit Payments in Mississippi, / Second Injury Fund Receipts and Payments, / Mississippi Workers Compensation Commission Staffing and Administrative Expenditures, Fiscal Years / Lost-Time Claims Filed in Mississippi, / Measures of Litigiousness, / Levels of Agency Activity, / Measures of Formal Dispute Resolution Staff Activity, / Hearing Preparation Time Frames Specified by the Rules and Practices of the Mississippi Workers Compensation Commission, 2004 / Statewide Formal Dispute Resolution Intervals in Cases That Had Hearings and Judges Orders Awarding Benefits in Calendar Year 2004 / Illustrative Cases That Involved Hearings and Judges Orders Awarding Benefits in Calendar Year 2004 / Incurred Benefits in Mississippi, Policy Years / Average Incurred Indemnity and Medical Benefit Costs, Indemnity Cases Only, Policy Years / 79 xi

7 xii list of tables 7.3 Average Incurred Indemnity and Medical Benefit Costs by Type of Claim, Policy Years / Cases by Type of Claim, Policy Years / Frequency of Claims by Type of Claim, Policy Year 2001 / Average Incurred Benefit Costs per Claim by Type of Claim, Policy Year 2001 / 86 SA.1 Claim Flow Statistics, / 94 SA.2 Claim Flow Activity, / 95 SA.3 People Interviewed for This Study / 96 List of Figures 2.1 Structure of the Mississippi Workers Compensation Commission, 2004 / Compensability Claim Flow / Terminating Temporary Total Disability Payments / 33 xiii

8 Executive Summary The Mississippi workers compensation system has undergone little legislative and administrative change in the past 10 years. Despite this stability, some public officials and private observers on both sides see room for improvement in the Mississippi system, especially regarding the speed of benefit delivery. Additionally, most workers representatives say that Mississippi s relatively low statutory maximum weekly amount for temporary total disability (TTD) benefits percent of the statewide average weekly wage instead of the typical 100 percent can cause higher-wage workers to suffer economically, forcing some to request that their treating doctors release them to work before they have recovered satisfactorily from their injuries. Workers representatives add that some workers, particularly those who have not returned to work, have to wait an unnecessarily long time to receive benefit entitlements. Current Context Although change in the Mississippi system has not been a matter of public debate and many participants on both sides say the system works reasonably well, others contend that improvement is needed. Most workers representatives say that maximum weekly benefit levels should be raised. Public officials and observers on both sides generally agree that dispute resolution should be faster. Some workers representatives, insurers, and self-insurers would like to see the Mississippi Workers Compensation Commission (MWCC) assume a more active role in informing workers of their rights; training claims adjusters, particularly those from out of state, on how to handle Mississippi claims; and educating doctors on how to evaluate permanent impairment. Some self-insurer representatives say that, over time, judges at the MWCC have become more liberal when awarding benefits to workers. xv

