Carrot? Or Club?

There's a trend percolating in workers' compensation about incentive based medicine.

The basic theory of incentive based medicine is to reward physicians for ensuring good, quality care is provided injured workers/patients to promote faster recovery, less disability, return to health and ultimately return to work.

In theory this all sounds good.

But as with anything that we think is a good idea, others will abuse the trust, and try to steer the world towards their special interest profit motive.

That's a concern that has arisen with the latest news that certain networks have either deployed or are developing economic profiling programs about physicians in their networks.

Yesterday, WorkCompCentral News reported that the Harbor Health Systems network and MPNs for Zenith, Liberty Mutual and the State Compensation Insurance Fund are using economic profiling to determine the top-performing doctors within their networks, and have promised to reward the best performers with extra compensation.

It is also reported that Coventry Health Systems says its "in the preliminary stages" of developing its own incentive program.

According to the news story, State Fund has a separate MPN provided by Harbor that does not offer financial incentives. But another Harbor plan offers financial rewards to doctors with the best track records for "efficiency."

Zenith's plan says incentives "may be provided," and Coventry says it hasn't determined what incentives, if any, will be part of its program.

The Harbor plan says that the disability rating at case closure is one of the factors that will affect a doctor's efficiency rating under the incentive programs. The duration of the claim, the duration of the medical treatment and the costs of the claim are also factors.

According to one source who wished to remain anonymous, in addition to looking at the direct cost of the treating physician, other factors was whether an attorney was on the case and how long the case had been ongoing. This source is concerned that if he or his clinic does not comply with corporate directives on any one particular case that punishment will be delivered; in other words the economic profiling will be used as a club, rather than a carrot...

While the Labor Code expressly allows MPNs to do economic profiling and to offer incentive programs based on doctor performance, the plan administrator must file a description of the program policies and procedures with the Division of Workers' Compensation.

The question being posed is just how much of an incentive program is disclosed in the filings, and whether there are "back room" criteria not subject to public review.

The division of opinion to the story broadcasts a stark and wide understanding of the issues, of the plan, and whether performance based incentive plans should even be a part of the work comp schema.

Here are some of the comments posted thus far to the story:

"It is absolutely ridiculous that Harbor will only compensate at 100% of OMFS if physicians basically don't do surgery, don't order MRI, no meds and limit physical therapy to 6 visits. Anything outside of this regiment the physician gets less than OMFS."

*****

"Are we the only ones concerned? As a TPA, we deal with attorney selected MPN physicians. Many of these MPN physicians even address their progress reports to the attorney with a CC to us, the TPA."

*****

"I agree that the insurance company should not be allowed to incentivize doctors, but when I read CAAA's response I laughed. 'They're supposed to be paid to practice medicine, not to improve the numbers of an insurance company's bottom line,' he said. Insert applicant attorney law firm name in for the insurance company in the previous sentence. That's been going on for decades."

*****

"Notice the outrage geared toward, 'will my client get a lower rating?" = 'will my fee be affected?' Rather, shouldn't the interest be whether the treatment was effective in returning my client back to work or preinjury status??? Or even, is this a provider who overbills, overprescribes or frequently requests treatment outside of MTUS, ODG or ACOEM?"

*****

Harbor Health posted a reply:

"Not only is there no connection to whether a doctor reduces the amount a care delivered to an injured workers, the model works quite the opposite from the concern expressed. A provider who delivers better health outcomes can in fact spend more on care than their peers and actually score in the top 20% of the benchmarking. This is because our model focuses on total outcomes; cost is only one of several factors measured and it is measured in the aggregate with medical spend, indemnity spend, and claims expense. A doctor can actually drive higher spend in medical if that investment results in better cure rates, reduced lost time, and reduced litigation."

*****

Frankly it's ludicrous that anyone has to provide any financial incentive to do the right thing, but this is work comp and at the end we only have human motivations to work with. I get it, and if the rules really will deliver better medicine, and the injured worker truly is benefited, then great!

However, transparency is really the question: One person's motivation is another person's deception ... there's a line of tolerance that defines disputes.

Jean-Louis Guillard, is a Swiss lawyer. He posted a thought provoking article on LinkedIn a couple weeks ago about ethics in business and that fuzzy line of tolerance.

"[T]he scope of the compliance or ethics message is somehow limited and the technicalities are hidden into legal jargon," Guillard writes. "'We do not offer bribes'. Indeed, but do you pay when asked?"

That same logic is applicable in reverse.

"We reward good outcomes."

Indeed, but who defines the "good outcomes," and do you punish for transgression from any particular corporate directive?

Sam vs. Jane

The Workers' Compensation Research Institute's latest study essentially states that financial incentives influence treatment considerations - that capitated systems will cause a case shift away onto fee for service systems, like workers' compensation.

Sometimes those incentives get reversed too - and it's all about who's paying, and who's receiving.

The following comparison that was communicated to me by a reader is anecdotal for sure, but it is illustrative, and alarming. The only real difference in the quantity of similar medical treatment rendered is an elderly man via Medicare versus a middle age woman on workers' compensation. Guess who loses?

************

Sam vs. Jane

What a contrast Jane's situation with Sam's dad's situation. 

We can't get the rehab people to stop treating Same's dad (Medicare), versus Jane (workers' compensation) who can't get anyone to treat her. 

Sam's dad, 97,  fell 4 times a few months ago and now the rehab people won't quit. They stop by with questionnaires (all the same) but 3 people have to fill out the same forms. They treat him with occupational therapy 3X/day. He does not want occupational therapy. He's 97, he wants to sit in his chair and read and at 97 he's entitled to do that. 

Sam had several meetings telling them to stop the rehab. Then coming up in the elevator after the last meeting to again tell them - NO REHAB for at least 2 weeks.... when the elevator door opened on the 4th floor ..... guess who was standing there waiting to come downstairs -- the rehab woman!  

Sam politely asked her if she wasn't possibly at his father's apartment and sure enough she had been -- she'd stopped by to "say hi" even though less than 1 hour earlier Sam had had a 20 minute conversation with her and never uttered anything other than "No, we do NOT WANT REHAB."

Contrast to Jane who fell and has had to beg for care. And has had DOZENS of denials of care for her witnessed, admitted, injury.

The rehab woman for Sam's dad gets paid per treatment, and probably an incentive bonus when she treats over 50 times/week, or something.

