Title 803 | Chapter 025 | Regulation 089E
803 KAR 25:089REG
A proposed version of this document exists.
PREVIOUS VERSION
The previous document that this document is based upon is available.
STATEMENT OF EMERGENCY
803 KAR 25:089E
The schedule of fees made effective by this administrative regulation governs the amount of reimbursement a medical provider may seek from a payment obligor for medical treatment provided to an employee who contracted an occupational disease or was injured in the course of employment. The Department of Workers' Claims must amend this administrative regulation by emergency to comply with KRS 342.035(1) which requires that the schedule of fees be reviewed and updated, if appropriate, every two (2) years on July 1. Medical costs in the workers' compensation system shall be fair, current, and reasonable for similar treatment in the same community where paid for by general insurers. The medical fee schedule meets this statutory guideline. By complying with that statutory guideline, the medical fee schedule update insures injured employees receive quality and appropriate health care and medical providers are appropriately compensated. KRS 342.035(1) directs the Commissioner to contract with a consultant to evaluate the schedule of fees. The Commissioner is to consider recommendations arising from the evaluation and promulgate a regulation, effective on an emergency basis, to effect changes to the fee schedule. This emergency regulation complies with the statutory mandate to have the schedule of fees in place by July 1 and protects human health and public health, safety, and welfare by updating medical costs. The current administrative regulation incorporates the 2022 fee schedule. After review, it was necessary to update and revise the 2022 fee schedule to address current medical costs. Because KRS 342.035(1) requires the medical fee schedule to be updated in order to remain fair, current, and reasonable, the current administrative regulation must be amended to incorporate the 2024 fee schedule. The schedule of fees provided in this emergency administrative regulation cannot be provided through an ordinary administrative regulation because the ordinary rulemaking process cannot be completed in time to meet the statutory requirements. This emergency administrative regulation will be replaced by an ordinary administrative regulation. The ordinary administrative regulation is identical to this emergency administrative regulation.
ANDY BESHEAR, Governor
SCOTT C. WILHOIT, Commissioner
EDUCATION AND LABOR CABINET
Department of Workers’ Claims
(Emergency Amendment)
803 KAR 25:089E.Workers' compensation medical fee schedule for physicians.
Section 1.
Definitions.(1)
"Medical fee schedule" means the 2024 Kentucky Workers' Compensation Schedule of Fees for Physicians.(2)
"Physician" is defined by KRS 342.0011(32).Section 2.
Services Covered.(1)
The medical fee schedule shall govern all medical services provided to injured employees by physicians under KRS Chapter 342.(2)
The medical fee schedule shall also apply to other health care or medical services providers to whom a listed CPT, HCPCS, or Transportation code, is applicable unless:(a)
Another fee schedule of the Department of Workers' Claims applies;(b)
A lower fee is required by KRS 342.035 or a managed care plan approved by the commissioner pursuant to 803 KAR 25:110; or(c)
An insurance carrier, self-insured group, or self-insured employer has an agreement with a physician, medical bill vendor, or other medical provider to provide reimbursement of a medical bill at an amount lower than the medical fee schedule.Section 3.
Fee Computation.(1)
The appropriate fee for a procedure or item covered by the medical fee schedule shall be the Maximum Allowable Reimbursement (MAR) listed in the 2024 Kentucky Workers' Compensation Schedule of Fees for Physicians for those procedures or items for which a specific monetary amount is listed.(2)
Procedures Listed Without Specified Maximum Allowable Reimbursement Monetary Amount. The appropriate fee for a procedure or item for which no specific monetary amount is not listed shall be determined and calculated in accordance with numerical paragraph seven (7) of the General Instructions of the medical fee schedule unless more specific Ground Rules are applicable to that service or item, in which case the fee shall be calculated in accordance with the applicable Ground Rules.(3)
The resulting fee shall be the maximum fee allowed for the service provided.Section 4.
(1)
A physician or healthcare or medical services provider located outside the boundaries of Kentucky shall be deemed to have agreed to comply with this administrative regulation if it treats a patient who is covered under KRS Chapter 342.(2)
Pursuant to KRS 342.035, medical fees due to an out-of-state physician or healthcare or medical services provider shall be calculated under the fee schedule in the same manner as for an in-state physician.Section 5.