9 xvi executive summary executive summary xvii Major Findings The statutory maximum weekly TTD benefit in Mississippi is among the lowest in the nation (as a percentage of the statewide average weekly wage). We compared each state s statutory maximum weekly TTD benefit amount as of January 1, 2004, with its statewide average weekly wage (SAWW). 1 At percent, Mississippi s $ maximum weekly TTD benefit, as a fraction of the SAWW, was tied with Delaware s as the fourth lowest in the nation. 2 The most common statutory provision, effective in 22 states, sets the maximum weekly benefit for temporary total disability at 100 percent of the SAWW. Mississippi is one of 10 states that link the maximum weekly TTD benefit to less than 100 percent of the SAWW. 3 The lower statutory maximum weekly benefit creates economic hardship for higher-wage earners. Most system observers agree that higher-wage earners can suffer economically while receiving indemnity benefits. On the other hand, workers whose benefits are not affected by the maximum receive TTD benefits similar to those in the typical state. Total incurred benefits per employed worker (adjusted for inflation) were relatively stable from policy years 1997 through 2001, masking two offsetting factors: a decrease in the annual number of lost-time claims and a rapid increase in average incurred benefits per indemnity claim. This pattern is not unusual for many states. For the following analysis, we relied on incurred benefit data (for insured employers only) from the National Council on Compensation Insurance, Inc. (NCCI) Total incurred benefits per employed worker (adjusted for inflation) kept pace with inflation, falling 0.1 percent annually on average from policy Forty-four states base the maximum weekly TTD amount on a percentage of the SAWW or statewide average monthly wage (SAMW). For these states, we divided the maximum weekly TTD amount (as of January 1, 2004) by the applicable percentage to calculate the SAWW. For the remaining six states that do not base the maximum weekly TTD amount on a percentage of the SAWW or SAMW, we calculated the ratio of each state s maximum weekly TTD amount to its SAWW for 2003, using data from the U.S. Department of Labor, Bureau of Labor Statistics. States with lower percentages were New York (44.0 percent), Arizona (55.5 percent), and Georgia (60.4 percent). Twelve states tie the maximum weekly benefit to more than 100 percent of the SAWW, and six states do not use the SAWW to determine the maximum benefit. years 1997 through Inflation-adjusted incurred indemnity benefits per employed worker grew slightly at 0.9 percent annually on average, and inflation-adjusted incurred medical benefits per employed worker fell just 0.9 percent annually on average. The incurred benefit data show a significant decrease in the number of indemnity claims per 100 employed workers. From policy years 1997 through 2001, there was a total drop of 24 percent, or 7.5 percent annually on average. This decrease is seen in numerous states, leading some observers to speculate that a driving factor in this phenomenon was the state of the general economy at the time. The inflation-adjusted data on average incurred benefits per indemnity claim show rapid growth in indemnity benefits from policy years 1997 through 2001: 8.4 percent from 1997 to 1999, percent from 1999 to 2000, and 11.0 percent from 2000 to Similarly, the inflation-adjusted average incurred medical benefit per indemnity claim grew rapidly over this period, particularly in the most recent year: 4.7 percent from 1997 to 1999, 7.5 percent from 1999 to 2000, and 13.2 percent from 2000 to We asked insurers and public officials, What drove medical and indemnity benefits in Mississippi from policy years 1997 through 2001? Respondents offered several possible explanations. First, they pointed to a change in the way scheduled permanent partial disability (PPD) benefits were resolved. Second, respondents noted an increase in the duration of temporary disability that led to increased TTD benefit costs. Third, respondents said that rapidly rising medical costs in this period resulted from doctors ordering more diagnostic tests in general, payors and providers requesting more functional-capacity evaluations, payors requesting more defense medical exams, increased use of pain management services, and rapidly rising hospital costs (observed but not measured). More detailed and more recent data are needed to determine what is driving the growth in the average incurred medical benefit per claim. Most observers characterize the state agency s personnel as responsive. Private system participants generally agree that MWCC personnel are knowledgeable and responsive to their needs and concerns. They say that commissioners and judges 4 The policy year, which was January through December in 1997, was changed to September through August in No data are available for the period January through August 1998.