By contrast, utilization review, the adjuster and the defense counsel get rewarded for refusing care. Defense counsel gets paid more for every hour he works the file to deny care. UR gets paid per review, and they know the expectation is to deny care. The adjuster doesn't really care since the employer has, no doubt, a large deductible policy and they still get their Allocated Loss Expense. The vendors are allowed to run wild.

Sam's dad is in a high quality, expensive facility with vendors that are ruling the roost, running wild providing unwanted treatments. He was an Colonel in Army, and a university Dean, but is now treated like an idiot by the rehab people.

Jane, on the other hand, has had to find her own care, pay for it herself (including the lodging necessary because the only facility she could afford was too far away for a normal commute) and eventually ran out of money, and options.

Anyway, it's interesting to watch the two different systems and how, in different ways, they mistreat those they serve.

************

While the WCRI was focused on case shifting into or away from workers' compensation, the real take away is further confirmation, reprehensible as it is, that providers of medical care (and those responsible for managing them) will go where the dollars are, and unfortunately that's not always in the best interests of the patient or injured worker.

Business, after all, is business...

Guilty Without Charge

The other day I wrote about the fear in the workers' compensation industry to blow the whistle on wrong doers.

Many readers acknowledged that fact and I got several telephone calls and comments/emails that there is a culture of retaliation in workers' compensation against do-gooders.

And everyone thinks that they will be singled out, believing that the problem is only in the state or jurisdiction in which they participate.

It's not. What happens in one state is rampant, and unfortunately, standard, practice in probably every state. I think I've had enough phone calls on the topic from different people in completely different jurisdictions to confidently state that.

Bowzer knows it when he sniffs it...

One trick that happens to be in vogue across state lines is the use of third party networks to obfuscate the true medical treatment bill, as I mentioned Wednesday.

Here's how it works:

A medical provider renders services to an injured worker and submits his or her bill to the medical provider network.

The MPN has a contract with XYZ claims department to manage the medical billing and is paid on a percentage of "cost savings" basis.

The MPN then manipulates the original medical billing, recoding and otherwise changing the bill to inflate it and then "discount" it.

I was told of one specific incident where a neurologist had received authorization from the claims examiner for a $10,000 procedure, but then the MPN interceded. The neurologist performed the procedure and submitted his bill to the MPN, and got paid a bit less because the MPN negotiated the fee down.

The MPN then recoded and manipulated the bill up to reflect $24,000 in services, and submitted the reformatted, new, billing to the carrier, which then paid the bill without question.

The allegation is that the MPN not only falsely represents what the charges were, but falsely represents what the actual savings are, and gets away with it by kicking back a "fee" to someone with a white collar high in the chain of command at the claims department.

Somehow the neurologist got a hold of the billings and documentation to support this - but won't divulge it to reveal identities because he gets too much business from the MPN and carrier.

If this scenario is happening on one state, it's happening in every state where there are MPNs, and in fact my bet is this kind of activity happens in nearly any case where cost controls are delegated to private enterprise.

So why doesn't someone do something about this? How can such illegal behavior continue on for so long without law enforcement interception?

This behavior was identified long ago - in 1961 President Dwight Eisenhower warned the American public of the dangers of the military-industrial complex: the policy and monetary relationships which exist between legislators, national armed forces, and the arms industry that supports them. The temptation to take advantage of the back door obfuscation for ill gotten profit is too great, particularly if the company is reporting to public investors.

I recall growing up news about all the big defense contractors getting wrapped up in investigations, hearings, fines and penalties, and monetary damages, as dirty relationships were uncovered. Nobody ever admits wrongdoing, but everybody pays a little more money to make the story go away.

In the case of workers' compensation, we don't have any big investigations going on that I'm aware of, and if there were then they are probably best kept secret at this time lest interference occur.

But it's not the fact that these shameful actions are occurring, or aren't stopped, which causes me consternation.

Its the fact that the fear of reprisal is so great that even those with the strongest of ethics, morals and sense of right-doing won't come forth with their information and identify people and companies.

Sure, we can all wait for law enforcement to jump in, but by then it's too late, if at all. The harm to the public has been done. The profiteers have had sufficient time to launder their gains and hide the evidence.

And ultimately the behavior is reinforced with what amounts to slaps on the wrists.

The industry is good at distracting us, and the public, from this white collar crime: there are fraud enforcement divisions that get their funding from the insurance industry, there are fraud think tank organizations that get their funding from the insurance industry, and press releases of injured worker fraud get lots of airplay despite the fact that the dollar amounts involved are de minimis in comparison to all other forms of fraud.

Nothing is more effective in curbing bad behavior than the court of public opinion - but until identification and documentation is provided then we're all, each and every one of us, just as guilty of condoning fraud as the criminals committing it are.

Fly The Claim

Four One Mike over the LA basin managing risk...

Heading back to California today from the 70th annual WCI Educational Conference in Florida, it's been a week since Bonanza Six Six Four One Mike has been in the air and it's been 8 days since I checked up on Mom.

Last week Mom was still dealing with a bit of pneumonia in the lower left lobe of her lung. She was happy as she normally is, and even referred to me accurately as her son (normally she gets this confused and I've been called grandson, nephew, husband, cousin ... everything but her son).

But Mom still had a bit of a cough, and still required oxygen because her O2 uptake without the supplement was in the low 80s.

My brother had stopped by a few days ago to install new safety cords to her hearing aids because the original installation had broken. He reported an otherwise "normal" Mom.

And of course, Four One Mike hasn't been in the air since then. I know she'll need a half quart of oil before I fire up that Continental IO 520 tomorrow; she may need some air in the tires, and the windshield will need a good cleaning. The GPS database needs its 28 day cycle update.

Otherwise I don't expect any surprises from Four One Mike - the pitch servo is still in Kansas for repair but once properly trimmed the plane flies hands off just fine and the pitch servo is only missed when doing an instrument approach (without a pitch servo there is no autopilot coupling to the vertical gradient, so it must be hand flown).

A couple of days ago the airport manager at Oceanside called and left a message that the left rear window was still open (doh!), but that there didn't appear to be anything amiss with the car I use to visit Mom after landing ... phew!

Here it is, well more than 24 hours in advance and I'm already thinking of what needs to be done to accomplish the mission of checking on Mom.

In our world, we would call this a part of risk management.