Incorporation by Reference.(1)
"2024 Kentucky Workers' Compensation Schedule of Fees for Physicians", July 1, 2024 Edition, is incorporated by reference.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department of Workers' Claims, Mayo-Underwood Building 3rd Floor, 500 Mero Street, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m.(3)
The fee schedule may be obtained directly from FAIR Health, Inc., at https://orders.fairhealth.org/. A link to FAIR Health, Inc., may be found on the Department of Workers' Claims Web site at https://elc.ky.gov/Workers-Compensation/Pages/Medical-Services.aspx.This is to certify the Commissioner has reviewed and recommended this administrative regulation prior to its adoption, as required by KRS 342.260, 342.270 and 342.285.
SCOTT C. WILHOIT, Commissioner
APPROVED BY AGENCY: May 8, 2024
FILED WITH LRC: May 14, 2024 at 3:10 p.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on June 27, 2024, at 10:00 a.m. (EDT) at the Department of Workers’ Claims, 500 Mero Street, Frankfort, Kentucky 40601. Individuals interested in being heard at this hearing shall notify this agency in writing by five workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing was received by that date, the hearing may be cancelled. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted through June 30, 2024. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.
CONTACT PERSON: B. Dale Hamblin, Jr., Assistant General Counsel, Workers’ Claims Legal Division, Mayo-Underwood Building, 3rd Floor, 500 Mero Street, Frankfort, Kentucky 40601, phone (502) 782-4404, fax (502) 564-0681, email Dale.Hamblin@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
B. Dale Hamblin, Jr.
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation incorporates the medical fee schedule for physicians and the requirements for using the fee schedule.
(b) The necessity of this administrative regulation:
Pursuant to KRS 342.035, the commissioner is required to promulgate an administrative regulation regarding fee schedules.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation incorporates the extensive fee schedule for physicians and requirements for the fee schedule.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
It is imperative to have fee schedules to control the medical costs of the workers' compensation system. Injured employees should receive quality medical care and physicians should be appropriately paid.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
The medical fee schedule has been updated and will be incorporated by reference.
(b) The necessity of the amendment to this administrative regulation:
KRS 342.035 requires the schedule of fees to be reviewed and updated every two (2) years, if appropriate.
(c) How the amendment conforms to the content of the authorizing statutes:
The schedule of fees has been appropriately updated to ensure that medical fees are fair, current, and reasonable for similar treatment in the same community for general health insurance payments.
(d) How the amendment will assist in the effective administration of the statutes:
The schedule of fees assists the workers' compensation program by updating fees for physicians to ensure injured employees get qualified and appropriate medical treatment.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
All physicians and medical providers providing services to injured employees pursuant to KRS Chapter 342, injured employees, insurance carriers, self-insurance groups, self-insured employers and third-party administrators.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
Insurance carriers, self-insured groups, self-insured employers, third party administrators, and medical providers must purchase the new schedule of fees to accurately bill and pay for medical services. Other parties to workers' compensation claims are only indirectly impacted by the new fee schedule.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
Insurance carriers, self-insured groups, self-insured employers or third-party administrators and medical providers can purchase the fee schedule book for $150, a portable document format (“PDF”) version for $75 for the first user and $60 for each user thereafter, or an electronic version for $175 for the first user and $60 for each user thereafter.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
Medical providers will receive fair, current, and reasonable fees for services provided to injured employees. Injured employees will be treated by qualified medical providers.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
The contract for reviewing and updating the physicians fee schedule is $85,010.
(b) On a continuing basis:
No continuing costs.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
The Department of Workers' Claims normal budget is the source of funding.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
No increase in fees or funding to implement this administrative regulation.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This administrative regulation sets forth a current schedule of fees to be paid to physicians. Fees have been updated to be fair, current, and reasonable for similar treatment in the same community as paid by health insurers.
(9) TIERING: Is tiering applied?
