Northwestern Ohio Building & Construction Trades Council v. Conrad

750 N.E.2d 130, 92 Ohio St. 3d 282
CourtOhio Supreme Court
DecidedJuly 18, 2001
DocketNo. 00-216
StatusPublished
Cited by52 cases

This text of 750 N.E.2d 130 (Northwestern Ohio Building & Construction Trades Council v. Conrad) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northwestern Ohio Building & Construction Trades Council v. Conrad, 750 N.E.2d 130, 92 Ohio St. 3d 282 (Ohio 2001).

Opinions

Cook, J.

In 1993, the General Assembly amended Ohio’s workers’ compensation scheme to create the Health Partnership Program (“HPP”), a comprehensive managed care program administered by appellant, the Bureau of Workers’ Compensation (“BWC”), to provide medical services to employees for thencompensable injuries or occupational diseases. See 145 Ohio Laws, Part II, 2990, 3088-3093; R.C. 4121.44 and 4121.441. We have already determined that the managed care organizations (“MCOs”) certified to perform these services under the HPP do not unconstitutionally usurp the state’s power and authority to administer the State Insurance Fund (“SIF”) and determine the terms and conditions of payments to injured claimants. State ex rel. Haylett v. Ohio Bur. of Workers’ Comp. (1999), 87 Ohio St.3d 325, 331, 720 N.E.2d 901, 906.

Now we are asked to decide whether the BWC’s use of SIF proceeds to pay administrative and performance-incentive fees to certified MCOs under the HPP violates either the Revised Code or Section 35, Article II of the Ohio Constitution. The court of appeals determined that the BWC’s use of fund proceeds for [283]*283administrative and performance incentive payments is neither legislatively authorized nor constitutional. For the following reasons, however, we disagree.

I. MCOs and the HPP

As we noted in Haylett, supra, MCOs are an integral part of the HPP established by the General Assembly. Id., 87 Ohio St.3d at 326, 720 N.E.2d at 903. The MCOs certified by the BWC under Ohio Adm.Code Chapter 4123-6 are private entities that perform medical-management and cost-containment services under contract with the BWC. Id. Employers covered by the SIF select an MCO from a list of BWC-certified MCOs, or the BWC will assign an MCO to employers who fail to make a selection. Ohio Adm.Code 4123-6-051(A); 4123-6-052(A). Each MCO is associated with a network of health-care providers that can offer a full range of medical services to injured workers. Id.

Once certified by the BWC and selected by or assigned to an employer, MCOs manage the medical aspect of each workers’ compensation claim. Ohio Adm. Code 4123-6-043(B) and (F); Haylett, 87 Ohio St.3d at 329, 720 N.E.2d at 905. An MCO is the entity responsible for initially authorizing medical care to an injured party. Ohio Adm.Code 4123-6-043(F); 4123-6-045(D). “The MCO must promptly notify the BWC of an employee’s industrial injury. While the BWC determines the compensability of a claim, the MCO works ‘in conjunction with the employer, employee, attending physician, and the [BWC to] seek a course of medical or rehabilitative treatment that promotes a safe return to work.’ ” Haylett, 87 Ohio St.3d at 329, 720 N.E.2d at 905, citing Ohio Adm.Code 4123-6-043(B). “During the life of a medical claim, the MCO performs utilization reviews * * *. Utilization reviews ensure that only medical services and supplies that are medically necessary for the diagnosis and treatment of allowed conditions and that are causally related to those conditions will be considered for payment. The MCO must submit all medical bills to the BWC. * * * The BWC then authorizes payment and sends it to the MCO for reimbursement to the individual provider.” (Citation omitted.) Id.

The HPP also contains a mandatory dispute resolution program available to employees, employers, and providers. Id., citing Ohio Adm.Code 4123-6-16. “Any decision by an MCO regarding treatment or payment is nonbinding and subject to multiple levels of review. The final decision as to any aspect of the claim lies with the Industrial Commission.” Id. at 330, 720 N.E.2d at 905. In addition to these procedural safeguards, the HPP requires the BWC to supervise the certified MCOs and to monitor their performance continually. Id.

II. Administrative and Performance Incentive Payments to MCOs

To compensate the MCOs for their medical-management and cost-containment services, the administrator promulgated a rule providing for certain payments to [284]*284be made to the MCOs. The source of the payments made to MCOs by the BWC under this administrative rule is the focus of the instant dispute.

Ohio Adm.Code 4123-6-13 provides:

“(B) The bureau shall pay an MCO an administrative fee for its medical management and administrative services in a manner determined by the administrator. The administrative fee may be subject to a disincentive penalty based upon the failure of the MCO to meet predetermined performance criteria set forth in the MCO contract. The bureau may pay an MCO a performance payment and may pay an incentive payment.

“(C) In establishing performance measures, the bureau shall evaluate an MCO’s performance based upon but not limited to:

“(1) Quality performance measures that may include return to work rates and reinjury rates.

“(2) Total cost measures that may include average total paid cost, average incurred cost, and lost-time claims to total claims ratio.

“(3) Change in cost measures that may include change in average total paid cost, change in average incurred cost, and change in lost-time to total claims ratio.

“(4) Customer satisfaction that may include in-network utilization rate and employee, employer, and provider satisfaction surveys.”

The parties here stipulate that both the administrative and performance-incentive payments authorized by Ohio Adm.Code 4123-6-13 are paid out of employer premium contributions, “with the total remuneration available to each [MCO] being a fixed percentage of the premiums paid by the employers which have selected or been assigned to it.” The parties further stipulate that “[t]he total percentage of premium allocated for payment of fees and performance incentive payments is not fixed by rule, but is established by the BWC or the Administrator and may be periodically adjusted.”

Douglas Maser, the BWC’s Chief Medical Management and Cost Containment Officer in 1997, testified at a deposition about how the administrative and performance-incentive fees provided under Ohio Adm.Code 4123-6-13 are calculated. Maser testified that at the time of his deposition, the “base administrative fee” was set at three percent. Accordingly, a hypothetical MCO with one hundred employers enrolled in it would receive a base administrative fee from the SIF equal to three percent of the premiums paid by those one hundred employers. As of January 1,1998, the phase-in of the HPP was complete and the base administrative fee for each participating MCO was increased to five percent of premium.

[285]*285The performance-incentive payments, Maser testified, are payable to an MCO “over and above its administrative fee” and calculated on an “MCO-by-MCO” basis. At the time of Maser’s deposition, a total of an additional three percent of premium — over and above the three percent administrative fee — was potentially available to MCOs in incentive payments keyed to specific quality-control objectives. Of this additional three percent of premium, one percent would be paid to those MCOs that achieved a certain level of data accuracy and “reduee[d] the lag time” between claimants’ injuries and the MCO’s report of those claims to the BWC. One percent of premium would be paid to those MCOs that participated in Phase 2 of the HPP implementation program by picking up additional claims.

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Cite This Page — Counsel Stack

Bluebook (online)
750 N.E.2d 130, 92 Ohio St. 3d 282, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northwestern-ohio-building-construction-trades-council-v-conrad-ohio-2001.