Risk management entails thinking ahead and making sure that contingencies are in place to deal with the unexpected. Certainly tomorrow things could go wrong. Part of this phase of risk management, however, is planning.

Planning is a primary and critical risk management technique. It is the basis of risk management.

Risk management isn't rocket science. Hell, it's barely science at all - it's mostly common sense. We have thousands of years of existence on this planet and there's not a whole lot of risk that hasn't yet been experienced by human beings.

The lessons we have learned over those thousands of years have been reinforced by experience. We have documented and chronicled the unexpected. We have studied those events. We have devised methods of minimizing such events in the future, and have strategies for dealing with them in case similar events do occur.

Risk management is, by definition, a conservative practice. It has to be because you can't manage the unknown; one doesn't experiment with risk.

Which is why I cringe when I see phrases touting, "Cutting edge risk management techniques."

That phrase is an oxymoron. There is nothing "cutting edge" about risk management. Being "cutting edge" strongly implies operating outside the norm, on the fringes of what is known and established.

Workers' compensation has no place for "cutting edge." We live in a very basic, fundamental world. Work place safety essentially means don't be stupid, and prevent other people from being stupid, or at least minimizing the possibility that someone will be stupid.

Flying epitomizes risk management, and trust me, there's nothing "cutting edge" about making sure planes don't fall out of the sky or hit things that break them.

The lessons have been learned and repeated, and get repeated thousands of times every day: planning, communication, decision making.

Fail any of those three fundamental risk management techniques in aviation and ... you die.

It's a pretty simple concept.

Pilots and airplane owners can make things complicated. We can get tangled up about operational details: manifold pressure readings at certain altitudes, propeller RPM, indicated airspeed versus angle of attack, comm one or comm two, ATIS reports, TCAD settings, frequencies, approach plates, departure procedures, etc., etc.

Lots of details.

But when something bad happens pilots revert to basic, fundamental risk management techniques and the single most basic those is, "fly the airplane."

"Fly the airplane." Simple, concise, easy to remember ... which is what humans need when panic sets in.

We panic a lot in workers' compensation. We talk about medical marijuana, opt out, reform, fee schedules, waiting periods, and other topics that induce industry anxiety.

We get all confused about "flying the airplane" in workers' compensation. We get hung up on the operational details: TTD, PTD, RTW, ACOEM, ODG, MTUS, MPN, QME, etc., etc.

Ugh ....

There's lots of "cutting edge" risk management techniques propounded by "experts" who sell products and services to keep the industry "cutting edge."

The reality is that all these cutting edge risk management techniques just increase costs because it takes away from just "flying the airplane," or in the case of workers' compensation, just paying the claim.

I know, I know - it's not that simple. There are rules to abide by, hoops to jump through, things to be audited, checks and balances ... all sorts of details to pay attention to.

I suggest that it IS that simple; that it doesn't have to be that hard. Is there an injury - yes or no? Does that injury require treatment - yes or no?

When a pilot "just flies the airplane" he or she makes binary decisions - yes or no. There's no time to consider whether the FAA might get mad or ATC might have an issue. There's no time to fiddle with gadgets, dials and knobs.

Everything is a yes or a no, broken down to the most simple, basic risk management fundamentals.

Tomorrow, I'll check flight conditions. My pre-planning today suggests that everything should be fine and within the capabilities of Four One Mike and its pilot.

I'm planning to fly Four One Mike. I'll check the weather and decide, yes or no, whether to go. I'll preflight the plane and then make a yes or no "go" decision.

I'm planning on seeing you tomorrow Mom! I'm hoping for a "yes" risk management decision, but hope you're not disappointed if it's a "no."

Rules of the Game

Texas basically started the medical provider network trend and there are many states that have modeled their systems, albeit with notable differences, on the Texas network style.

But a recent case out of the 5th District Court of Appeals in Texas may alarm physicians and other medical providers in networks, because in private contractual settings a doctor is not free to express his opinion, and certainly not in his chart notes, nor encourage patients to take legal action against the network or the underlying carrier.

Dr. John C. McConnell, is a board-certified orthopedic surgeon since 1987 who got his medical degree from the University of Texas Southwestern Medical School in Dallas, completed a residency in orthopedic surgery at the University of Tennessee and a fellowship at Tufts University of Medicine in Boston.

He thought he was advocating for his patients when he made deleterious notes in patient charts, stating in one that he believed Liberty Mutual Insurance Company was acting in bad faith, and that "inappropriate (`bad faith') denials on the part of work comp carriers in Texas are unfortunately endemic."

In another chart McConnell wrote that he believed that most carriers engage in a "3-D (delay/denial/dispute of care) business strategy," supported by the "opinions of a network of physicians from whom carriers can obtain whatever opinions they want.”

Liberty didn't like these comments so it told the network manager, Coventry Health (which is now part of Aetna) to terminate McConnell from its network.

After the termination McConnell sued on various legal theories, all based in tort but not in contract.

Likely that's because there was no actual breach of contract.

Regardless, the trial judge threw the case out.

And last week the 5th DCA upheld the trial judge.

The court said that generally, "conduct pursuant to a valid contract can not be said to be independently tortious or wrongful" and that the evidence showed "the conduct McConnell complains about was based on Coventry’s exercise of its legal rights under its contract with McConnell."

Liberty also "did exactly what its contract with Coventry allowed it to do," the court said, and McConnell had not properly presented a breach-of-contract claim to the trial judge.

Texas Department of Insurance, which governs the state's workers' compensation system, reports that physicians are vacating it.

In 2000, there were 17,318 doctors participating in the Texas system, representing about 57% of the physician population in the state. By 2013, according to the Department, the number of doctors in the comp system had dropped to 16,906 – even though the total number of doctors in the state had continued to rise at an average of 3% per year – leaving only 40% of the state's doctors were treating injured workers as of 2013.

Cases like McConnell's may explain this trend.

According to McConnell's appellate brief, in the two years before one of his patients sued Liberty Mutual for bad faith, Coventry received only one complaint concerning McConnell from all of its payers. But after the patient's bad-faith suit was filed, Coventry received 10 new complaints from Liberty in nine months.

What Liberty and Coventry were telling McConnell, and other physicians in its networks, is don't encourage patients to sue the carrier and its agents for bad faith (which has virtually no chance of success in Texas any longer anyhow).

And the message to McConnell's patients, and others similarly situated, is don't complain when someone else is paying your medical bill.

Until there's some legislative adjustment, those are the rules of the game.