Tiering is not applied, because the updated fee schedule applies to all parties equally.
FISCAL IMPACT STATEMENT
(1) Identify each state statute, federal statute, or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 342.035.
(2) Identify the promulgating agency and any other affected state units, parts, or divisions:
The promulgating agency is the Department of Workers’ Claims within the Education and Labor Cabinet. Every state unit, part, or division, with one employee subject to KRS Chapter 342, is affected; specifically, this administrative regulation governs the allowable reimbursements a medical provider may charge, and a payment obligor pay, for physician services provided under KRS Chapter 342.
(a) Estimate the following for the first year:
Expenditures:
The contract for reviewing and updating the physicians fee schedule is $85,010.00.
Revenues:
None
Cost Savings:
While there is no direct cost savings, ensuring that charges and fees are fair, current, and reasonable for similar treatment of injured persons in the same community for like services where treatment is paid for by general health insurers, helps ensure injured employees receive treatment by qualified medical providers while maintaining premium costs.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
There will be no continuing expenditures related to the 2024 Workers’ Compensation Medical Fee Schedule for Physicians; however, the Department is statutorily required to reevaluate the fee schedule every two years and additional expenditures will be required to perform these subsequent evaluations. While there is no direct cost savings, ensuring that charges and fees are fair, current, and reasonable for similar treatment of injured persons in the same community for like services where treatment is paid for by general health insurers, helps ensure injured employees receive treatment by qualified medical providers while maintaining premium costs. This administrative regulation does not generate revenue.
(3) Identify affected local entities (for example: cities, counties, fire departments, school districts):
All local entities with one employee subject to KRS Chapter 342, is affected; specifically, this administrative regulation governs the allowable reimbursements a medical provider may charge, and a payment obligor pay, for physician services provided under KRS Chapter 342.
(a) Estimate the following for the first year:
Expenditures:
The fee schedule book may be purchased for $150, a portable document format (“PDF”) version for $75 for the first user and $60 for each user thereafter, or an electronic version for $175 for the first user and $60 for each user thereafter. There may be increased medical costs for self-insured employers; however, without knowing what medical services will be required, it is not possible to estimate any increase. Employers that have obtained a workers’ compensation insurance policy will not experience expenditures outside of insurance premiums.
Revenues:
None
Cost Savings:
While there is no direct cost savings, ensuring that charges and fees are fair, current, and reasonable for similar treatment of injured persons in the same community for like services where treatment is paid for by general health insurers, helps ensure injured employees receive treatment by qualified medical providers while maintaining premium costs.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
There will be no change in expenditures, revenues, or cost savings in the second year; however, the Department is statutorily required to reevaluate the fee schedule every two years and additional expenditures may be required following subsequent evaluations.
(4) Identify additional regulated entities not listed in questions (2) or (3):
Insurance carriers, self-insured groups, self-insured employers, third-party administrators, and medical providers.
(a) Estimate the following for the first year:
Expenditures:
The fee schedule book may be purchased for $150, a portable document format (“PDF”) version for $75 for the first user and $60 for each user thereafter, or an electronic version for $175 for the first user and $60 for each user thereafter.
Revenues:
None
Cost Savings:
While there is no direct cost savings, ensuring that charges and fees are fair, current, and reasonable for similar treatment of injured persons in the same community for like services where treatment is paid for by general health insurers, helps ensure injured employees receive treatment by qualified medical providers while maintaining premium costs.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
There will be no change in expenditures, revenues, or cost savings in the second year; however, the Department is statutorily required to reevaluate the fee schedule every two years and additional expenditures may be required following subsequent evaluations.
(5) Provide a narrative to explain the:
(a) Fiscal impact of this administrative regulation:
There is no direct fiscal impact on state or local government because the fee schedule governs the cost of medical services between medical treatment providers and payment obligors. Where an employer is self-insured and directly paying workers’ compensation benefits, there may be some increased costs for medical services; however, without knowing what medical services will be required, it is not possible to estimate the fiscal impact. Employers that have obtained a workers’ compensation insurance policy will not experience expenditures outside of insurance premiums.
