House approves workers’ comp changes

  • By Tim Bradner
  • Thursday, April 17, 2014 10:19pm
  • News

JUNEAU — A bill revamping how medical costs under the Alaska workers’ compensation program are calculated passed the state House Wednesday.

Time is tight for House Bill 306 to make it through the state Senate before the Legislature’s required April 20 adjournment, however.

The legislation changes the method for paying medical fees of injured workers under the state program to one that is used in several other states.

ADVERTISEMENT
0 seconds of 0 secondsVolume 0%
Press shift question mark to access a list of keyboard shortcuts
00:00
00:00
00:00
 

State Rep. Kurt Olson, R-Soldotna, sponsor of the bill, believes the new method will slow the fast-rising workers’ compensation medical costs that are driving up the costs of workers’ comp insurance premiums employers must pay.

“This is an effort to reduce exorbitant costs in both the public and private sectors,” Olson said when he introduced the bill in mid-February.

Workers’ compensation medical costs in Alaska are increasing at about 10 percent per year compared with an annual inflation of 4 percent in the medical cost component of the Anchorage Cost of Living, says Mike Monagle, director of the state Workers’ Compensation Division.

“Medical costs constitute 76 percent of workers’ compensation claims in Alaska, which has a serious impact on premium rates paid by all Alaska employers,” said Anna Latham, an aide to Olson.

“The result is that Alaska has the highest workers’ compensation premiums in the nation. Medical costs under the program are continuing to rise despite a 14 percent decline in claims by injured workers,” due partly to employers’ workplace safety improvements, she said.

The problem has been in the way payments in Alaska are currently made, which are set at the 90th percentile for the costs of specific procedures in a given area.

Monagle said that if there are just a few practitioners for a given medical procedure the 90th percentile rule has the effect of setting the rate at close to what the most expensive practitioner charges.

When those rates are published, the providers charging less expensive rates see that and are encouraged to raise their rates, which creates an upward spiral of prices, he said.

HB 316 shifts to a different system where prices would be based on federal Medicaid and Medicare rates for procedures and then adjusted through a “conversion factor” that would be set by the Alaska Medical Services Review Committee, an advisory body to the Alaska Workers’ Compensation Board.

The Commissioner of Labor and Workforce Development ultimately approves the conversion factor under HB 316.

Medicaid and Medicare rates are already given a regional geographic adjustment for Alaska and Medicaid rates are also adjusted for higher-cost areas within the state.

The conversion factor would make additional adjustments, but just how that will work is unclear.

Critics in the Legislature said HB 316 does not define the conversion factor or describe it. Rep. Andy Josephson, D-Anchorage, said he is concerned about that, and that the rates might fall to the point that some medical providers will turn away injured workers.

There are now concerns in the other direction, however, that the bill’s influence in moderating rates may have been weakened.

An amendment made to the bill recently in the House Finance Committee, at Olson’s request, tends to strengthen the hand of the medical rate review committee. Medical providers, who have little incentive to see lower rates, hold four of the nine seats on the committee. The Alaska Medical Association suggested the change.

“It has been tough to keep all the stakeholders happy with this,” Olson said.

In the previous version of the bill the rate review committee’s role was advisory only, with the actual decision on the conversion factor made by the workers’ compensation board.

Tim Bradner can be reached at tim.bradner@alaskajournal.com. 

More in News

Vice President Kelly Cooper speaks during a meeting of the Kenai Peninsula Borough Assembly in Soldotna, Alaska, on Tuesday, July 8, 2025. (Jake Dye/Peninsula Clarion)
Borough considers seasonal sales tax rate

Borough sales tax would be modified from a flat 3% to a seasonal model of 4% in summer months and 2% in winter months.

The Kasilof River is seen from the Kasilof River Recreation Area, July 30, 2019, in Kasilof, Alaska. (Photo by Erin Thompson/Peninsula Clarion)
King salmon fishing on Kasilof closes Thursday

If any king salmon is caught while fishing for other species, they may not be removed from the water and must be released immediately.

Un’a, a female sea otter pup who was admitted to the Alaska SeaLife Center in June 2025, plays with an enrichment toy at the center in Seward, Alaska. Photo courtesy of the Alaska SeaLife Center
SeaLife Center admits 2 seal pups, 1 orphaned otter

The three pups join the Alaska SeaLife Center’s ‘growing’ patient list.

James Wardlow demonstrates flilleting a salmon with an ulu during a smoked salmon demonstration, part of Fish Week 2023, on Wednesday, July 19, 2023, at the Kenai National Wildlife Refuge Visitor Center in Soldotna, Alaska. (Jake Dye/Peninsula Clarion)
Refuge to celebrate all things fish during weeklong event

Fish Week will take place July 16-19.

President Zen Kelly speaks during a meeting of the Kenai Peninsula Borough School District Board of Education in Soldotna, Alaska, on Monday, July 7, 2025. (Jake Dye/Peninsula Clarion)
School board finalizes budget with deep cuts to programming, classrooms

Multiple members of the board said they were frustrated by the state’s failure to fund education.

Former KPBSD Finance Director Liz Hayes speaks during a Kenai Peninsula Borough School District budget development meeting at Kenai Central High School in Kenai, Alaska, on Wednesday, Feb. 19, 2025. (Jake Dye/Peninsula Clarion)
School district finance department earns national awards

The two awards are based on comprehensive reviews of the district’s budget and financial reporting.

Children leap forward to grab candy during a Fourth of July parade on South Willow Street in Kenai, Alaska, on July 4, 2025. (Photo courtesy Sarah Every)
Celebrating the 4th in the streets

Kenai comes out for annual Independence Day parade.

Fire crews respond to the Bruce Fire, July 4, 2025, in Soldotna, Alaska. (Alaska Division of Forestry)
Firefighting crews respond to wildfire outside Soldotna

The 8-acre fire and two “spot fires” of less than one acre each are located near Mile 102 and 103 of the Sterling Highway.

Most Read

You're browsing in private mode.
Please sign in or subscribe to continue reading articles in this mode.

Peninsula Clarion relies on subscription revenue to provide local content for our readers.

Subscribe

Already a subscriber? Please sign in