Simply Complex

California workers' compensation claims stay open longer, much longer, than the national average and as a consequence cost a whole lot more when compared to other states, and according to the Workers' Compensation Insurance Rating Bureau much of this has to do with when medical treatment is paid for.

Only 39% of ultimate accident year medical payments in California are made within the first 36 months of an injury, compared to a national average of 67%.

As a consequence, California employers pay more for workers' compensation insurance than any other state no matter what study is used to compare statistics.

The WCIRB analyzed 1 million claims and $4.4 billion in medical benefit payments. The claims were divided into categories based on the interval between the date of the accident and the date of medical service.

Of the claims reviewed, 84% had medical services provided within the first three years following the accident. These claims accounted for 66% of total medical payments reviewed.

About 12% of claims had medical services being provided between three to 10 years from the date of injury, accounting for $970 million, or 22% of payments reviewed. And while only 4% of claims were still getting medical services between 10 and 30 years after an injury, payments for these claims totaled $559 million, or 13% of costs.

Greg Johnson, director of medical analytics for the WCIRB, said in a WCIRB Research Forum webinar yesterday that claims start to develop similar patterns the longer they stay open: Prescriptions for narcotic painkillers and psychoactive drugs increase for workers still receiving medical care three years following an injury.

Prescription drugs account for 10% of payments made for services provided up to three years following an accident. That number increases to 27% of payments services provided three to 10 years following an injury and 37.2% of payments 10 to 30 years after the accident.

Johnson noted that the amount spent on drugs is about 4% to 5% higher than the amount paid to pharmacies for each cohort, and that physician dispensing is the culprit, and that the longer a claim stays open the more likely narcotic prescriptions become involved.

Johnson couldn't say whether there was a cause and effect in the relationship, only that we know there is a relationship.

In addition, three years after an injury payments for services such as physical therapy and chiropractic care drop off considerably, which makes sense given California's hard cap and reimbursement restrictions on those service codes.

Physical medicine accounts for 11.1% of payments for services up to three years following an injury, 4.2% of payments for services provided three to 10 years after an injury and 2.2% of payments 10 to 30 years after an injury.

Of course those conditions evolve from acute to chronic in nature, further complicating the treatment picture.

"This shows me we've got an aging population," Johnson said. "If you look at the health care statistics in the population, these chronic problems obviously develop with other people, and the comp system is paying for many medical problems of aging. The acute injuries are related to the original injury, but the individuals here evolve in terms of the primary diagnosis to more chronic problems over time."

I'm sure there's all sorts of other explanations as well, and everyone can point a finger at someone else for this phenomenon.

All that doesn't matter. Everyone's to blame and no one does anything about it.

The fact of the matter is that behavior of everyone in the system is a product of the laws and regulations that establish the boundaries. Those boundaries drive incentives. Incentives drive behavior. Behavior drives costs.

I wrote on Tuesday about trust. There is very little trust in workers' compensation. There's even less trust in California.

That's why we have artificial limitations on physical medicine services - because there was a group of providers who couldn't be trusted.

That's why we have fee schedules for copy and interpreting services - because there was a group of vendors who couldn't be trusted.

That's why there's a claims audit process and a penalty system - because there was a group of claims payers who couldn't be trusted.

That's why there's payroll audit and employer premises inspections - because there was a group of employers who couldn't be trusted.

That's why there's sub rosa investigation and prying into the private lives of injured workers - because there was a group of employees who couldn't be trusted.

With each level of mistrust there's greater gesticulation by the conductor, and all of us react in amplified manners to the point where the entire "orchestra" is flailing and creating the comedy that gets ridiculed and despised.

If you look at the top performers in the self-insured/administered category you don't find these statistical anomalies, and claims get closed faster, employees return to work and have less disabilities - because the employers trust their providers and their employees, and the providers trust the employers and the employees, and the employees trust their employers and providers.

It's a complex trusting relationship that takes a lot of work to establish and maintain and frankly it comes down to money.

The friction in the system is money. But the lubrication in the system is also money. There's a fine line between the two. That distinction is understood by those top performers and they use those incentives to drive their claims cultures.

Those with good experiences look at the moon, not at the finger pointing at the moon. They pay for good results up front, not for bad results at the end.

It's really quite simple, yet unnervingly complex.

MPN Means Managed

Medical Provider Networks, introduced into the California workers' compensation system around 2003, are one form of managed care.

The purpose of MPNs was to reduce medical treatment costs.

But like anything "managed," success depends upon the actual management.

In particular management for the right reasons.

In the case of MPNs in workers' compensation, management just to reduce medical costs isn't a sufficient end goal because the medical component of workers' compensation affects all of the other components such as disability, indemnity, return to work, etc.

The California Workers' Compensation Institute has just released a report on MPNs that essentially concludes that well managed MPNs work, and those that aren't, don't.

Image from Total Managed Care, Inc.

The study reviewed claims pre-MPN (the Preferred Provider Organization model period), the period of transition around 2003-04, and then the period when full MPN implementation was realized (Accident Year 2009 and beyond).

In summary the researchers found:

• Overall, network utilization increased from 55.4 percent in the PPO model period (AY 2000 – AY 2002) to 79.5 percent in the full MPN period (AY 2009 – June AY 2011), while for indemnity claims it more than tripled from 24.4 percent to 77.2 percent.

• The proportion of all network claims with attorney involvement increased from 12.2 percent in the PPO period to 17.4 percent in the full MPN period.

• The claim closure rate for network claims measured at 12 months post-injury decreased from 72.7 percent in the PPO period to 61.2 percent in the full MPN period.

• The percentage of network claims with at least one opioid prescription increased from 39.1 percent in the PPO period to 54.5 percent in the full MPN period.

• Differences in average risk-adjusted medical payments between network and non-network claims varied greatly by region, ranging from no difference in Los Angeles County to a 20 percent difference in San Diego County in the full MPN period.

• Average risk-adjusted medical payments on indemnity claims at 24 months post injury were 16 percent less for network claims than for non-network claims in the PPO period, but were only 3 percent less in the full MPN period. 

• Average risk-adjusted medical payments on indemnity claims with attorney involvement were 14 percent less for network claims than non-network claims in the PPO period, but were 2 percent more in the full MPN period.

• Average risk-adjusted medical payments on network claims with opioids were 16 percent less for network claims than non-network claims in the PPO period, but were 20 percent less in the full MPN period.