10 xviii executive summary The dispute resolution delay potentially gives payors additional leverage when settling claims; sometimes this leverage is used, sometimes it is not. When we asked system participants whether payors tend to pay unscheduled PPD benefits biweekly pending a settlement or final determination of the weekly amount, we received various responses. Most workers representatives and some payors and defense attorneys said that once a worker reaches maximum medical improvement, many payors terminate TTD benefits and do not start making biweekly unscheduled PPD payments until the weekly amount is finally agreed on, a judge issues an order, or, more commonly, a compromise lump-sum settlement is reached. However, some payors and defense attorneys told us that many payors routinely pay unscheduled PPD benefits on account, using one of two conventions. First, the payor might continue paying PPD benefits at the TTD rate until a vocational consultant s labor market survey defines the worker s new wageearning capacity, and then the payor would take a credit against any overpayment of PPD benefits. Second, the payor might start paying PPD benefits biweekly at the TTD rate or the rate that would apply if the worker could return to work at the minimum wage, or based on an estimate of the worker s loss of wage-earning capacity. Among the payors we interviewed who said they usually do not make biweekly unscheduled PPD payments, most justified their methodology by citing the absence of any MWCC rule or policy specifying how to calculate such payments. Acexecutive summary xix interact well with system participants: they regularly attend conferences (including one that the MWCC sponsors annually) and are available to speak at seminars. Average death benefits are low compared with those in other states. According to data published by Blum and Burton (2004b), the average incurred indemnity benefit per death claim (for insured employers only) in Mississippi ranked 43 rd (from highest to lowest) of 46 jurisdictions in policy year 2000, the most recent year for which comparable data were available (table 2). 5 At least two features of Mississippi s benefit system probably contributed to its low ranking. First, Mississippi is one of 12 states that places a statutory maximum on the amount of death indemnity benefits that can be paid to spouses, children, or both. Second, a spouse without children receives 35 percent of the deceased worker s average weekly wage instead of percent, which is typical in other jurisdictions. Formal-hearing delays in Mississippi are long relative to those in other states that WCRI has studied in the past 10 years. Analysis of MWCC data reveals that, among cases that involved formal hearings and judges orders awarding benefits to workers in calendar year 2004, the average statewide interval from petition filing to the judge s order was 19.6 months. MWCC data also show that the average interval from petition filing to the approval of a lump-sum settlement in 2004 was 12.1 months. However, these intervals may be overstated (by an unknown amount) because, according to system observers, some workers attorneys file petitions before their cases are ripe for resolution. The 19.6-month interval was next to the longest among eight other states (for which comparable data were available) that WCRI has studied in the past 10 years. Agency rules and docketing practices allow considerable time to prepare for and schedule a hearing. Examination of MWCC docketing practices and procedural rules for hearings reveals 23 days for both sides to file an answer to a request for formal dispute resolution, 120 days for both sides to complete discovery, and 30 days for both sides to file prehearing statements indicating that discovery has been completed and depositions have been taken or scheduled. MWCC officials say that between 41 and 52 days are allowed for docketing practices, such as notifying the parties, allowing the parties to call the MWCC to request a hearing 5 We excluded data for the U.S. Longshore and Harborworkers Program after determining they were not comparable for the purpose of interstate comparisons. date, and scheduling a hearing and informing the parties of the date. In all, between 214 and 225 days (7.4 months) are allowed from petition filing to setting the hearing date. The MWCC frequently receives requests for extension of the 120-day discovery period and grants almost all initial requests. MWCC data show that among 1,287 cases that were closed by lump-sum settlements in 2003, 633 (49 percent) involved at least one request for extension of the 120-day discovery period. Public officials say that MWCC policy gives legal assistants at the agency the discretion to grant one extension to the worker and one to the insurer or self-insurer, unless there is some objection. The typical extension is for 60 days and is for the purpose of allowing a party additional time to complete discovery or take depositions. Generally, after the legal assistant processes the first extension request, any subsequent request goes to the judge to whom the case is assigned. It is common practice among judges to deny the later requests for extension unless the other side agrees. Absent agreement, the judge usually holds a telephone hearing on the request and renders a decision.

11 Unlike many states that automatically inform workers of their rights, benefits, and responsibilities under the system, the state agency mainly provides information on request from workers. Most workers representatives and some selfinsurers we interviewed said that, although injured workers receive prompt attention when they contact the MWCC, workers are not automatically sent much inxx executive summary executive summary xxi cording to most workers representatives, payors choosing not to pay on account can exert undue leverage on workers to settle their claims, especially given the typical dispute resolution delay. Because of this leverage, workers representatives believe that workers are more likely to suffer economically and often choose to settle their claims for less than the appropriate amount to obtain benefits. A combination of system features creates incentives on both sides to settle claims. MWCC data shows that 24 percent of lost-time claims arising in 2000 resulted in lump-sum settlements. 6 Among litigated claims (that is, those with one or more petitions filed), 74 percent were settled. Among nonlitigated claims, 12 percent were settled. Observers on both sides identify three system features that provide incentives for both workers and insurers or self-insurers to settle claims. First, unless settled, unscheduled PPD benefits in Mississippi are usually payable for 450 weeks. This feature can create some relatively low biweekly PPD payments. Workers representatives say that most workers receiving PPD benefits cannot live on the payments and instead agree to lump-sum settlements. Second, according to Mississippi case law, once indemnity benefits are paid and stopped, any additional medical treatment that is rendered or authorized resets the one-year statute of limitations. In most states we have studied, only the receipt of additional indemnity benefits can reset the statute of limitations. Observers on both sides generally agree that the practical effect of the case law is to create incentives for insurers and self-insurers to attempt to close claims in the form of compromise lump-sum settlements. Finally, as previously noted, the practice of some insurers and selfinsurers of not paying unscheduled PPD benefits biweekly pending the outcome of a dispute over the weekly amount, coupled with the almost 20-month delay from a hearing request to a hearing decision, creates incentives for some workers to settle their cases in order to obtain PPD benefits. Most workers attorneys say that higher-wage earners in particular often opt to settle for less so they can receive their benefits sooner. formation about their benefits, rights, and responsibilities when they file claims. These respondents acknowledged that the MWCC automatically sends a one-page letter to an injured worker after it receives the injury report. This letter informs the worker that the MWCC has established a claim file, the claim will be investigated entirely by the insurer or self-insurer, and the worker can contact an MWCC claims representative if the employer or insurer is not able to assist the worker. However, some workers representatives told us that this form letter does little to inform workers about their rights under the law for example, the right to choose the treating physician. In many states, the state agency automatically sends a Workers Compensation Facts pamphlet to every worker reporting an injury or requires that the employer or insurer do so. The state agency does little to measure and monitor system performance. The MWCC database captures most of the data elements necessary to measure system performance but does not systematically analyze performance against norms or goals. For example, the MWCC database includes detailed information about the various events, dates, and participants associated with disputed claims, and the agency annually publishes data on the number of hearings, settlements, orders, and appeals. However, the MWCC does not regularly measure the speed of dispute resolution an area of concern for many system participants. With cooperation from MWCC staff, we were able to measure the speed of dispute resolution for claims closed in Lost-time claims received and entered in 2000 were evaluated as of July 19, 2004.