(b) Methodology and resources used to determine the fiscal impact:
This administrative regulation governs the charges and reimbursement for medical treatment provided to injured employees. The CPT codes used in the Fee Schedule were updated to 2024 standards. The Fee Schedule is based on Fair Health Commercial Database Values at the 45th percentile with no fees in the 2024 version being reduced from those in the 2022 Fee Schedule and there was a 7.5% cap on any increase in rates over those in the 2022 Fee Schedule for the same procedure code, with the exception of home health, which is designated By Report, and dental codes, which have no cap. Radiology rates were retained at the 2022 Fee Schedule rates. Fair Health benchmarks are based on actual charge data as reported on claims, which are collected and aggregated from over 60 national and regional insurers across the country. After the data is run through a vigorous validation process, charges are organized by procedure code and geographic areas. The charges are arrayed from lowest to highest and assigned a percentile. In a case where the frequency of collected data for a particular procedure code/geographic area combination is not sufficient to produce a benchmark based on the actual data for that code, a benchmark is derived for that code using a relative value and conversion factor methodology applied to charges for codes in a related procedure code group. When necessary, usual and customary rates may also be obtained from a nationally recognized source that accounts for the rural areas of Kentucky. The conversion factor for Anesthesia is $78.53. Increases to transportation fees are based upon current CMS values. Ground transportation is assigned 145% of Medicare and air transportation is assigned 210% of Medicare. Codes were added to this fee schedule at the request of the stakeholders for ease of billing and reimbursement purposes. There are 9,137 codes in the 2024 Kentucky Workers' Compensation Schedule of Fees for Physicians. Employers that have obtained a workers’ compensation insurance policy will not experience expenditures outside of insurance premiums.
(6) Explain:
(a) Whether this administrative regulation will have an overall negative or adverse major economic impact to the entities identified in questions (2) - (4). ($500,000 or more, in aggregate)
It is not anticipated that this administrative regulation will create an overall negative or adverse major economic impact to the entities identified in questions (2) - (4).
(b) The methodology and resources used to reach this conclusion:
The National Council on Compensation Insurance (NCCI) has reported a loss cost decrease in the voluntary market and a favorable loss experience for Kentucky over the last three years. This NCCI report reflects the result of prior fee schedules which were created using the same methodology used to establish in the 2024 Workers’ Compensation Medical Fee Schedule for Physicians.
STATEMENT OF EMERGENCY
803 KAR 25:089E
The schedule of fees made effective by this administrative regulation governs the amount of reimbursement a medical provider may seek from a payment obligor for medical treatment provided to an employee who contracted an occupational disease or was injured in the course of employment. The Department of Workers' Claims must amend this administrative regulation by emergency to comply with KRS 342.035(1) which requires that the schedule of fees be reviewed and updated, if appropriate, every two (2) years on July 1. Medical costs in the workers' compensation system shall be fair, current, and reasonable for similar treatment in the same community where paid for by general insurers. The medical fee schedule meets this statutory guideline. By complying with that statutory guideline, the medical fee schedule update insures injured employees receive quality and appropriate health care and medical providers are appropriately compensated. KRS 342.035(1) directs the Commissioner to contract with a consultant to evaluate the schedule of fees. The Commissioner is to consider recommendations arising from the evaluation and promulgate a regulation, effective on an emergency basis, to effect changes to the fee schedule. This emergency regulation complies with the statutory mandate to have the schedule of fees in place by July 1 and protects human health and public health, safety, and welfare by updating medical costs. The current administrative regulation incorporates the 2022 fee schedule. After review, it was necessary to update and revise the 2022 fee schedule to address current medical costs. Because KRS 342.035(1) requires the medical fee schedule to be updated in order to remain fair, current, and reasonable, the current administrative regulation must be amended to incorporate the 2024 fee schedule. The schedule of fees provided in this emergency administrative regulation cannot be provided through an ordinary administrative regulation because the ordinary rulemaking process cannot be completed in time to meet the statutory requirements. This emergency administrative regulation will be replaced by an ordinary administrative regulation. The ordinary administrative regulation is identical to this emergency administrative regulation.