So, while the use of networks to medically manage treatment of work-related injuries has fulfilled the legislative intent to encourage network use (which increased from 55 percent of work injuries prior to MPN implementation to 80 percent in the fully implemented MPN period), over time the MPNs has not lowered the cost of medical care.

But this is on an overall model assessment. The researchers point out that there was considerable variation across the individual MPNs sampled, and that just as many networks had lower cost per claim outcomes as higher cost per claim outcomes.

What seemed to affect many MPNs are access requirements controlled by law and regulation - the more geographically diverse MPNs have a more difficult time fulfilling those mandates, and, ergo, experience greater diversity in outcomes.

In other words, the success of any one single MPN is highly dependent on how well managed it is - cutting medical treatment payments is not, and can not be, the sole reason for an MPN. Other outcomes need to be considered when a claims payer goes shopping, or decides to create their own, MPN.

This is evident in the findings that claim closure rates with MPNs takes longer, and that opioid prescription was higher - these are findings that are contradictory to good claims management and positive outcomes.

CWCI's Research Note, “PPO to MPN: Impact of Physician Networks in the California Workers’ Compensation System,” is available to members and subscribers in the Research section of the CWCI website.

WorkCompCentral will have a more detailed story on the report, with commentary, in the coming days.

Claim Commodity

Access to medical care is usually debated in terms of geography or process approval - injured workers in more rural areas have greater difficulty getting to a physician because of geographical limitations, or a particular treatment request has to go through the approval/denial process before a physician will execute a treatment plan.

But applicant attorney and radio talk show host Alan Gurvey, in a recent WorkCompCentral opinion piece, points out a much more sinister and debilitating access issue: California Medical Provider Networks in accepted cases are themselves an access to care issue.

MPNs were invented a dozen years ago to allegedly bring efficiency into workers' compensation medical treatment by consolidating physician practices into a managed care setting, but as recently observed by the California Workers' Compensation Institute, their effectiveness is questionable, if not outright negative.

CWCI, at its annual meeting in March, disclosed that it is looking at three different eras: the preferred provider organization period prior to the 2004 reforms, with dates of injury between 2000 and 2002; the transition period from PPOs to MPNs with dates of injuries in 2003 through 2008; and finally the pure MPN era with dates of injury from 2009 through 2011.

Though the report hasn't been released yet, CWCI president Alex Swedlow did provide some preliminary conclusions.

In the PPO era, Swedlow observed, the average cost per claim was about $9,321 for services provided by a network provider, compared to $11,065 for non-network provider services, a difference of about 16%. During the transition period, the cost of in-network services increased to about $9,843 per claim while out-of-network costs decreased to $10,290, a difference of about 4%, Swedlow said.

In the current era of MPNs, the difference between network and non-network costs is down to about 3%. The average cost per claim is now about $13,654 when services are provided in-network and $14,061 for non-network services.

So much for "savings."

Part of the reason "for that collapse in savings" could be attributed to the growing number of claims that are being treated in the networks, Swedlow said; MPN administrators are "finding it somewhat difficult to scale the size of the network to have the same kind of superior results among a wider list of physicians."

Or maybe, as anecdotally alleged by Gurvey, it's a communication issue that starts at the claims administration office - he says that it is nearly universally impossible, in his experience, to get authorization for treatment within an MPN on an accepted case without going through weeks of failed communications until a proverbial gun is held to the head of the administrator by way of expedited hearing to get approval.

And there is still the issue of having a physician within an MPN who actually will take a work comp case, and then know what to do with it given the Byzantine complexities of treatment rules, regulations and guidelines.

Gurvey says, "it seems that the MPN system is set up as an intentional way to cause confusion, unresponsiveness, inappropriate treatment, unreasonable delays, and cost containment, without concern for the injured worker," and that the MPN structure needs reexamination.

If CWCI's preliminary indications are correct, then frankly MPNs don't make any sense. It was an experiment that failed the practicality test.

And this is supported by the Workers' Compensation Research Institute's recent findings that medical fee schedule scrimping exacerbates alternative billing - in other words, whack-a-mole.

“When (providers) lose revenue because of the … reforms, they would really have added incentive to try to find a way to retain the revenue that they used to get. So they keep playing with the system, playing with the rules,” WCRI researcher Dongchun Wang said during a webinar presentation yesterday. “I just want to emphasize how important it is to evaluate the impact of reforms and to try to identify those unintended consequences and address them promptly.”

So not only is there a shortage of physicians that are willing to operate within California's preferred method of medical delivery, those that do so are motivated to operate at fuzzy borders because of perverse payment rules and obstacles.

What's happened is that the industry's obsession with micro-management has backfired (as do most attempts at micro-management). The micro-management is a consequence of trying to save a penny on a wholesale basis.

The reality is that a workers' claim for compensation isn't a commodity, isn't something that can be dealt with on a wholesale basis - though administrator executives would like that.

Claims administration is a laborious, skill-intensive manual process that requires human decision making on a case by case basis.

The failure of MPNs is not a result of MPNs. The failure of fee schedules is not the failure of fee schedules.

These are symptoms of failing to take care of the claim - correctly from the outset, by skilled, knowledgeable, educated, compassionate and empathetic humans.

Which by the way is another "shortage," but that's a post for another day.

What The Doctors [Don't] Know

I was honored to be on The Great Debate panel at the California Applicants' Attorneys Association Winter Convention in San Diego on Friday afternoon.

Presenting with me were:

• Christine Bouma, a member of the California Commission on Health Safety and Workers' Compensation;
• Dan Bagan, a member of the California Commission on Health Safety and Workers' Compensation;
• Jamie Berenson, a partner in the applicant law firm of Glauber/Berenson; and
• Barry Pearlman, founding partner in the defense law firm of Pearlman, Borska & Wax

Adam Dombchik, a partner in the applicant law firm, Gordon, Edelstein, Krepack, Grant, Felton & Goldstein, LLP, moderated (and input his opinion on occasion).

The Great Debate was, as you would expect, about SB 863, whether it's meeting expectations, how it has impacted employers, workers, and the industry, and observations as to its efficacy.

As one would expect with such a diverse selection of experience, opinions diverged on some issues, and interestingly, converged on more issues that I expected.