12 Workers Compensation in Mississippi: Administrative Inventory

13 1 Introduction Purpose of the Study States sometimes seek to improve their workers compensation systems through internal evaluations; others recognize that similar jurisdictions have struggled with problems comparable to their own. Adapting successful system features from other states may be an efficient method for solving problems, provided that one is mindful of the reality that those features may not work the same way in a different system context. However, there are few sources of reliable information that describe in detail how various workers compensation systems function in practice. This study is the 36 th in a series of Administrative Inventories of state workers compensation systems published by the Workers Compensation Research Institute (WCRI). 1 The purpose of this series is to help public policymakers and other participants understand the features of workers compensation systems and make informed interstate comparisons. The intended audience includes public officials, insured and self-insured employers, insurers, workers and their representatives, attorneys, and others interested in the features and operation of state workers compensation systems. The objective of this volume is to describe how the workers compensation system in Mississippi is administered and functions. This volume shares a common outline with other Administrative Inventories and, as much as possible, addresses the same core issues. Readers who are familiar with the basic components 1 Twenty-seven states have been studied, nine of which have been revisited. 3

14 4 workers compensation in mississippi The report is organized around the questions listed under Scope of the Study. Chapter 2 is an overview of the administration of the Mississippi workers compensation system. It describes the functions, responsibilities, and resources of the MWCC. In Chapter 3, we describe the types of workers compensation benefits available to injured workers. In Chapter 4, we discuss the informal and formal dispute resolution processes. Chapter 5 describes system outcomes, such as utilization, litigiousness, administrative workload, costs, and the speed of resolution. The implications of our findings for policymakers are the topic of Chapter 6. In Chapter 7, we provide data on incurred benefit costs and trends in incurred beneintroduction 5 of workers compensation systems should have little difficulty understanding the major features, provisions, and issues of the Mississippi system. Scope of the Study This inventory addresses the following core issues of the Mississippi workers compensation system: How is the system administered? What benefits are paid? What is the role of the special funds, and what do they cost? How do claims flow through the system? How quickly are payments initiated and claims resolved? What dispute resolution procedures are used, and to what effect? How are attorneys involved in the system? How litigious is the system? What is the workload of the administration? What are the costs of administration, benefits, claims processing, and litigation? What aspects of the system deserve special attention or further inquiry? We address these questions for the system in Mississippi as it functioned in mid Data generally are presented for the period from 1994 through 2004, and observations about changes over that period are made when relevant. An examination of trends can help to determine how Mississippi s system has changed over time in response to particular problems and policies. It is important to point out that our research was not guided by any preconceived hypotheses, and we do not make specific policy recommendations on the basis of our findings. Rather, our goal is to provide a comprehensive, substantive, and objective framework that system participants can use to structure future policy discussions. Research Approach The research conducted in this study is descriptive and seeks to offer a factual assessment of the Mississippi system. We used a five-step approach to gather data and conduct our analysis: 1. Examining the statute and literature. We began by identifying and reviewing the relevant statutory provisions and literature on the workers compensation system in Mississippi. 2. Conducting semistructured interviews. The purpose of the interviews was to probe beyond the statutory provisions and learn how the system operates in practice. The 33 individuals with whom we spoke represent a variety of perspectives: administrators and staff at the Mississippi Workers Compensation Commission (MWCC), insurers, self-insured employers, attorneys for workers and defense attorneys, representatives of organized labor, and interest groups (see Table SA.3). The diversity of the perspectives of the respondents helped to ensure balance in the information we obtained from the interviews. As much as possible (while preserving confidentiality), we describe the affiliation of the respondents when reporting conflicting perspectives on system features and changes. 3. Performing a descriptive analysis of the available data. To provide a statistical base for our examination of activities, outcomes, and trends in the system, we collected data for up to 10 years, when possible, from various state and national organizations, including the MWCC and the National Council on Compensation Insurance, Inc. (NCCI). All data are from the most recent years available. 4. Collecting and analyzing additional data. We asked relevant agency administrators to provide us with supplementary data to improve our understanding of certain details of the system. 5. Reconciling the information. Finally, we submitted the draft of the report to the individuals we had interviewed and asked them to review our observations for accuracy. Organization of the Report

