TAMING THE BEAST

The cost of administering California workers’ comp benefits is starting to swamp the cost of the benefits the system delivers.

That’s scary from a policy standpoint.

Consider these figures:

Not only did medical cost containment rose 272.9% from 2002 to 2013 but also

The % of medical dollar spent on treatment decreases from 81.8% in AY 2002 to 66% in AY 2012

Per WCAB 2015 State of the System, loss adjustment expense were 17.7% of total system costs in 2014
Per WCIRB July 2015, the ratio of claim adjustment expenses to benefit payout was 28.2%, highest ratio in USA (USA median was 18.4%)
According to a recent CHSWC report, in 2014 administrative expenses (loss-adjustment expenses, commissions, general costs etc) were $7.647 billion, which was more than the cost of medical expenses ($7.553 billion) or indemnity benefits ($5.079 billion).

So it’s not surprising that the California Workers’ Compensation Institute (CWCI) chose “friction costs” as a topic at its recent annual meeting in Oakland. I spoke on a panel titled “Identifying and Reducing Medical and Legal Friction Costs”. Joining me on the panel were Christine Baker (Director of the California DIR), Southern California defense attorney Saul Allweiss, Dr. Roman Kowanacki (Medical Director of Occupational Health at Kaiser Permanente in Northern California), Jill Rosenthal, (SVP and chief medical officer of Zenith Insurance), and Dr. Kathryn Mueller, Medical Director of the Colorado workers’ comp system.

My fellow panelists had a number of good suggestions but in this post I want to outline my own ideas. What follows is a list of over 50 suggestions I made, some big and some small, to reduce bottlenecks in the system and to shrink frictional costs.

Politically speaking, MPNs, the panel QME process, UR and IMR aren’t going to go away anytime soon. And there are a number of frictional costs that by now are just deeply embedded in the workers’ comp culture.

But there are a number of measures that could be taken that would increase transparency and make the system run more smoothly, and some that might make things more difficult for those who want to exploit the system for greedy motives.

Here’s my list:

1. Set up more roadblocks to bad behavior

Require signing services to register & disclose who pays
Require any treatment report from secondary treater be served on Employer or insurer within 30-days
Amend DWC-3 form to require attorney certify no referral fee or kickback from providers

2. Tighten advertising restrictions

Expand Rule 9820( k) to include advertising by other service providers, including copy services, interpreters & durable medical equipment providers
Expand Rule 9831 to require advertisers to disclose in registration any funding from non-attorney service providers
Require advertisers under Regs 9820-9834 to file registration statement with DWC; create online database
Require DWC to study role of advertising & referral services in the system

3. Conduct studies to answer key questions that need resolution

Effect of UR & IMR on TD duration
Effect of UR & IMR on RTW rates
MTUS compliance or non-compliance by MPN doctors
The business side of UR: In-house vs. Contracted UR

The role of advertising, signing services & medical providers in generating claims
Non-Network PTPs where there is an MPN; Who are they? & What circumstances led to off network treatment
Study on the quality of UR & IMR reviews (Are they getting the necessary documents? Properly applying MTUS? Using the correct LC 4610.5 (c)(2) hierarchy?
Cost shifting between WC & group health/ACA/Medicare

4. Continue to implement measures that are already under consideration

Chronic pain/Opioid guidelines
Home Health Care guidelines
Prescription drug formulary
Online IMR filing portal

5. Focus on how information technology can reduce disputes/costs

Electronic transmission of reports & records
Reduce the paper that carriers have to serve; require electronic service option

6. Improving MPNs

How are MPNs educating doctors on MTUS?
Do disproportionate numbers of UR & IMR disputes come from within the MPN?

• Tighten rules re MPN doctors who refuse to treat WC

7. Improve the QME process

Address lack of QMEs in certain specialties/ regions
Consider telemedicine pilot project as option
Consider incentives to attract QMEs

Increase penalties for failing to provide records before appointment
Reinstate payment code for records review

Address roadblocks to receiving 2nd specialty panel or QME- requested consult. (see Reg 31.7 & compare with former Reg 32)
Clarify what consult reports under LC4620 are reimbursable, admissible & not subject to LC4062.2 procedures where there is a disputed issue

Establish penalties for a defendant’s failure to serve medical records on QME before an exam as required under Rule 35
Consider reimbursing physicians for completing DWC AD Form 10133.36,the Physician’s Report of P&S Status and Work Capacity.

8. Focus on educating doctors

Require MPNs to file a MTUS education plan
Require UROs to file a MTUS education plan
Mandatory online education module for MPN, UR, & IMR physicians focusing on CA Workers’ Comp law

9. Make changes to the RFA form

Integrate RFA form with PR-2 progress report

Add field to RFA certifying that requested treatment is covered by MTUS

Add field to RFA for doctor to explain if treatment not MTUS covered

• Require service of RFA on applicant & applicant attorney at same time it is sent to URO or when UR served on attorney/unrep worker

10. Implement UR reforms discussed by RAND at recent CHSWC meeting

Exempt select services from RFA/URprocess
Post UR plans to facilitate transparency

Revamp audit program to obtainmore URO performance data
Require UROs to be accredited

Merge RFA & progress report into single form
Electronic submission of RFAs

11. Consider additional UR reforms

Exempt MPN doctors from RFAs/UR for certain services
Create a UR plan template to facilitate transparency/understanding

Create a medication prescription portal that merges formulary data
Require URO to set forth alternate care plan or weaning plan before refusing to re-certify medication

Prohibit UROs from giving financial incentives based on the number of modifications, delays or denials

Grant DWC authority to review URO contracts with UR physicians
Random & targeted UR audits to monitor UR quality

Clarify that diagnostic tests done to comply with AMA Guides requested by QME or treater are not subject to UR process
Increase sanctions or penalties on failure to supply relevant records to the URO

Require that results of diagnostic tests done within 1-year of RFA be submitted to URO

12.Reforms to make IMR work better

• Electronic filing portal for IMR (in process)

Extend IMR filing deadlines where parties agree to
voluntary UR appeal process or where applicant attorney sends written meet and confer offer to adjuster

Clarify alternate IMR provider where WCJ rejects an IMR determination

Require service of amended RFA and/or amended UR determination on AA

Increase enforcement of requirement that defendant send records to Maximus in timely fashion

13. Promote better quality treatment

Require MPNs & UROs to distribute educational materials on MTUS & formulary to MPN/URO doctors

Exempt basic diagnostics from the UR process

14. Better adjuster training to avoid conflicts that encourage litigation

Adjusters who don’t return calls to unrepresented worker
Adjusters who misinform unrepresented workers or delay authorizing MPN doctors

15. Consider changes in the litigation process

• Encourage Use Of ADR/Mediation In Complex Cases

• Consider A WCAB Discovery Calendar To Manage Discovery Disputes, QME Panel Disputes, MPN Panel Disputes

That’s my list. What’s yours?

Stay tuned.

Julius Young