But one part of the presentation really caught my attention and points to a significant problem with California workers' compensation, and perhaps many other states: doctors don't know how to interface with the system, and the more complex the requirements on physician participation, the less likely they are to understand their roles, the expectations and the rules.

And this means failure in compliance, less effective treatment, increased disability, failed outcomes and increased expense.

Pearlman raised this issue with an anecdote about a recent presentation he gave to a large Medical Provider Network group of physicians.

Pearlman said that there were about 150 doctors in the audience, and he asked them several questions that drew complete blank stares: what is an MPN, are you in an MPN (remember this was a presentation TO an MPN!), what is the Medical Treatment Utilization Schedule, what is ACOEM, etc.

Blank stares. None of these physicians had any clue about workers' compensation regulation of their professional activity.

No wonder Utilization Review and Independent Medical Review are such road blocks - the physicians that are supposed to be complying with various standards don't even know a) that there are standards, or b) how to comply.

Ugh!

Remember that this is an anecdote and is not necessarily representative of all physicians that become involved in industrial medicine.

But it is a troubling anecdote nevertheless.

I don't think it's just a matter of education. I think it's a matter of motivation - what is the motivation to learn all this complexity if there is no financial or other incentive? The practice of medicine, in the end, is a business and that means that there are income and expense columns that get interpreted to profit.

If profit is not a positive number then either the expense column needs to be trimmed, or the income column needs to be bolstered.

Trimming the expense column is easier than bolstering the income column - nearly anyone that runs a business will tell you that. The amount of resources necessary to capture new revenue increases exponentially compared to retention of existing business.

Part of the expense column is education. There is the direct expense of acquiring the education, but there are also all of the indirect expenses, including intrusion into personal time.

And the more complicated a system is (as can be evidenced by the number of acronyms in any given system), the more expensive it becomes to become and stay educated, and deploy that education into practice.

This doesn't portend well for workers' compensation because part of the Grand Bargain is delivery of medical benefits: treatment and the reporting necessary for the legal/indemnity end to work.

Without doctors in the system able to do what the system asks of them means the system will fail.

There's a difficult balance between regulating the behavior of the professionals that make the system run in an efficient manner, and regulation to the point of stifling participation. If what Pearlman described is more that just a passing anecdote then we're on the wrong side of the fulcrum.

*************edited 01/27/2015*************

Steve Cattolica, Director of Government Relations for the California Society of Industrial Medicine and Surgery, provided this response to the above post - it was too long for a comment so I have included it as part of this original post:


David, while I agree with you for the most part, having heard the “Debate” panel, Barry Pearlman’s revelation absent any detail, may have led listeners to draw errant conclusions or diverted them from a clear picture of a much different and pervasive source of the problem he seemed to want to convey.

Regarding physician education and expertise; motivation to learn is important and that certainly tracks to some degree with reimbursement. However, one must keep in mind that some providers’ reimbursement comes in the form of a salary check or a contracted percentage based on production. Therefore, in what could be a surprisingly high number of instances, the profit motive lies with the network itself, with a leased sub-network or with another corporate entity, rather than the provider.

To this attendee, this segment of the “Debate” seemed to lay the blame for poor results on the ignorance of physicians. Notwithstanding your statement that it was, “not necessarily representative of all physicians that become involved in industrial medicine,” I believe it is an extreme disservice to providers to lay that ignorance or their motivation to learn about the comp system, solely at the feet of their own reimbursement.

Pearlman did not choose to tell the audience to which MPN he was speaking. I can understand at least one reason why – as I outline below, the MPN might become open to unwanted (if not deserved) scrutiny.

He also left out the background of his physician audience – were they specialists or primary care? Were they solo or small group practitioners? Were they independent contractors to a large health insurer’s medical group or employees? Did they even know that they were contracted with the MPN in the first place? All of these facts matter, when for lack of them the speaker leaves the audience to draw an over-generalized conclusion regarding the training, competency and motivation of the provider community at large.

Often employee physicians, even in specialized work comp clinic chains, have little idea how the work comp system actually functions. They are trained in their employer’s operating system and someone else takes care of the rest. In this context, the chain’s corporate decision how to “train” its physicians could be based upon the notion that rote compliance with policies and procedures equals the lowest cost (and highest margins).

More importantly, he did not mention how his audience came to be contracted to the MPN in the first place. He may not have known that information. As I queried above, did these providers even know they were providing services in a work comp network? Were these providers part of a leased network? How did they get in? Who is watching the store?

He also did not offer to explain the reason why a work comp network would contract with these providers in the first place. I suspect he did not know this information either. What was the network thinking when it presented these physicians to its workers’ compensation clients and prospects as being part of an MPN? Did the network bother to tell the client or prospect about the providers’ lack of knowledge or expertise about the comp system? Did the network even know this information itself? What kind of an informed buying decision could any carrier, TPA or employer make when the baseline expertise of the contracted providers is unknown or its disclosure may be withheld? Caveat emptor doesn’t really do justice to this situation. From this point of view, Barry’s education program appears to have been motivated by the network’s or its customer’s need for damage control rather than quality healthcare.

We have long maintained that direct contracting between providers and employers is the best and least expensive relationship available to assure the highest quality healthcare for injured workers. That’s motivation.

Don't Use a Bigger Hammer

The California Applicant's Attorneys Association has issued a report keeping Utilization Review and Independent Medical Review in the spotlight.

CAAA says that the Division of Workers' Compensation and other industry group's measurements of the rates of denial and delay on medical treatment can't be trusted.

The various industry reports by the California Workers' Compensation Institute and The Rand Corporation indicate that somewhere between 65% and 70% of all treatment requests are approved without resort to UR, much less getting elevated into the system.

Somewhere around 20+% are denied, another 6+% are modified prior to approval, and the balance gets delayed to some other disposition.

The year examined affects the statistics and the actual ratios, but the above generalizations are close enough for argument.

Adding the CWCI 2012 and 2013 figures to the numbers provided by Rand would show between 2007 and 2013, of the 8,524 treatment requests submitted, 5,908 or (69.3%) were approved without modification or delay and 1,914 (22.5%) were denied.

CAAA states that the variability in the percentage of treatment requests that are approved and denied “suggests that the practices of the claims administrator have a major influence on the approval rate.”

CAAA also takes issue with mixing treatment requests from medical only claims along with indemnity claims.

The statisticians take issue with CAAA's claims of course.

