Article 14.5 - Cost Containment

 
8-14.5-101.  Short title.

This article shall be known and may be cited as the "Workers' Compensation Cost Containment Act". 

 8-14.5-102.  Legislative declaration.

The general assembly hereby finds and declares that any adjustments to premiums for workers' compensation insurance be granted on the basis of equity, rate adequacy, fairness, and insurer compliance with Colorado insurance rating laws.  The general assembly further finds and declares that notwithstanding the granting of different rates to insureds for their experience modification, participation in return-to-work programs, and premium volume discounts not exceeding fifteen percent, any other premium adjustments should be principally weighted in a manner primarily encouraging the adoption and successful implementation by insureds of effective workplace safety programs mainly encompassing risk management and medical cost containment procedures. 

 8-14.5-103.  Definitions.

As used in this article, unless the context otherwise requires:
 (1)  "Approved program" means a cost containment or risk management program approved by the board.
 (2)  "Board" means the workers' compensation cost containment board established pursuant to section 8-14.5-104.
 (3)  "Certified program" means a cost containment or risk management program which has been implemented for a period of at least one year and certified by the board.
 (3.5)  "Commissioner" means the insurance commissioner, appointed pursuant to section 10-1-104, C.R.S.
 (4)  "Department" means the department of labor and employment.
 (5)  "Director" means the director of the division.
 (6)  "Division" means the division of workers' compensation in the department of labor and employment.
 (7)  "High risk employer" means any employer classified in the upper ten percent of the insurance rate schedule in the Colorado workers' compensation insurance system.
 (8)  "Managed care" shall have the meaning set forth in section 8-42-101 (3.6) (p) (I) (B).
 (9)  "Workplace safety program" means those programs offered by insurance carriers authorized to do business in this state for purposes of workers' compensation insurance policies and implemented by employers to promote cost containment and risk management of workplace safety hazards.

 8-14.5-104.  Creation of board.

(1)  There is hereby created in the division the workers' compensation cost containment board, to be composed of seven members: The commissioner of insurance, the chief executive officer of Pinnacol Assurance, and five members appointed by the governor and confirmed by the senate.  Appointed members of the board shall be chosen among the following: Employers or their designated representatives engaged in businesses having workers' compensation insurance rates in the upper five percent of the rate schedule, actuaries or executives with risk management experience in the insurance industry, or employers who have demonstrated good risk management experience with respect to their workers' compensation insurance.
 (2)  The board shall exercise its powers and perform its functions under the department and the director of the division as if the same were transferred to the department by a type 2 transfer, as such transfer is defined in the "Administrative Organization Act of 1968", article 1 of title 24, C.R.S.
 (3)  The appointed members  of the board shall serve for terms of three years and may be reappointed; except that, of the members first appointed, two shall  serve for terms of three years; two shall serve for terms of two years, and one shall serve for a term of one year.  The chief executive officer of Pinnacol Assurance and the commissioner of insurance shall serve continuously.
 (4)  Members of the board shall receive no compensation but shall be reimbursed for actual and necessary traveling and subsistence expenses incurred in the performance of their official duties as members of the board.

 8-14.5-105.  Powers and duties of the board.

(1)  The board shall have the following powers and duties:
 (a)  To establish model cost containment and risk management programs for selected classifications in the upper ten percent of the insurance rate schedule under the Colorado workers' compensation insurance program;
 (b)  To adopt standards for the approval of particular cost containment and risk management programs submitted by community, technical, or junior colleges or by employers in those selected high risk classifications;
 (c)  To receive, evaluate, and certify cost containment and risk management programs implemented by community, technical, or junior colleges or by employers in those selected high risk classifications for a period of at least one year;
 (d)  To promote cost containment and risk management training by community, technical, or junior colleges, employers, groups of employers, or trade associations;
 (e)  To review annually the classifications in the upper ten percent of the insurance rate schedule under the Colorado workers' compensation insurance program for inclusion in the cost containment program;
 (f)  To set the qualifications for technical personnel to assist community, technical, and junior colleges and employers in establishing risk management and cost containment programs;
 (g)  To disseminate information regarding the types of workers' compensation insurance policies available;
 (h)  To adopt such rules and regulations as may be necessary to carry out the purposes of this article. 

