The lazy, hazy days of summer areabout to give way to a frenetic presidential campaign season forthe most powerful political position in the world. Lost in all thehype surrounding this national political drama are hundreds ofbarely watched and little noticed campaigns for legislative seatsin statehouses across the U.S.

These campaigns will be waged against a backdrop of a sluggisheconomy. The latest figures from the U.S. Bureau of LaborStatistics show national unemployment flatlining at around 8percent. Economic growth, indicated by the Gross Domestic Productand reported by the Bureau of Economic Analysis, is hovering around2 percent.

The added uncertainty of the global economy, tepid returns inthe investment markets and a hardening Workers' Compensationinsurance market are causing business leaders and citizens to lookfor legislative candidates who have the potential to re-energizetheir local economies by attracting jobs and lowering the cost ofdoing business. The men and women battling it out on doorsteps, atlocal cafés and town meetings will have a lot to say about howimprovements should be made in their state's business climate.These changes include reforms to Workers' Comp laws that deal withhow medical treatment and benefits are delivered to injured workersand the costs that are ultimately passed on to localbusinesses.

STATE OF REFORM

There has been significant reform activity in a number oflegislative chambers, and a handful of states have put forth somemajor reform efforts that impact Workers' Comp payers as well asinjured workers. No single area of the system is immune fromscrutiny: State legislators are taking a hard look at everythingfrom disability benefits to the cost and delivery of pharmacy andancillary services.

Some issues have led to harsh divisions and even harsher words,and for some higher-profile state issues, the debates have becomeso fierce they have made the national airwaves. Here are somehighlights from state legislative activities and their expectedimpact on Workers' Comp:

• In New York, Assembly MemberArvella Simotas, D-Astoria, pushed A. 5183, a bill that would haverolled back one of the hallmark provisions of the Spitzer reformsof 2007 by undoing the mandatory participation by injured workersin a pharmacy network if one had been established by theiremployer. Supporters of the pharmacy-choice bill included retailpharmacies. Opponents included pharmacy-benefit managers andinsurance carriers.

Both sides traded volleys during a high-profile media campaignto sway the vote. Proponents touted patient safety and convenience,while opponents pointed out that pharmacy was the one area in whichcosts have actually been contained since the reform measures wereadopted. Lawmakers, sobered by the announcement that New Yorkemployers had seen their Workers' Comp premiums rise by roughly 30percent since the 2007 reforms, decided to keep the mandatorynetworks in place to avoid any inadvertent culpability for futurerate increases.

The New York legislature also recently took a big step incombating opioid abuse by passing the Internet System for TrackingOver-Prescribing Act (I-STOP), which directs the State Departmentof Health to create a real-time prescription-drug monitoringsystem. I-STOP also includes an education component designed tohelp physicians, pharmacists and patients understand risks andpotential alternatives to opioid use.

Legislators believe that I-STOP will dramatically reducefraudulent prescriptions and significantly limit doctor shopping todecrease opportunities for fraud, misuse and abuse. While themanner in which the law is actually implemented will determine itsultimate success, the legislation is already being heralded byindustry experts as the new standard for prescription-drugmonitoring programs.

• The California Department ofIndustrial Relations (DIR), the Division of Workers' Compensation(DWC) and the state legislature set the wheels in motion for amajor reform effort in the latter part of this year and into the2013 session. DIR Director Christine Baker and DWC AdministrativeDirector Rosa Moran hosted listening sessions throughout the statein which they sought input from various stakeholders on problems inthe Workers' Comp system along with ideas for potential solutions.Hundreds of written comments were also submitted. Gov. Jerry Brownhas publicly stated that he does not want piecemeal reform; theinformation gathered from the listening tour should reveal a roadmap for both the DWC and legislators to follow as they create thereform package.

• Managing reimbursement rates ofrepackaged drugs has been a hot debate in Florida, as it has beenidentified as a key cost-driver in the state's Workers' Compexpenditures. Florida HB 668 (to regulate pricing for repackageddrugs), sponsored by Sen. Alan Hays, R-Umatilla, generated one ofthe more acrimonious debates this legislative season. The Houseversion, HB 511, sponsored by Rep. Matt Hudson, R-Naples, sailedthrough the House committees. In contrast, the Senate version facedmultiple unfriendly amendments.