15 6 workers compensation in mississippi fit costs using data from the NCCI for insured employers only. Finally, in Chapter 8, we present the features we believe to be special strengths of Mississippi s system and note aspects that merit the attention of those interested in improving the system. Change in the System 2 Administration There have been few major legislative and administrative changes to the Mississippi system in the past 10 years. In this chapter, we describe the administration of the workers compensation system in Mississippi and the organization and staffing of the agencies that play a role in the system. Organization, Functions, and Staffing of the Agencies Administering the Workers Compensation System The Mississippi workers compensation law was enacted in The Mississippi Workers Compensation Commission is the agency primarily responsible for the administration of workers compensation in Mississippi. The commissioner of insurance in the Department of Insurance is responsible for approving the rate and classification of all workers compensation insurers in the state. mississippi workers compensation commission The MWCC is charged with enforcing and administering the workers compensation laws. Figure 2.1 shows how the MWCC is organized. Located in Jackson, the MWCC carries out its responsibilities through the various units described in the following paragraphs. In September 2004, the MWCC consisted of 71 employees, and 75 positions were authorized. 7

16 8 workers compensation in mississippi administration 9 Commissioners Figure 2.1 Structure of the Mississippi Workers Compensation Commission, 2004 Governor Workers Compensation Commission Commissioners Legal Executive Director Rehabilitation Administrative Law Judges Medical Cost Containment Information Systems Noncontroverted Claims Controverted Claims Insurance Commission Secretary Business Three commissioners are appointed by the governor (with the consent of the state senate) for six-year staggered terms. One member represents employers, one member represents employees, and one member must be an attorney with at least five years of active practice in Mississippi. The governor designates one member as the chair the administrative head of the MWCC with final authority on all matters relating to assignment of cases for hearing and the administrative work of the agency. In fiscal years 2004 and 2005, the chair received an annual salary of $100,250, and the other two commissioners each received $98,000 per year. Table 2.1 lists the characteristics of the current commissioners. One commissioner had extensive experience in workers compensation (as a judge with the MWCC) before her appointment to the agency, one commissioner had no experience, and the chair had no experience in workers compensation. Some respondents say that, in the past, problems have occurred when the commission chair was not a lawyer or when commissioners had limited or no experience in workers compensation before their appointments. Moreover, the politicized nature of the appointment process sometimes means that by the time new commissioners have gained experience in the position, they are replaced by the new governor. Administrative Law Judges Eight judges are appointed by the commissioners, with the consent of the governor. Judges must be members of the Mississippi Bar Association and have a minimum of three years of experience in the practice of law. The MWCC has no formal training program for new judges and does not conduct formal evaluations of judges. Judges were paid an annual salary of $95,350 in fiscal years 2004 and Rehabilitation Department The rehabilitation director reviews all injury reports involving lost-time claims. After determining that a worker would benefit from vocational rehabilitation services, the rehabilitation director refers the worker to the Mississippi Department of Rehabilitation Services. Executive Director The executive director is responsible for the daily operations of the MWCC. Appointed by the commission, the executive director serves at the pleasure of the

