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Langham: Fee Schedules Revised

  • State: Florida

This post continues the discussion of the impact of CS/CS/ HB487 (2023). The first part, including reminders of the nomenclature and legislative process, is in Major Change in the EMA (May 2023).

Judge David Langham

Judge David Langham

This bill is not a major revision of the workers' compensation law. However, the impact on provider fee schedules may be profound. In any event, the changes should help to attract providers to workers' compensation.

Some history will be helpful. In 2016, the Florida Legislature noted the fact that rules adopted by the executive branch can have significant economic impacts. Therefore, the provisions of Section 120.541 were amended to require agencies to address that potential whenever a new rule is proposed. There is a statement required, called a SERC (statement of estimated regulatory cost), whenever there is such a proposal.
There is a threshold.

The rule must be predicted to "have an adverse impact on small business or if the proposed rule is likely to directly or indirectly increase regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule."

If that threshold is met, then the SERC must be prepared. And legislative approval of the rule may be required. This is mandated when the impact is expected to adversely "impact economic growth ... in excess of $1 million in the aggregate;" adversely "impact on business competitiveness ... in excess of $1 million in the aggregate;" and "increase regulatory costs, including transactional costs ... in excess of $1 million in the aggregate."

Any such proposed rule "shall be submitted to the president of the Senate and speaker of the House of Representatives no later than 30 days prior to the next regular legislative session, and the rule may not take effect until it is ratified by the Legislature."

Notably, the impact of this requirement will become increasingly stringent. In 2023, after inflation, the equivalency to 2016 dollars is $795,892.47, according to the U.S. Bureau of Labor Statistics. With each passing year, the scope of this constraint will increase as the cost in the present tense will be compared to this past-tense statutory figure. Some feel like it won't be too long before a dozen eggs satisfy the $1 million figure. Have you bought eggs lately?

CS/CS/HB 487 ratifies the 2020 Florida Workers' Compensation Health Care Provider Reimbursement Manual filed in October 2021. This is the first ratification of an adjustment since 2016 and should provide some better standards for the providers who treat injured workers.

The process for these manuals has generally been through the Three-Member Panel, which has long been part of our Florida workers' compensation parlance. The panel will continue to be responsible for "statewide schedules" for "hospitals and ambulatory surgical centers." However, HB 487 removes "physicians" and others from that responsibility.

Now, the Department of Financial Services, essentially the Division of Workers' Compensation, will notify the public of "the physician and nonhospital services schedule of maximum reimbursement allowances" each year by July 1. This will not be "subject to approval by the Three-Member Panel." It is also not applicable to "reimbursement for prescription medication."

As such, according to the legislative staff analysis, the process is removed "from rulemaking and the applicable legislative rule ratification requirement for rules that increase private sector costs more than $1 million." Thus, the division will be empowered to adjust reimbursement for physicians and other care providers without the cost and technicalities of the rulemaking process, as well as the challenges of the SERC and legislative approval. 

It seems likely that fee schedule adjustments will become more frequent, focused and regular. There may be benefit there in both the medical community and workers' compensation generally, as more providers are available for injured workers. It is possible that time will bring significant shifts in reimbursement, and that unfettered discretion may eventually impact the ever-important insurance rates. It seems that when rates are affected, there is potential for further legislative consideration. 

Adoption now of the 2020 Rate Manual is predicted to affect a .2% increase in rates. That is likely to be viewed as a nominal amount. In an age of rampant inflation, there are many concerns. Americans are concerned about inflation. The last three years have been significant for inflation. A .2% increase in rates may pale in comparison to those concerns. But in time, more significant rate increases may drive more significant concerns. 

David Langham is deputy chief judge of the Florida Office of Judges of Compensation Claims. This column is reprinted, with his permission, from his Florida Workers' Comp Adjudication blog.

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