ANDY BESHEAR, Governor
SCOTT C. WILHOIT, Commissioner
EDUCATION AND LABOR CABINET
Department of Workers’ Claims
(Emergency Amendment)
803 KAR 25:089E.Workers' compensation medical fee schedule for physicians.
Section 1.
Definitions.(1)
"Medical fee schedule" means the 2024 Kentucky Workers' Compensation Schedule of Fees for Physicians(2)
"Physician" is defined by KRS 342.0011(32).Section 2.
Services Covered.(1)
The medical fee schedule shall govern all medical services provided to injured employees by physicians under KRS Chapter 342.(2)
The medical fee schedule shall also apply to other health care or medical services providers to whom a listed CPT, HCPCS, or Transportation code, is applicable unless:(a)
Another fee schedule of the Department of Workers' Claims applies;(b)
A lower fee is required by KRS 342.035 or a managed care plan approved by the commissioner pursuant to 803 KAR 25:110; or(c)
An insurance carrier, self-insured group, or self-insured employer has an agreement with a physician, medical bill vendor, or other medical provider to provide reimbursement of a medical bill at an amount lower than the medical fee schedule.Section 3.
Fee Computation.(1)
The appropriate fee for a procedure or item covered by the medical fee schedule shall be the Maximum Allowable Reimbursement (MAR) listed in the 2024(2)
Procedures Listed Without Specified Maximum Allowable Reimbursement Monetary Amount. The appropriate fee for a procedure or item for which no(3)
The resulting fee shall beSection 4.
(1)
A physician or healthcare or medical services provider located outside the boundaries of Kentucky shall be deemed to have agreed to comply with this administrative regulation if it treats a patient who is covered under KRS Chapter 342.(2)
Pursuant to KRS 342.035, medical fees due to an out-of-state physician or healthcare or medical services provider shall be calculated under the fee schedule in the same manner as for an in-state physician.Section 5.
Incorporation by Reference.(1)
"2024 Kentucky Workers' Compensation Schedule of Fees for Physicians", July 1, 2024 Edition(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department of Workers' Claims, Mayo-Underwood Building 3rd Floor, 500 Mero Street, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m.(3)
The fee schedule may be obtained directly from FAIR Health, Inc., at https://orders.fairhealth.org/. A link to FAIR Health, Inc., may be found on the Department of Workers' Claims Web site at https://elc.ky.gov/Workers-Compensation/Pages/Medical-Services.aspx.This is to certify the Commissioner has reviewed and recommended this administrative regulation prior to its adoption, as required by KRS 342.260, 342.270 and 342.285.
SCOTT C. WILHOIT, Commissioner
APPROVED BY AGENCY: May 8, 2024
FILED WITH LRC: May 14, 2024 at 3:10 p.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on June 27, 2024, at 10:00 a.m. (EDT) at the Department of Workers’ Claims, 500 Mero Street, Frankfort, Kentucky 40601. Individuals interested in being heard at this hearing shall notify this agency in writing by five workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing was received by that date, the hearing may be cancelled. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted through June 30, 2024. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.
CONTACT PERSON: B. Dale Hamblin, Jr., Assistant General Counsel, Workers’ Claims Legal Division, Mayo-Underwood Building, 3rd Floor, 500 Mero Street, Frankfort, Kentucky 40601, phone (502) 782-4404, fax (502) 564-0681, email Dale.Hamblin@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
B. Dale Hamblin, Jr.
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation incorporates the medical fee schedule for physicians and the requirements for using the fee schedule.
(b) The necessity of this administrative regulation:
Pursuant to KRS 342.035, the commissioner is required to promulgate an administrative regulation regarding fee schedules.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation incorporates the extensive fee schedule for physicians and requirements for the fee schedule.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
It is imperative to have fee schedules to control the medical costs of the workers' compensation system. Injured employees should receive quality medical care and physicians should be appropriately paid.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
The medical fee schedule has been updated and will be incorporated by reference.
(b) The necessity of the amendment to this administrative regulation:
KRS 342.035 requires the schedule of fees to be reviewed and updated every two (2) years, if appropriate.