Alex Swedlow, president of CWCI and a co-author of the UR report, said differentiating between medical-only and indemnity claims when examining how claims adjusters handle treatment requests would be inappropriate. It suggests there are different standards of appropriate care depending on whether an injured worker lost time or not, he said.

“The standard of care is the standard of care,” he said. “To try to make the case that you have to have time off work as a test just doesn't make any sense.”

He also says that if every carrier sent every request for treatment to UR would increase cost management expenses dramatically and it would easily be distinguished in carrier expense reporting.

CWCI's study concluded that between adjusters approving requests and utilization-review companies authorizing treatments, 94.1% of treatment requests by physicians are ultimately approved.

CAAA's experience may be different, but there are explanations for that difference.

According to CWCI, an analysis of claims from accident years 2005 to 2010 found an attorney was involved in 80.4% of permanent disability claims and 38.1% of all indemnity claims.

Ergo, the CAAA attorney's experience is already significantly influenced by the fact that these claims already are in a disputed status, and one of the big disputes is going to be medical treatment.

In other words, the CAAA experience is a microcosm of the total workers' compensation environment.

For example, according to CWCI, the average cost of an indemnity claim in Los Angeles was $64,399 if an attorney was involved and $8,193 with no attorney. In Orange County, indemnity claims involving attorneys cost an average $65,681, compared to $9,168 for claims that weren't litigated.

In Sacramento, the average cost for a litigated claim was $66,627 while the cost for a non-represented claim was $8,540.

These numbers of course don't account for severity of injury, the extent of treatment requests, the amount of defense fees, the expense of UR, and a whole host of other unanswered questions that may factor into the total expense experience of a litigated versus non-litigated case.

But CAAA attorneys get cases that aren't entirely representative of the average workers' compensation experience. Their cases already are involved in dispute, are already on a path towards more significant severity (both medical and indemnity), and probably most importantly in the distinction, another set of eyes and hands are meddling in the control of the case.

I had opined earlier that IF there was a problem with treatment requests and out of control UR that the parties need to get together and HONESTLY disclose their numbers and experiences, without the interference of emotion or agenda, to see if there really is a problem and if so what to do about it.

The posturing by constituencies at odds with each other doesn't further the discussion and only makes participants dig in deeper to protect their positions and their opinions.

For instance, how many claimants go to an attorney as a consequence of the UR/IMR process?

Or, how many treatment denials get elevated in attorney involved cases versus non-represented?

And of those, how many are driven by an MPN doctor versus cases that are outside an MPN?

I could go on and on. There are so many unanswered questions surrounding the debate regarding the efficacy and efficiency of UR and IMR that industry statements from any position, party or constituency are almost meaningless, and seem to foster distrust and posturing.

In other words, OF COURSE attorneys are going to question the numbers posited by CWCI, Rand, DWC and others - because their experience on a case-by-case basis is at the extreme end of all claims. Applicant attorneys are, rightfully, going to question and act upon that experience - it is what they know and understand.

And these cases ARE a problem - as noted above litigated claims represent a huge expense over and above non-litigated cases. But they get litigated for a reason which is not easily quantified, and thus not easily understood.

We know anecdotally why claims "lawyer up" and one of the reasons is because medical treatment may have been delayed or denied.

To say that these cases are representative of an entire system is incorrect, just as it is incorrect to say that the overall UR/IMR experience is representative of litigated claims.

We can debate all of this endlessly but to no avail.

The volume of IMR requests had alarmed me, as it had many others in California workers' compensation.

I'm not so sure now. Perhaps it was just reaching equilibrium.

Bottom line - I'm not ready to declare that the present experience with UR/IMR is any overall industry problem. There may be specific issues that need to be addressed, but not on a wholesale basis.

My grandfather lived with us when I was growing up. He was a "master mechanic" back in the days when there was respect for the trades and such designations meant something.

My favorite quote of his is, "if it doesn't fit, use a bigger hammer."

He was of course being facetious.

Let's not let his facetious maxim drive workers' compensation policy.

RVRBS and Quality - Does Anyone Care?

Paying for medical services is hugely complex because of competing interests.

Factor in the added complexity of workers' compensation's indemnification factors, which ultimately rely on the execution, delivery and interpretation of medical services, and the complexity increases substantially.

California's conversion to a Resource-Based Relative Value Scale fee schedule, which has been in the works for years, is drawing out these competing interests more acutely as the time for implementation draws near.

Some physician groups have been saying that moving to an RVRBS system will alienate doctors even further and constrict access to care because specialists will not be reimbursed sufficiently to encourage their participation.

Others argue that an RVRBS system, which according to reports will increase reimbursement for primary care physicians, will actually increase access and improve outcomes by redirecting the motivations of practitioners.

And of course there is the old debate about how costs to employers will be affected.

Earlier this week the California Workers’ Compensation Institute that the division’s plans for annual inflation adjustments to its proposed medical fee schedule will eventually exceed 120% of Medicare and will cost the employer community much more than legislatively intended due to the way the Division of Workers' Compensation is interpreting the law and implementing the regulatory framework.

The DWC says that the way CWCI has calculated costs is erroneous, and that DWC's application of RVRBS, which ties rate structure to Medicare rates, will maintain medical costs within the Labor Code's mandate of no more than 120% of Medicare.

At the heart of the various arguments is how Medicare adjusts rates over time with annual inflation adjustments.

CWCI says that DWC's proposed methodology will result in total allowable fees for physician services to increase by $250.23 million during the DWC’s proposed four-year transition to RBRVS.

They say the Labor Code allows the DWC to adopt conversion factors and other adjustments affecting physician payments that are different than those used by Medicare so long as total aggregate fees in the work comp schedule don’t exceed 120% of Medicare’s total allowable fees for the same services.

“Unless this section of the law is applied in the physician fee schedule regulations adopted by the DWC, the compounding effect will drive up allowable physician fees beyond the 120% cap and undermine reform savings intended to pay for increased disability benefits for injured employees,” CWCI said.

DWC says CWCI is interpreting the law incorrectly and that SB 863 says aggregate fees under the RBRVS fee schedule can’t exceed 120% of aggregate fees under Medicare as of July 1, 2012, and as adjusted for the Medicare Economic Index and relative value scale adjustments.

DWC's interpretation is that this is a legislative mandate that the workers’ compensation fee schedule diverge from Medicare, but that the update factors in the proposed fee schedule regulations utilize Medicare’s MEI and Medicare’s relative value scale adjustment factors as required by SB 863.