8-14.5-106.  Duties of the director.

(1)  The director shall have the following powers and duties:
 (a)  To provide technical advice to the board;
 (b)  To provide technical advice and assistance to community, technical, or junior colleges, employers, groups of employers, or trade associations with respect to the development and implementation of cost containment and risk management programs;
 (c)  To publish, as may be appropriate, documents relating to the development and implementation of cost containment and risk management programs;
 (d)  To maintain records of all proceedings of the board, including the evaluation of proposals for cost containment and risk management programs submitted by employers and by community, technical, or junior colleges;
 (e)  To maintain records of all employers and community, technical, or junior colleges with certified programs.

 8-14.5-107.  Cost containment certification.

Any employer complying with an approved program for at least one year may present evidence of such compliance to the board and petition the board to certify its program.  The names of such certified employers shall be made available on a periodic basis to bona fide insurance carriers on file with the division. 

 8-14.5-107.5.  Workplace safety programs - study by commissioner -

(1)  The commissioner shall undertake a full study of current workplace safety, risk management, and cost containment programs offered by insurers, including Pinnacol Assurance, a review and analysis of the various incentives used by insurers to obtain policyholder participation, including any premium adjustment programs in use, and shall evaluate other possible programs and incentives that could be used by insurers to expand workplace safety programs and reward policyholder participation.  The commissioner shall consult with the Colorado department of labor and employment in conducting the study.  Such study, review and analysis, and evaluation shall include but not be limited to the following:
 (a)  Whether or not by a date certain, all insurers including Pinnacol Assurance issuing workers' compensation insurance policies in this state shall offer all insureds in the ten most populous counties a managed care plan featuring a designated medical provider;
 (b)  Whether or not by a date certain, if it is in the best interest of employers and employees, all insurers including Pinnacol Assurance issuing workers' compensation insurance policies in this state shall offer to all or some selected classes of insureds some type of basic workplace safety program;
 (c)  Whether or not the board or the commissioner should continue providing certification of workplace safety programs or whether such certification should be provided by insurers for insureds;
 (d)  Whether or not by July 1, 1995, the commissioner should promulgate regulations concerning the granting of premium adjustments for an insured's participation and implementation of a basic workplace safety program or managed care program;
 (e)  The participation by insureds in existing workplace safety programs offered by insurers and the methods by which insurers offer such programs;
 (f)  Insurer compliance with deductible provisions;
 (g)  Insurer compliance with the provisions of part 4 of article 4 of title 10, C.R.S., regarding the current design and use of any premium adjustment, rate deviation, premium discount, retro-rate, scheduled adjustment, or other type of financial plan and their effect on the fairness and reasonableness of rates for those insureds not qualifying for experience or schedule rating;
 (h)  The efficacy of reducing the premium dollar volume needed for an insured to become experience rated;
 (i)  A cost benefit analysis of implementation of workplace safety programs.
 (2) (a)  Repealed.
 (b)  Insurers shall make all necessary information and records pertaining to workplace safety programs of such insurers available to the commissioner in carrying out the study required by subsection (1) of this section.  The reasonable costs of such study shall be borne by insurers, including Pinnacol Assurance, as determined by the commissioner based on the total cost of such study. 

 8-14.5-108.  Cost containment fund - creation.

All moneys collected for cost containment pursuant to section 8-14.5-109 or 8-44-112 (1) (b) (III) shall be transmitted to the state treasurer who shall credit the same to the cost containment fund, which fund is hereby created.  All moneys credited to said fund and all interest earned thereon shall be subject to appropriation by the general assembly to pay the direct and indirect costs of the cost containment program, and said moneys shall remain in such fund for such purposes and shall not revert to the general fund or any other fund. 

 8-14.5-109.  Grants-in-aid - cooperative agreements.

The division may receive grants-in-aid from any agency of the United States and may cooperate and enter into agreements with any agency of the United States, any agency of any other state, and any other agency of this state or its political subdivisions, for the purpose of carrying out the provisions of this article.

 8-14.5-110. Repeal of article. (Repealed)