17 10 workers compensation in mississippi administration 11 Table 2.1 Commissioners Characteristics, Mississippi Workers Compensation Commission, 2005 Term Expires Occupation Prior Workers Compensation Experience Appointing Governor Name Title Year Appointed 2005 Barbour January 1, 2011 Business Executive No Chairman (employer representative) Liles Williams Yes 2001 Musgrove January 1, 2007 Administrative Law Judge Lydia Quarles Commissioner (attorney representative) 1997 a Fordice January 1, 2008 State Legislator No Barney Schoby Commissioner (employee representative) Reappointed by Governor Musgrove in a Source: Mississippi Workers Compensation Commission. commissioners. The present executive director has served in this capacity since 1994 and received an annual salary of $95,350 in fiscal years 2004 and Legal Department The legal department consists of two claims representatives, two senior attorneys, and a support person. The claims representatives provide information and assistance to various participants and intervene to resolve problems informally. The senior attorneys prepare appeal orders for the commissioners and provide legal advice as required. Business Office Staff members in the business office handle the day-to-day business of the MWCC. Commission Secretary s Office This department serves as a clearinghouse for orders issued by the full threemember commission and other official declarations. The secretary is responsible for certifying MWCC documents and maintaining orders and other records. Insurance Department Staff members in the insurance department maintain records of insurance companies that are authorized by the Mississippi Department of Insurance to sell workers compensation insurance in the state. Controverted Claims Department This department maintains files on disputed cases, monitors cases, and schedules cases for formal hearings. Noncontroverted Claims Department The primary function of this department is establishing and monitoring all claim files.

18 12 workers compensation in mississippi administration 13 Information Systems Department The information systems department exists to support the hardware and software data systems that track and process MWCC claim information. Medical Cost Containment Department This department monitors medical fees, develops and maintains fee schedules, and provides dispute resolution mechanisms for disputes concerning medical fees, charges, and costs. Agency Data-Gathering and Analysis Capabilities Table 2.2 shows that the MWCC collects and stores most of the data elements listed. With the help of MWCC staff, we learned how the Mississippi dispute resolution system performs through a number of special data runs that tapped this database. We were also able to measure the percentage of lost-time claims arising in 2001 that involved litigation, attorney involvement, and settlements in Mississippi as of July 19, Table 2.3 Aspects of System Performance Tracked and Routinely Reported, 2005 Data Item Average time from injury to first report Average time from injury to first payment Denial rate Average duration of temporary total disability Average time from filing to a hearing being held Rate of resolution at informal level Rate of resolution at formal level Average time from informal hearing to formal hearing Average time from filing to resolution of dispute Average time from injury to resolution of claim Percentage of workforce covered by managed care arrangements Tracked and Routinely Reported Key: n/a: not applicable. Source: Interview with Dorothy Irving, Senior Analyst, Mississippi Workers Compensation Commission. No No No No No n/a No n/a No No No Table 2.2 Data Collection Activities of the Mississippi Workers Compensation Commission, 2005 Data Item Data Collected Computerized Database Initial indemnity payment Yes Yes Denials of compensability Yes Yes Modification or termination of indemnity payment Yes Yes Payments for medical treatment No No Notice and date of attorney involvement a a Requests for hearing or dispute filing Yes Yes Types of benefits claimed under request for hearing No No a Attorney involvement is collected and captured in the database, but the date of the involvement is not. Source: Interview with Dorothy Irving, Senior Analyst, Mississippi Workers Compensation Commission. The MWCC s 2003 Annual Report of Occupational Injuries and Illnesses contains general information and demographic data on occupational injuries and illnesses. A separate summary document contains statistics for all available years on total claims filed, disputed claims, total benefits paid, and disbursements from the second injury fund. Table 2.3 describes aspects of system performance that are tracked and routinely reported. As this table suggests, the MWCC does not systematically analyze performance against norms or goals. For example, the MWCC database includes detailed information about the various events, dates, and participants associated with disputed claims, and the agency annually publishes data on the number of hearings, settlements, orders, and appeals. However, the MWCC does not regularly measure the speed of dispute resolution an area of concern for many system participants. For this report, MWCC staff assisted us in measuring the speed of dispute resolution for claims closed in 2004.

19 3 Benefits The Mississippi workers compensation law authorizes the following eight categories of benefits: Medical benefits Indemnity benefits Temporary total disability (TTD) benefits Temporary partial disability (TPD) benefits Permanent partial disability (PPD) benefits Disfigurement benefits Permanent total disability (PTD) benefits Death benefits Rehabilitation benefits Medical Benefits By law, the insurer or self-insurer must furnish any medical, surgical, and hospital services, including crutches, artificial members, and apparatus, that the nature of the injury or the process of recovery requires. 15

