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Minnesota Department of Labor and Industry

May 21, 2015

Legislature approves workers' compensation cost-savings measure

Legislation approved this week and signed by Governor Mark Dayton will cut workers' compensation inpatient hospital costs by 10 to 15 percent and slow future medical cost increases.

Minnesota's workers' compensation system will be required by the legislation to use the same payment system Medicare uses to reimburse hospitals beginning in January 2016. The system bases a hospital's reimbursement on a patient's diagnosis using Medicare Severity -- Diagnosis-Related Groups (MS-DRGs). This replaces the current system in which reimbursement is based on charges billed for treating a patient.

The legislation enhances electronic billing, reduces information hospitals must submit with bills and reduces payment disputes. It also ensures injured workers are granted the right to have disability benefit payments electronically deposited in their own accounts.

The legislation authorizes the Department of Labor and Industry to adopt rulesm to take effect in 2017, setting up a similar system to pay outpatient hospital and ambulatory surgical center services provided to injured workers. The department will continue to work with all interested parties in developing the rules.

The bill is the result of eight months of complex negotiations involving hospitals, insurers, organized labor and employers.

"This is the most significant workers' compensation cost control measure in two decades," said Ken Peterson, commissioner, Department of Labor and Industry. "Proper care will continue to be provided to injured workers, while costs will be driven down and the system made more efficient."

Before being submitted to the Legislature, all workers' compensation bills must be approved by the Workers' Compensation Advisory Council, composed equally of labor and management representatives. The council approved this measure in April 2015.


News media contact:
James Honerman
(651) 284-5313

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