Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 16 entitled:

begs leave to report as follows:

The purpose of this measure is to abolish the State's Medicare Resource Based Relative Value Scale system-based workers' compensation medical fee schedule and to adopt the federal workers' compensation medical fee schedule.

Testimony in support of the measure was received from numerous doctors and medical profession associations. Testimony in opposition to the measure was received from the Department of Labor and Industrial Relations, the City and County of Honolulu Department of Human Resources, the Hawaii Employers' Mutual Insurers Company, the Insurers Council, and the Building Industry Association of Hawaii. The Insurance Commissioner and the ILWU Local 142 provided comments on the measure.

Your Committee finds that the State's workers' compensation medical fee schedule governs how much a medical service provider is reimbursed for services rendered to workers' compensation patients.

Your Committee also finds that the State's existing workers' compensation medical fee schedule is based on the Medicare Resource Based Relative Value Scale system (MRBRVS) plus ten percent. This measure would replace that fee schedule with the federal workers' compensation medical fee schedule.

According to the Department of Labor and Industrial Relations, if adopted, the reimbursement rate to medical service providers would increase by an average of thirty-five percent.

Your Committee understands that the reason the State adopted the MRBRVS-based medical fee schedule was to lower workers' compensation insurance costs which were skyrocketing in the mid 1990's. Although the worker's compensation insurance policyholders in the State subsequently experienced double-digit reductions in their premiums over the past six years, it is debatable as to how significant an impact the fee schedule adoption had on the overall reduction rate.

However, two things are undeniable since the adoption of the MRBRVS-based medical fee schedule, workers' compensation insurance rates have been significantly reduced, and medical service providers are receiving less money for workers' compensation cases.

The question before your Committee now is whether or not medical service providers are being fairly compensated for the services they provide in workers' compensation cases.

Your Committee received testimony from numerous medical professionals stating that, due to the low reimbursement rates for workers' compensation cases, many medical professionals are not accepting workers' compensation patients. This results in workers' compensation patients not receiving timely and qualified care.

Your Committee is concerned over these assertions and hopes that all patients, regardless of their ability to pay for services, are receiving adequate care for their injuries. However, your Committee is not necessarily convinced that changing the basis of how the medical fee schedule's rates are determined is the most prudent or efficient way to solve the problem.

Your Committee believes that the issue this measure seeks to address is of great consequence, affecting both the timely access to quality care for work-related injuries, and the overall economic cost to insureds and the State in general. To this end, your Committee believes that the measure should move on in the process to ensure that a legislative vehicle will be available as discussions continue on this matter.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 16 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.