4 Regulatory Trends to Watch Out for in 2020

Marijuana legislation has come a long way in the last few years, and with 62% of Americans in favor of marijuana legalization, it is undeniable that the momentum will continue. This push has come with a string of developments that have increased injured workers’ access to marijuana.

In 2019, laws were passed in Nevada and New York City prohibiting the denial of employment over the presence of marijuana in drug screening tests taken by prospective employees. Furthermore, it is currently legal in Illinois and New York for patients with opioid prescriptions to obtain medical marijuana as an alternative, while in other states insurers may be legally required to reimburse medical marijuana in workers’ comp claims when other alternatives fail.

Meanwhile, the DEA is working to improve access to marijuana research, while the FDA is taking steps to advance regulatory pathways for cannabis-derived products.

Why This Matters

There is clearly a growing ecosystem developing to help patients gain access to marijuana, and there’s no shortage of supposed indications that marijuana can treat.

Specific to workers’ comp, there is substantial clinical evidence that marijuana can benefit patients experiencing chronic pain, neuropathic pain, and spasticity. However, there are no definitive guidelines on how marijuana can be effectively used to treat these conditions.

Furthermore, cannabidiol (CBD) is being marketed for a wide range of conditions, including pain, muscle spasms, opioid dependency, PTSD, and brain injury. However, the clinical validity of these claims is poor.

With the clinical science still in its infancy, embracing marijuana too quickly could lead to concerns, making marijuana a topic of great debate.

Anywhere from 16-40% of Americans are part of the gig economy, and many of those workers have long been considered independent contractors, meaning employers are not obligated to provide them with various benefits, including minimum wage, unemployment, healthcare, and workers’ compensation.

However, 2019 saw this tide shift in a few states.

Doubling down on a major state Supreme Court decision, California passed a law that established three key criteria to determine whether or not gig workers should be considered contractors or employees.

Unless hiring entities demonstrate the following, workers shall be considered employees and not independent contractors:

• The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact
• The person performs work that is outside the usual course of the hiring entity’s business
• The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed

Known as the “ABC test,” this law is expected to reclassify millions of independent contractors in California to employees, who would be entitled to workers’ comp benefits.

Shortly after this law was implemented, New Jersey introduced a bill written to establish the ABC test in their state as well. This action was spurred by labor auditors investigating Uber and Lyft, resulting in a claim from the New Jersey Department of Labor and Workforce Development that Uber owes the sate $650 million related to taxes, fees, and other matters tied to employee misclassification.

Another bill pushing the ABC test was introduced in New York, following rideshare and technology testimony before a Senate panel.

Why This Matters

If more and more states, or perhaps a federal mandate, reclassifies large portions of the gig economy as employees, then millions of jobs will require workers’ compensation coverage, expanding the market.

However, providing those benefits comes with various factors, as the employment model is radically different from traditional employment.

First and foremost, it is argued that gig companies would have to raise their prices due to increased overhead, which could lead to reduced demand and lower pay, in turn generating fewer employees to cover.

Additionally, gig workers do not typically work a traditional schedule; a rideshare driver may work every day for a week, then not work for that specific company for several months before returning. This is especially likely as roughly 50% of gig workers are supplemental earners, meaning they work their gig job in addition to full-time work.

Establishing an insurance plan for this kind of model comes with many challenges, though talk surrounding portable benefits has gained support by many gig companies.

And finally, the specific risks that gig workers face on the job are likely very different than those experienced in traditional occupations. When providing benefits to this new market, understanding the most effective strategies and regulations will require much thought.

In 2019, we saw New York, Kentucky, and Montana implement new workers’ comp formularies, following the lead of several other states in the years before.

While formularies needed several years to take root, the early work put in by other states has generated years of data that demonstrate the benefits which workers’ comp formularies can bring.

California experienced a 33% decrease in opioid payments, a 32% decrease in pharmaceutical costs per claim, and a 29% decrease in prescriptions per claim. Meanwhile, an NCCI report found that the Tennessee formulary yielded a 17% decrease in opioid utilization, while the Arizona formulary netted a 22% drop. And of course, Texas saw the number of claims receiving high-levels of opioids that required preauthorization decrease from nearly 15,000 to less than 500.

So much buzz has surrounded formularies that now the National Council of Insurance Legislators (NCOIL), an organization of legislators serving on state insurance and financial institutions around the nation, has created model legislation for formulary adoption.

This process began at the beginning of 2019 and took much work, but will likely spur legislative action across the nation, as NCOIL’s model legislation is often used as the basis for law in several states.

Why This Matters

Quite simply, more interest in building formularies means more action in legislative chambers. Expect to see various bills proposing different kinds of formularies across the nation, and keep an eye out for new formulary reports, as those insights can influence lawmakers in the construction of new state formularies as they hope to duplicate the success of others.

There’s no shortage of headlines surrounding how artificial intelligence (AI) could revolutionize healthcare. An estimated 85% of executives plan to invest in AI over the next three years, and AI-driven clinical decision support engines are already helping to guide claims professionals, while AI-drive analytics programs examine claims data to generate new insights.

While they have not embraced AI for workers’ comp yet, the Texas Department of Insurance launched an AI pilot program in early 2019 to review auto insurance policies. Using five years of data on auto policies, the program scans new policies to see if they are similar to existing approved policies.

Typical auto policies are 40 pages or longer and are incredibly customizable. The TDI must review 45,000 a year, and this program seeks to reduce human workload by using machine learning to bypass common, acceptable conditions of a policy and bring human attention to atypical information that would require more consideration.

But if this seems a long road to implementing AI in workers’ comp, consider that a Japanese life insurance company replaced 34 employees with an AI system based on IBM’s Watson Explorer, analyzing data before suggesting payments, which are reviewed and approved by humans. Also consider that right now, we at Healthesystems are using AI for audits of the eight-minute rule to verify the correctness of physical therapy billing.

While it will still take time for AI to become deeply integrated into workers’ comp, it is making progress and is gaining public acceptance, meaning its use will only grow more complex in workers’ comp, especially as industry leaders hope to build a competitive advantage.

Why This Matters

AI is incredibly complex, and as the technology continues to grow, regulation continues to fall behind as new issues continue to develop.

For instance, the Journal of the American Medical Association (JAMA) highly recommends using population-representative data in AI programs in order to address potential biases. Inappropriate or inaccurate risk assessments, treatment recommendations, diagnostic errors, privacy breaches, and other concerns may stem from a compromised data pool, as AI algorithms may replicate real-world discrimination, errors, and other issues.

Similar issues outside of healthcare have already occurred in the real world. An Amazon AI recruiting tool was abandoned when the program was found to heavily favor male candidates; it was later discovered that because Amazon had previously hired more men in the past, the program learned this pattern from the data it was fed and repeated it in its operations.

Small flaws in program design can be replicated on an enormous level thanks to AI’s vast processing and computing capabilities, creating a serious need for intensive regulation in order to prevent harm.

JAMA recommends the development and deployment of appropriate training and educational programs to support healthcare AI, as well as safety regulations for AI in healthcare.

While AI’s implementation into workers’ comp may be slow, the advancements made over time could have potential pitfalls that must be addressed.