(c) How the amendment conforms to the content of the authorizing statutes:
The schedule of fees has been appropriately updated to ensure that medical fees are fair, current, and reasonable for similar treatment in the same community for general health insurance payments.
(d) How the amendment will assist in the effective administration of the statutes:
The schedule of fees assists the workers' compensation program by updating fees for physicians to ensure injured employees get qualified and appropriate medical treatment.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
All physicians and medical providers providing services to injured employees pursuant to KRS Chapter 342, injured employees, insurance carriers, self-insurance groups, self-insured employers and third-party administrators.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
Insurance carriers, self-insured groups, self-insured employers, third party administrators, and medical providers must purchase the new schedule of fees to accurately bill and pay for medical services. Other parties to workers' compensation claims are only indirectly impacted by the new fee schedule.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
Insurance carriers, self-insured groups, self-insured employers or third-party administrators and medical providers can purchase the fee schedule book for $150, a portable document format (“PDF”) version for $75 for the first user and $60 for each user thereafter, or an electronic version for $175 for the first user and $60 for each user thereafter.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
Medical providers will receive fair, current, and reasonable fees for services provided to injured employees. Injured employees will be treated by qualified medical providers.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
The contract for reviewing and updating the physicians fee schedule is $85,010.
(b) On a continuing basis:
No continuing costs.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
The Department of Workers' Claims normal budget is the source of funding.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
No increase in fees or funding to implement this administrative regulation.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This administrative regulation sets forth a current schedule of fees to be paid to physicians. Fees have been updated to be fair, current, and reasonable for similar treatment in the same community as paid by health insurers.
(9) TIERING: Is tiering applied?
Tiering is not applied, because the updated fee schedule applies to all parties equally.
FISCAL IMPACT STATEMENT
(1) Identify each state statute, federal statute, or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 342.035.
(2) Identify the promulgating agency and any other affected state units, parts, or divisions:
The promulgating agency is the Department of Workers’ Claims within the Education and Labor Cabinet. Every state unit, part, or division, with one employee subject to KRS Chapter 342, is affected; specifically, this administrative regulation governs the allowable reimbursements a medical provider may charge, and a payment obligor pay, for physician services provided under KRS Chapter 342.
(a) Estimate the following for the first year:
Expenditures:
The contract for reviewing and updating the physicians fee schedule is $85,010.00.
Revenues:
None
Cost Savings:
While there is no direct cost savings, ensuring that charges and fees are fair, current, and reasonable for similar treatment of injured persons in the same community for like services where treatment is paid for by general health insurers, helps ensure injured employees receive treatment by qualified medical providers while maintaining premium costs.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
There will be no continuing expenditures related to the 2024 Workers’ Compensation Medical Fee Schedule for Physicians; however, the Department is statutorily required to reevaluate the fee schedule every two years and additional expenditures will be required to perform these subsequent evaluations. While there is no direct cost savings, ensuring that charges and fees are fair, current, and reasonable for similar treatment of injured persons in the same community for like services where treatment is paid for by general health insurers, helps ensure injured employees receive treatment by qualified medical providers while maintaining premium costs. This administrative regulation does not generate revenue.
(3) Identify affected local entities (for example: cities, counties, fire departments, school districts):
All local entities with one employee subject to KRS Chapter 342, is affected; specifically, this administrative regulation governs the allowable reimbursements a medical provider may charge, and a payment obligor pay, for physician services provided under KRS Chapter 342.
(a) Estimate the following for the first year:
Expenditures:
The fee schedule book may be purchased for $150, a portable document format (“PDF”) version for $75 for the first user and $60 for each user thereafter, or an electronic version for $175 for the first user and $60 for each user thereafter. There may be increased medical costs for self-insured employers; however, without knowing what medical services will be required, it is not possible to estimate any increase. Employers that have obtained a workers’ compensation insurance policy will not experience expenditures outside of insurance premiums.
