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
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?