Tuesday, September 24, 2013

IMR - The New Game In Town

Are you alarmed that Independent Medical Review requests in California work comp are 30 times higher than in group health?

It was reported this morning that Maximus had received 15,731 IMR requests in August alone.

According to the news, this is about 30 times the number of requests – 580 – Maximus received in the entire first six months of the year.

By comparison, the California Healthcare Foundation reported in January 2012 that there were only 11,954 group an private health care review requests made to Maximus between 2001 and 2010.

SB 863 made all requests for medical treatment regardless of date of injury subject to IMR as of July 1, 2013.

And while some are saying that the August number is just a spike as a consequence of the broad sweep of the IMR net in July, others are less optimistic, stating that this is an indication of things to come.

Is this evidence of yet another well intentioned protocol change that is just going to drive up costs to the benefit of third party vendors with no teeth in the game other than to derive a profit from system inadequacy?

That may be - and maybe Maximus stock (NYE - MMS) is a good buy (though currently trading near its 52 week high).

Or is the practice of medicine in the California workers' compensation system so pathetic that every request has to be independently reviewed?

Frank Neuhauser, with the University of California, Berkeley, said, “There’s something about the system that we are willing to tolerate that generates 100 times the number of disputes,” when asked about the staggering number of IMR requests compared to group health. “It has nothing to do with the IMR process. This has always been the case.”

Or is the novelty of IMR so alluring that everyone just has to use it?

Jerry Azevedo, a spokesman for the Workers’ Compensation Action Network, told WorkCompCentral the increase could be a “ramp-up” as more people are becoming familiar with how to use the process.

“The numbers may seem daunting when you consider the fact that employers are paying for each and every one of these," said Azevedo. Well, no, that's not accurate - carriers and administrators are paying for these up front and sure the cost eventually will migrate to employers - but are the carriers and administrators really conscious of this?

Or are the carriers and administrators anxious to deny as much treatment as possible?

Neuhauser notes that because workers' compensation medical is a fee-for-service system, doctors treat much more aggressively than they do in group health, which has different compensation models, and consequently there is a lot more push back from payers.

Perhaps the culture of California workers' compensation is so immutable that it survives regardless of attempts to reel in some of the troubling behavior?

Or is there something else driving this many requests so soon after the new process was implemented?

Maybe its just the way the law is written that forces people into IMR.

After all, there are time deadlines so if you want any other bite at the apple one must pursue the remedy.

I have to admit that when IMR was first proposed I had some optimism that a process was put in place that would minimize unsubstantiated treatment requests and expedite the approval of wholly legitimate, well documented, guideline-driven treatment.

I'm not sure what to think now.

As with many things in California workers' compensation, the devil isn't in the details because details open up whole new avenues of discord and manipulation. The more detailed one attempts to initiate in the name of controlling a process, the more opportunity there is for using those details against intended outcomes.

What I do know is that workers' compensation can not be compared with group health at all. The terms, the conditions, the incentives, the motivations - they are all different. What is done in group health can not be transferred to workers' compensation because there is no motivation for people to self-regulate other than internally driven morality and ethics.

There are two huge elements that drive behavior in workers' compensation that aren't found in group health, and unless these elements are changed anything that is intended to hold down costs will eventually fail.

These elements are: 1) workers' compensation is compulsory, and 2) the injured worker has no disincentive to seek as much medical treatment as possible.

The fact that work comp is compulsory drives behavior because there is no competition. Employers must carry it, employees must use it, and the third tier of the system, i.e. the process, has no escape valve for those who don't wish to participate.

And since there are no deductibles, no "plan" and no teeth in the game other than the fact of injury, employees (who in general lack any control over their treatment anyhow) have no reason to say "no."

The August numbers may be an aberration.

Or they may be a prognostication.

Or perhaps this is just one more new part of the complex puzzle that we will "reform" in seven to ten years.

Keep an eye on Maximus earnings...

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