20 16 workers compensation in mississippi benefits 17 medical cost containment policies Selection of Medical Provider In Mississippi, the employee has the right to select one physician or other medical provider of his or her choosing to render treatment. This chosen provider can make one referral to a physician within each specialty area. Except in the case of an emergency, any additional selection of treating provider or any further referrals must be approved by the insurer or self-insurer. If the insurer or self-insurer denies approval, the worker can apply to the MWCC for approval of the additional selection or referral. A physician to whom the employee is referred by the insurer or self-insurer is not considered as the employee s selection, unless the employee accepts the referral in writing. The insurer or self-insurer has the right to have the worker examined by a physician of its choosing. If the worker refuses, the MWCC can suspend payment of compensation for the period of the refusal. The MWCC can also demand that a physician of its choosing examine the worker to determine the degree of permanent disability or the extent of temporary disability. Most insurers and self-insurers we spoke with noted their lack of control over the initial choice of medical provider. They said that, in the absence of such control, they usually attempt to direct workers to qualified medical providers, and some workers accept the proposed providers. If a worker chooses his or her own provider, the insurer or self-insurer can contract with a defense medical expert to evaluate the worker s condition or request that the MWCC select an independent physician to evaluate the worker. According to insurers and self-insurers, limiting the treating provider to one physician per specialty is a valuable medical cost containment feature because it eliminates multiple referrals in the same specialty area. Workers representatives we interviewed said that some insurers and selfinsurers routinely do not inform workers about their right to choose the treating provider, leading some workers to conclude that they have no choice in the matter. Managed Care No explicit managed care policy is in effect. Most insurers and self-insurers say that the employee s right to choose the provider coupled with the predominantly rural nature of the state makes it difficult to contract with managed care organiza- tions (MCOs). They note that there are some preferred provider organizations (PPOs) to which they are just starting to refer workers. Most insurers and self-insurers complain about a 1996 ruling by the full threemember commission that denied their representatives the right to engage in nonconsensual ex parte contact or communication with a worker s treating physician once a petition to controvert (that is, a hearing request) is filed. 1 The ruling still permits administrative contact to schedule appointments and secure records. National insurers we spoke with say that this ruling is unusual among states where they do business and that the ruling significantly limits their ability to manage medical care. They say that the ruling also drives the need for depositions during litigation to obtain information from the treating doctor regarding the employee s work restrictions. Workers representatives say that such a prohibition is essential to preserving patient-physician privilege. Medical Fee Schedule Mississippi implemented a medical fee schedule in August Services covered include medical and surgical services, anesthesia, radiology, laboratory services, pathology, chiropractic services, and physical and occupational therapy services. The fee schedule was last updated in November 2002, with additional clarifications and changes made in April and June WCRI research shows that the medical fee schedule effective in Mississippi in October 2001 set fees that were 11 percent above that of the median state with a fee schedule and 65 percent above that of Medicare (Eccleston, Laszlo, Zhao, and Watson, 2002, tables 3.3 and 5.1). More recent information comparing Mississippi s fee schedule with that of other states or Medicare is not available. Regulation of Hospital Charges A hospital fee schedule was first implemented in September The schedule is based on a per diem amount according to type of stay. Outpatient hospital charges are paid by Current Procedural Terminology (CPT) codes for Ambulatory Surgical Center (ASC) group rates 1 through 9. The hospital fee schedule was most recently updated in March Jimmy Duane Hinson v. Mississippi River Corporation and Mississippi Manufacturers Association Workers Compensation Group, MWCC No F-4717 (1996).

