Somewhere In Between

What's odd about being on the inside of an industry is that the messages we receive about how we're doing don't align well with the perceptions being voiced by the injured worker and employer communities, particularly in California.

This was highlighted at this past Division of Workers' Compensation Educational Conference in Los Angeles, which ended yesterday.

Here's what we're hearing from inside the industry based on the presentations at the DWC Conference:

1) Independent Medical Review is starting to work;
2) Rates are going up but not as fast as they otherwise would;
3) Continuous trauma claims are alarming and tied to litigation;
4) Medical fraud is under-appreciated and is a big cost driver;
5) Filing fees and Independent Bill Review have decimated the cost of liens.

IMR filings have stabilized, according to Robert Nydam, a project manager for Maximus, the IMR contractor. Though applications filed each month has been around 20,000, the eligible number is about 12,000. The balance were filed late, were duplicates or simply weren't eligible for the IMR process.

Workers’ Compensation Insurance Rating Bureau data shows the average charged rates for California peaked at $6.29 per $100 of payroll for the second half of 2003. Average charged rates dropped to $2.10 by 2009, but since then have been increasing steadily, and the average charged rate through the first three months of 2014 was $2.97.

Carrier-reported written premium dropped from $23.5 billion in 2004 to $8.8 billion in 2009, according to WCIRB reports, but has been edging up ever since. Written premium increased to $14.8 billion in 2013 and $16 billion for 2014. Dave Bellusci, WCIRB executive vice president and chief actuary, said the pattern of increases will likely continue this year.

Both David Lanier, California Labor Secretary, and Donald Marshall, vice president and national director of the anti-fraud program for Zenith Insurance Co. and chairman of the Fraud Assessment Commission, said that medical fraud is the big cost driver.

Perhaps these views were fortified more recently with the spinal implant cases involving the Drobot family and related medical entities, which were concentrated in the Los Angeles area, which also accounts for a disproportionate amount of claims, particularly CT claims.

Bellusci said WCIRB research shows that about 80% of CT cases involved attorney representation, 25% include an injury to a specific body part, two-thirds of claims were initially denied and 41% were filed post-termination.

More pointedly though, in 2005, cumulative trauma accounted for 6.8 out of every 100 indemnity claims filed in Los Angeles, 5.9 out of every 100 indemnity claims filed in the San Francisco Bay Area and 4.3 out of every 100 indemnity claims filed in the rest of the state.

As of 2013, 12.5% of indemnity claims in Los Angeles were for cumulative trauma, compared to 7.8% in San Francisco and 6% in the rest of the state. In 2003, cumulative trauma claims accounted for about 7.7% of permanent disability cases. As of 2013, they accounted for 13.4% of PD claims.
“There’s definitely a picture of these claims,” Bellusci said. “They’re typically represented, often denied, often two insurers, specific injuries, multiple body parts and many of them are filed after termination. And most of them are coming from right here in the Los Angeles basin.”

The WCIRB projected the $150 filing fee, $100 activation fee and new statutes of limitations for filing liens would cut filings by 40% and save about $480 million a year, but WCIRB's data shows lien filings are down nearly 60%, so projected savings attributable to the lien provisions was revised to $690 million.

Compare that picture to the anecdotal view from a couple of system physicians

Temperature rising?

.

A physician who goes by the pseudonym "Soothsayer" commented: "Many of us are about to abandon treatment. When compared to private patients, WC treatment is so difficult to obtain, that it is laughable, but not really funny. OK, we know there was "fraud". But we can control this in treatment schedules. We have limited PT/OT/Chiro. It is not worth dispensing meds in house. MRIs/ EMGs/ PT are corralled into privately contracted deals, by the carriers. Docs are getting prosecuted for dispensing compounds. We wait months for UR/IMR to ok any of the above. Yes, there were a few bad guys, but why do the rest of us and our patients have to suffer? You can bet the next attack is on CTs. They are being abused by the applicant attorneys, so it will be no surprise when the ax falls. Then there will be crying "woe is me" by these attorneys who have brought this on. No, things are not getting better for anyone except the carriers."

And in a LinkedIn post, IMR physician Tony Kim says: "CA WC is like the ghetto of the healthcare. There aren't any good doctors left. Only people that survived, because things were so harsh where crooks and the insurance companies are just playing the chase game one after another."

So what's the BIG PICTURE? Data suggests the system is "working." Anecdotes indicate there's a big gap in the reality perception.

The truth is probably somewhere in between.