Both sides claimed influence was “purchased” by the other sideand subsequently presented data the other side immediately refuted.Other important bills became political casualties in retributionfor a particular stand on the bill. The senators, who were besiegedby wildly conflicting data and caught in the middle of a firestormof words, did the only safe thing—sticking with the status quo.

• Maryland had its own mini-dramasurrounding its efforts to limit reimbursement onphysician-dispensed drugs. The state Workers' CompensationCommission held a public hearing, accepted public comments anddrafted a rule that would have put reimbursement forphysician-dispensed medications on par with the reimbursementreceived by pharmacies. Prior to officially adopting the rule, thecommission was summoned to a state legislative committee thatultimately sent the message that the rule change was notwell-received and would not receive the requisite legislativesupport for passage. Some of the same players that offeredobjections to the Florida repackaged drug legislation resurfaced asdebate over the proposed Maryland rule played out.

• Oklahoma madenews as a bill moved through its legislative process that wouldallow employers that met certain criteria the ability to opt out ofthe Workers' Comp system and become “nonsubscribers.” HB 2155,sponsored by Speaker Kris Steele, R-Shawnee, passed the House butwas amended in the Senate committee before passing out of theSenate. The amendment would have required benefits provided byemployers choosing to be nonsubscribers to the system to meet orexceed benefits offered by payers in the system. The House failedto concur with the Senate amendments on a closely divided vote,thus killing the bill.

• Louisiana attempted to advance anumber of major initiatives to reform its Workers' Comp system.Signed into law by Gov. Bobby Jindal in June, HB 367 enactedlanguage refining the medical-dispute process and the determinationof medical necessity. It also created a definition for “utilizationreview company.” Additionally, Rep. Tony Ligi, R-Jefferson Parish,sponsored two major pieces of legislation that were ultimately heldfor further study. They are HB 885, which seeks to outline clearguidelines for reimbursement of repackaged and compoundmedications; and HB 959, which would allow employers to establishmedical-provider networks.

REFORM EFFORTSCONTINUE

Here's a forecast of what to expect on state legislative agendasas we move into fall sessions and into 2013:

Major reform efforts will occur in California as the informationgarnered from the listening tours is distilled into concreteproposals. New York will be advancing its own set of reforms toshore up some of the erosion in savings that has occurred since its2007 system overhaul. Louisiana will revisit the Ligi bills, andOklahoma will make another run at an opt-out bill. Tennesseealready has some working groups pulled together to scrutinize itssystem, and those ideas will be shared and likely explored when thelegislature reconvenes.

We expect other states to explore reform measures as they battlerising Workers' Comp expenses and challenging public issuescontributing to these costs such as physician dispensing, opioidabuse, compounded medications and repackaged drugs.

For example, reducing opioid misuse and abuse has quickly becomeone of the hottest topics in the health-care world and in Workers'Comp. It will be interesting to see how New York will define andimplement its I-STOP program and how other states begin to followits lead and take steps to curb abuse.

States also will likely continue to observe the outcome of theTexas formulary law, set to become fully active for legacy claimson Sept. 1, 2013, which created a closed formulary that is based onOfficial Disability Guidelines. Initial results of the law haveshown a significant decrease in opioid use in new Texas Workers'Comp claims. Based on these initial outcomes, it is likely thatstate legislatures will monitor Texas' progress closely todetermine if they would like to pursue similar legislation.

We can also expect to see continued debate surrounding physiciandispensing in Florida, Maryland and myriad other statehouses,bringing with it much controversy and media attention for bothsides.

On the federal front, it will be interesting to see the resultof the November elections. Whoever wins will ultimately drivechange in policy related to Workers' Comp. No matter whichcandidate you support, the federal government is expected to take acloser look at mitigating the risks associated with narcotic usethrough education initiatives and the U.S. Food and DrugAdministration's Risk Evaluation and Mitigation Strategy.

Budgetary pressures will continue to keep attention focused onthe cost-drivers in the federal Workers' Comp system. Whilewatching the campaigns play out is a political junkie's dream,outcomes of who is elected at the state and federal levels willgreatly influence Workers' Comp policy.