Revenues:
None
Cost Savings:
While there is no direct cost savings, ensuring that charges and fees are fair, current, and reasonable for similar treatment of injured persons in the same community for like services where treatment is paid for by general health insurers, helps ensure injured employees receive treatment by qualified medical providers while maintaining premium costs.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
There will be no change in expenditures, revenues, or cost savings in the second year; however, the Department is statutorily required to reevaluate the fee schedule every two years and additional expenditures may be required following subsequent evaluations.
(4) Identify additional regulated entities not listed in questions (2) or (3):
Insurance carriers, self-insured groups, self-insured employers, third-party administrators, and medical providers.
(a) Estimate the following for the first year:
Expenditures:
The fee schedule book may be purchased for $150, a portable document format (“PDF”) version for $75 for the first user and $60 for each user thereafter, or an electronic version for $175 for the first user and $60 for each user thereafter.
Revenues:
None
Cost Savings:
While there is no direct cost savings, ensuring that charges and fees are fair, current, and reasonable for similar treatment of injured persons in the same community for like services where treatment is paid for by general health insurers, helps ensure injured employees receive treatment by qualified medical providers while maintaining premium costs.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
There will be no change in expenditures, revenues, or cost savings in the second year; however, the Department is statutorily required to reevaluate the fee schedule every two years and additional expenditures may be required following subsequent evaluations.
(5) Provide a narrative to explain the:
(a) Fiscal impact of this administrative regulation:
There is no direct fiscal impact on state or local government because the fee schedule governs the cost of medical services between medical treatment providers and payment obligors. Where an employer is self-insured and directly paying workers’ compensation benefits, there may be some increased costs for medical services; however, without knowing what medical services will be required, it is not possible to estimate the fiscal impact. Employers that have obtained a workers’ compensation insurance policy will not experience expenditures outside of insurance premiums.
(b) Methodology and resources used to determine the fiscal impact:
This administrative regulation governs the charges and reimbursement for medical treatment provided to injured employees. The CPT codes used in the Fee Schedule were updated to 2024 standards. The Fee Schedule is based on Fair Health Commercial Database Values at the 45th percentile with no fees in the 2024 version being reduced from those in the 2022 Fee Schedule and there was a 7.5% cap on any increase in rates over those in the 2022 Fee Schedule for the same procedure code, with the exception of home health, which is designated By Report, and dental codes, which have no cap. Radiology rates were retained at the 2022 Fee Schedule rates. Fair Health benchmarks are based on actual charge data as reported on claims, which are collected and aggregated from over 60 national and regional insurers across the country. After the data is run through a vigorous validation process, charges are organized by procedure code and geographic areas. The charges are arrayed from lowest to highest and assigned a percentile. In a case where the frequency of collected data for a particular procedure code/geographic area combination is not sufficient to produce a benchmark based on the actual data for that code, a benchmark is derived for that code using a relative value and conversion factor methodology applied to charges for codes in a related procedure code group. When necessary, usual and customary rates may also be obtained from a nationally recognized source that accounts for the rural areas of Kentucky. The conversion factor for Anesthesia is $78.53. Increases to transportation fees are based upon current CMS values. Ground transportation is assigned 145% of Medicare and air transportation is assigned 210% of Medicare. Codes were added to this fee schedule at the request of the stakeholders for ease of billing and reimbursement purposes. There are 9,137 codes in the 2024 Kentucky Workers' Compensation Schedule of Fees for Physicians. Employers that have obtained a workers’ compensation insurance policy will not experience expenditures outside of insurance premiums.
(6) Explain:
(a) Whether this administrative regulation will have an overall negative or adverse major economic impact to the entities identified in questions (2) - (4). ($500,000 or more, in aggregate)
It is not anticipated that this administrative regulation will create an overall negative or adverse major economic impact to the entities identified in questions (2) - (4).
(b) The methodology and resources used to reach this conclusion:
The National Council on Compensation Insurance (NCCI) has reported a loss cost decrease in the voluntary market and a favorable loss experience for Kentucky over the last three years. This NCCI report reflects the result of prior fee schedules which were created using the same methodology used to establish in the 2024 Workers’ Compensation Medical Fee Schedule for Physicians.