Thursday, February 7, 2013

Regulatory Implementation and Burning Hands

Proponents, and even critics, of California's landmark reform bill, SB 863, have continuously, and vociferously, stated that the success of the bill will be in its regulatory implementation.

One of the more controversial provisions of SB 863 is particularly subject to this maxim.

Independent medical review (IMR) is a great idea in concept. Borrowed from the Texas work comp system but with some twists, IMR holds the possibility of quick resolution of medical disputes to get the injured worker necessary treatment faster thus decreasing costs by reducing indemnity periods as well as unnecessary or ineffective treatments.

A really big company was tapped as the initial provider of IMR services, a company that has experience with this process in the general health realm for California's Medicaid program and other state and federal systems.

Maximus Federal Services has started the process of recruiting physicians to perform these contract services and WorkCompCentral reporter Greg Jones was able to procure a copy of a letter sent by Maximus to doctors soliciting review services for $150 per case for standard reviews, which must be completed in 30 days, and $200 for expedited reviews, which must be completed in three days.

Maximus will be paid $560 for standard review and $685 for expedited review.

This has doctors in the system, and others on the injured worker side, upset.

According to Jones, the Current Procedural Terminology code for prolonged services without direct face-to-face patient contact, pays $36.34 per 15 minutes, or $145.36 per hour.

People that Jones interviewed said that a flat fee as proposed by Maximus means that IMR is just going to be a rubber stamp affair with little to no valuable review going into the process.

Maximus didn’t return Jones' emails or phone calls inquiring about its IMR payments or how many doctors it has recruited so far.

I wouldn't expect them to, frankly. They have nothing to defend at this point. The financial people at Maximus have figured out what they need to charge, and what they need to pay, in order for California workers' compensation IMR to fit within their profit model.

And Maximus has nothing to lose, really, if IMR doesn't pan out as intended by its architects. The company recently reported that fiscal 1Q revenue grew 19% to $286.3 million compared to $239.6 million reported for the same period last year.

"During the quarter, we experienced strong volumes from our Federal Medicare appeals business and we also made steady progress in winning new work in the emerging health insurance exchange market. Internationally, we see future opportunities that dovetail nicely with our core capabilities as governments evaluate program affordability and seek solutions to control costs and improve their benefit programs,” commented Richard A. Montoni, Chief Executive Officer of MAXIMUS in the company's earnings release.

The release makes no mention of the California IMR business.

But the company increased its 2013 revenue outlook and now expects fiscal 2013 revenue to range between $1.25 billion and $1.30 billion and adjusted diluted earnings per share from continuing operations to range between $3.00 and $3.15.

The California workers' compensation IMR business is a drop in the bucket compared to Maximus' core business which is the Federal Medicare program.

So for year one of the IMR process, don't expect miracles. The quality of reviews will be a factor in whether any challenges to the appealability of reviews passes judicial review. By the time that provision gets to the higher courts, my guess is that Maximus will be gone from the IMR picture, and if the quality of review is as poor as some critics suggest due to the low flat fees then IMR won't be around at all.


On another note, did anyone notice that a Request for Proposal (RFP) to bid on a study for copy service reimbursement schedule wasn't published? At least not before the contract was already awarded to The Berkeley Group.

According to my sources, those responsible for soliciting the work failed to "advertise it correctly." It wasn't until the lack of open solicitation for the work was brought to the attention of officials did an RFP actually appear on the state's Bid Sync system, and by then it was too late.

This is your government at work. Back door deals, phantom solicitations for public work, secret contracts, and callous disregard for legal procedure while hypocritically espousing ethical and moral superiority.

I was suspicious when SB 863 was proposed, negotiated, authored, voted, signed, etc. It was, and remains, politics of the worst order in my opinion, with little regard for the public outside of those special interests at the table at the time of negotiation.

In the way that special interests spawned SB 863, the same set of special interests may ruin any chance that the law will actually do what it is supposed to do - reduce costs and increase benefits - because myopically attempting to control processes removes the ability to see the peripheral issues and problems.

A copy service fee schedule is small potatoes in the grand order of workers' compensation things.

But the manner in which those in control exert their will upon the system doesn't bode well for a democratic society.

The regulatory process is just as subject to political machinations as the legislative process. That's why we have the courts.

When disregard for established legal procedure gets called out by a reviewing court, don't blame the court. Blame your regulators.

Even those with their hands in the fire have said it - success of SB 863 lies with regulatory implementation.

Hands are going to get burned.

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