21 18 workers compensation in mississippi An employee s AWW is calculated using his or her gross wages for the 52 weeks prior to the injury, divided by 52. Any allowances made in lieu of wages are inbenefits 19 Utilization Review A cost containment policy is in effect regarding utilization review in accordance with the medical fee schedule. An insurer or self-insurer must conduct a medical bill review and a utilization review to determine the quality and extent of medical care and to determine whether the fees are in line with the schedule. The insurer or self-insurer must have both technical and professional health care review programs. The professional review program must be certified by the State Board of Health. A certain amount of prospective utilization review, including preadmission and presurgery certification, is mandated. According to most insurers and self-insurers, given that the employee has the right to make the initial choice of treating provider, utilization review does not carry much weight in Mississippi. Treatment Guidelines No statutes or rules govern the use of treatment guidelines. However, most insurers and self-insurers say that they typically use secondary vendors such as utilization review entities or billing services that typically look at treatment protocols when evaluating medical billings. medical disputes The MWCC resolves disputes over medical fees through administrative review. A request for dispute resolution is reviewed by a claims representative at the MWCC within 30 days of the request. The representative contacts the payor and/or provider by telephone or in writing; an informal hearing may be held. The representative then issues a decision. When a dispute arises over the necessity of treatment, the judge or the MWCC requests dispute resolution from a peer medical consultant. The consultant reviews the case records and renders an opinion within 30 days of the request for dispute resolution. An MWCC claims representative then notifies the parties of the peer consultant s determination. Parties in a dispute have 20 days following an MWCC decision to request a formal hearing before a judge. The judge s decision can be appealed to the full commission. Indemnity Benefits Table 3.1 outlines several basic characteristics of each of the medical and indemnity benefits available to injured workers in Mississippi as of January 1, The specific characteristics of indemnity benefits are discussed in the following paragraphs. compensation rate Compensation for temporary total disability is payable at the rate of percent of the employee s average weekly wage (AWW), subject to maximum and minimum weekly amounts. The maximum weekly amount is set at percent of the statewide average weekly wage (SAWW) $ for injuries arising in calendar year The Mississippi Employment Security Commission determines the SAWW annually, before the end of the calendar year. At percent of the SAWW, Mississippi s maximum weekly amount for TTD benefits was tied with Delaware s as the fourth lowest in the country as of January 1, Twenty-two states set the maximum weekly TTD benefit at 100 percent of the SAWW, and another 22 states link the maximum weekly amount to percentages of the SAWW ranging from to 200 (the highest percentage is in Iowa). The remaining six states do not tie the maximum weekly TTD benefit to the SAWW. The minimum weekly benefit amount is $25 for TTD, PTD, and death benefits. TPD and PPD benefits have no minimums. The date of injury determines the amount of benefits, including the maximum and minimum levels. Table 3.2 lists the maximum and minimum amounts from 1994 through average weekly wage 2 States where the benefits, as percentages of the SAWWs, were lower were Georgia (60.4 percent), Arizona (55.5 percent), and New York (44.0 percent).

22 20 workers compensation in mississippi benefits 21 Table 3.1 Benefit Characteristics in Mississippi as of January 1, 2005 Medical benefit Benefit basis Benefit rate Employee sustains an occupational injury or disease. Reasonable and necessary medical services required to treat the injury and achieve maximum cure, including doctor and hospital services, nursing services, medication, physical therapy, crutches, and any other necessary apparatus or medical services. Benefit amount Maximum Set by a fee schedule. Minimum COLA Payment method Reimbursement paid directly to service provider(s). Benefit duration As required. TTD benefit Benefit basis Benefit rate Benefit amount Maximum Minimum COLA Employee out of work for more than 5 days. Initial 5 days are paid if employee is out of work 14 or more days of AWW at time of injury. $ per week. $25 per week. None Payment method First installment due on 14 th day after employer has knowledge of injury or death. Payments made at least every 14 days thereafter. Benefit duration Maximum amount for all compensation is $158,013. PTD benefit Benefit basis Benefit rate Benefit amount Maximum Minimum COLA Payment method Loss or loss of use of both hands, arms, feet, legs, or eyes, or any two of those. In all other cases, permanent total disability is determined in accordance with the facts of employee s weekly lost wage-earning capacity. $ per week. $25 per week. None Payable every two weeks. Benefit duration 450 weeks or maximum amount for all compensation ($158,013), whichever is first. Table 3.1 TPD benefit Benefit basis Benefit rate Worker returns to work (or is capable of returning to work) and earns less than preinjury wages percent of the difference between the injured employee s preinjury AWW and wage-earning capacity thereafter in the same or other employment. Benefit amount Maximum $ per week. Minimum None COLA None Payment method Payable every two weeks. Benefit duration 450 weeks or maximum amount for all compensation ($158,013), whichever is first. Scheduled PPD benefit Benefit basis According to schedule. Benefit rate of AWW. Benefit amount Maximum Minimum COLA Payment method Benefit duration $ per week. None None Payable every two weeks. Capped by the maximum number of weeks for each loss as listed in the schedule. Unscheduled PPD benefit Benefit basis Worker experiences a permanent disability (as a result of a work-related injury or disease) that results in loss of wage-earning capacity; loss is not covered by the schedule. Benefit rate of AWW. Benefit amount Maximum Minimum COLA Payment method Benefit Characteristics in Mississippi as of January 1, 2005 (continued) $ per week. None None Payable every two weeks. Benefit duration 450 weeks or maximum amount for all compensation ($158,013), whichever is first. continued