Workers Comp Zone


Several days ago the California Workers’ Compensation Institute unveiled a new study on medical-legal costs in California.

Those are the costs of evaluations, reports and testimony of forensic doctors in California workers’ comp cases as contrasted to payments made for treatment.

I’m scheduled to speak in Oakland a March 2016 CWCI conference, and I’m sure that this study will be one of the topics that will come up.

Medical-legal costs constitute a relatively small amount of the overall spend amount of California workers’ comp. Yet, historically there has been great concern about these costs as a potential “cost driver” in workers’ comp.

It’s a topic that RAND has been looking at as well.

Over the past several decades the laws and regulations have changed pertaining to when and how such evaluations can be obtained. As a result, parts of the CWCI study are dealing with medical-legal service costs during different statutory/regulatory schemes. For lack of a better word, it’s a data mining study based on CWCI’s own industry research information database. So called “first aid” or medical-only claims were excluded from the data analysis.

What does the CWCI team led by Stacy L. Jones find?

They punt on whether the IMR process unveiled after the 2012 reforms has affected medical-legal reporting costs, as it is too soon to analyze the data.

CWCI does find that there has been a shift in medical-legal billing toward more expensive time-based billing codes such as the ML 104 code for a “comprehensive evaluation involving extraordinary circumstances”.

Don’t feel bad if your eyes are now glazing over.

This is “inside baseball” stuff of great interest to some doctors and payers but not to John Q. Public.

But these sorts of studies can have real consequences down the line when factored into regulatory or legislative negotiations, so I like to comment on them.

Some may read these results and claim that doctors are “up coding’. Others will say that doctors are forced to do more detailed reports, dealing with the complexities of apportionment and rating that is often more complicated now.

The report itself is inconclusive, noting that though “the average number of hours associated with payments for each time-based service did increase steadily from 2007 to 2014”, with the data at hand it is not possible to identify “which elements of a medical-legal service accounted for the increased time required to complete the evaluation and/or report.”

This shift to more expensive report billing seems to be counteracted by the trend for less indemnity cases to have medical-legal services. According to charts in the study, in 2004 24.1% of such cases had medical-legal services, compared to 11% in 2013.

However, the study claims that in in most recent years claims involving medical-legal services are “newer and less developed”. And it seems to claim that certain medical-legal services are being performed more closely in time to prior medical-legal services.

So go figure.

Reading this report did not strike me as a clarion call for any particular system adjustments, with one exception.

That is the report’s claim that as much as one-sixth to one-fifth of billings for supplemental reports are erroneously billed by physicians who bill for a ML 106 supplemental without having performed an initial medical-legal evaluation. The report says that “unidentified factors” are influencing this, but does not take a position as to why (comment:if true, is this  a lack of physician understanding of billing codes , an example of greed and avarice in the system, or a problem caused by confusion over forms etc etc?)

I did find it surprising that the use of agreed medical examiners (AMEs) remains strong. In my personal experience the trend has been for defense attorneys and claims examiners to be less interested in using AMEs to resolve claim disputes. Yet, charts in the study note that in 2014 35% of medical-legal services were provided by AMEs as opposed to 34.8% in 2007. So AME use is still strong.

Stay tuned.

Julius Young

Here, from CWCI’s press release are specific findings from the study (in italics)

  • The percent of indemnity claims with medical-legal services dropped from 24 percent in AY 2004 to 17 percent in AY 2005, after implementation of the 2002-2004 reforms, and has remained near that level.
  • In 2007, the first full year under the revised fee schedule that introduced new time-based billing codes for medical-legal testimony and supplemental evaluations, the average payment for an individual medical-legal service was $979. By 2014, the average had increased 66 percent to $1,628.  
  • The increase in the overall average medical-legal payment from 2007 to 2014 reflects a continuing shift from services with flat fees to the following time-based services that are billed in 15-minute increments:
    • Follow-up evaluations within nine months of a prior evaluation (billing code ML 101), where the average payment increased 136.4 percent;
    • Comprehensive evaluations involving extraordinary circumstances (billing code ML 104), where the average payment increased 66.2 percent; and
    • Supplemental evaluations (ML 106) where the average payment rose 86.1 percent