I don't know who is correct in this debate.

I'm not even sure it matters.

Once again, the workers' compensation world revolves around the cost of the system, rather than the delivery of quality care to injured workers.

The debate should really be about whether this conversion will: a) promote efficient, effective medical care to injured workers; and b) provide sustainable access to care by encouraging good medical participation.

The debate about costs arises only within the context of the payer community, be it insurance companies or self-insured employers, whose focus, in my opinion, is short-sighted.

The "long-tail" of workers' compensation claims has direct relationship to the quality of medical care delivered: timeliness, appropriateness, effectiveness - qualitative factors that can not be measured by a reimbursement schedule but which have direct impact on the duration and extent of disability.

In other words, the indemnity part of a claim.

The RVRBS debate is unfortunate, because it distracts the industry from a more robust, healthier (pun intended) debate about medical care payment and delivery - how to motivate both the doctor and the patient towards better outcomes.

So long as the industry makes costs its focal point there won't be any sound strategy, investigation, imagination, or development of methodologies to encourage quality over quantity, to the chagrin of the injured worker waiting to get the care needed to return to work, and the employer whose experience modification factor is unnecessarily inflated due to claim duration.

TX Innovates With Specialty Networks

Some may dispute this, but Texas continues to be a leading innovator in workers' compensation concepts, and not just because it is the home of non-subscription.

Prior to September 1, 2005, before the Texas Workers' Compensation Commission (TWCC) became the Division of Workers' Compensation (DWC) and the agencies duties were reorganized under the Department of Insurance, Texas was fodder for derision and criticism over the management of its workers' compensation system.

Since reformation and reorganization in 2005, however, Texas has led the way in establishing one of the most robust workers' compensation insurance markets in the country, with profitable underwriting for carriers, and affordable coverage for employers.

Employers opting into the state's system, rather than providing alternative benefit plans or going completely bare, has been increasing and carrier participation in the system has also been increasing.

The process has not been without pain, for sure. Injured workers' benefits are not the most generous, and medical coverage issues in the vast rural areas of Texas remain. Many physician and other medial vendors still feel that the Texas system lacks fairness in reimbursement for services, but participation rates remain steady.

One of the innovations that Texas brought to the workers' compensation market was medical management networks, and idea that has spread across the country with variations, but with the essential features mirroring those pioneered in Texas.

Texas is innovating again with new laws that would further the ability to create provider networks that don't easily fit within the certified network system created in Texas.

The certified network system in Texas requires application, interview, review, certification, maintenance and all sorts of other mandates to ensure that the network is operating properly and providing services without discrimination, and to ensure that physicians are properly paid.

With certification, however, comes cost and for small providers of specialty services or equipment, joining a network was prohibitive.

Texas is on the verge, however, of creating a method for these small specialty providers to become sub-networks, and thus create the ability to join larger networks that are certified.

This should in theory increase business for the small providers, decrease costs for networks, and offer more choice to payers.

Texas state Sen. Leticia Van de Putte, D-San Antonio, had little trouble moving Senate Bill 1322 through the state Legislature during the legislative session that ended on Monday. The bill passed the Senate with a 30-0 vote and won House approval with a 145-3 vote. The bill is now on Gov. Rick Perry's desk for his veto or final approval.

SB 1322 will allow home health care services and durable medical equipment providers to voluntarily create informal "specialty" networks. Before this bill, the legal requirements made it too costly for home health care and DME providers to form "certified networks."

The benefit to these specialty providers is consolidation of resources and operations - in particular billing and collection functions.

In addition the bill will allow home health care and DME networks to contract with certified networks and payers directly, which should increase business volume, in exchange for the discounted rates that a network will command.

Smaller vendors, who might be overlooked by some of the large health care networks, will now have opportunities for business and informal specialty networks can also provide services to underserved, rural areas.

Nothing is perfect, and nothing is set in stone - I'm sure there are downsides to this development. It is an untested concept and the idea still needs to get to the regulatory stage, assuming Gov. Perry signs the bill.

Nevertheless, they do things different in Texas, and managing workers' compensation is one of them. We'll see in a few years whether this idea pans out as expected.

Medical Networks and Indemnity Caps

California leads the headlines this morning with two very interesting, but unrelated, developments.

First, the Division of Workers' Compensation (DWC) in a public hearing held in Oakland on Wednesday said it is exploring the possibility of using the Department of Insurance or the Department of Managed Health Care to oversee entities providing physician network services.

There are arguments on both sides of the fence on this issue of course.

Greg Moore, president and chief executive officer of Harbor Health Systems in Irvine, said he is concerned that allowing the Department of Managed Health Care (DHMC) to regulate MPNs would create problems in California similar to what is happening with efforts to implement preferred provider program rules in Illinois.

Moore said the proposed rules in Illinois “reflect very much of a group health influence” with certain standards for approval dealing with co-pays and other issues “that have nothing to do with workers’ comp.” The concern is that this would make it more difficult to establish and maintain networks in work comp.

The other side of the argument is that allowing the DMHC to perform the oversight is that they have experience and expertise in the financial health of medical networks.

In response to the failure of several physician organizations in the 1990s, California lawmakers in 1999 passed SB 260, creating a Financial Solvency Standards Board within the Department of Managed Health Care. Organizations are required to submit quarterly reports and take corrective action if they don’t meet solvency requirements.

A white paper by California’s Integrated Healthcare Association said the regulation has made the group health provider network more stable.

I haven't studied the issues enough to take a position on the proposal, but what I do find fascinating is that this represents another step in the evolution of workers' compensation towards the unification of medical care.

The concept of universal care, 24 hour care, single stop shop, etc. has been floating for a couple of decades now with very little progress.

But the passage of the Affordable Care Act, the signing of HB 1 back in February 2009, and other Federal health related laws and regulations including ERISA, have accelerated the fusion of workers' compensation medicine and general health medicine. Outsourcing MPN oversight to a health care related agency is just another step towards this outcome.

On another note, the First District Court of Appeals (1st DCA) ruled yesterday that the limits of Labor Code section 4656 apply to benefits received by a public safety officer (police officer in this case) under Labor Code section 4850.

To the uninitiated, 4656 essentially limits temporary total disability indemnity to 104 weeks (though there are exceptions) from the start of the first payment. 4850 gives public safety officers a salary continuation benefit in lieu of temporary total disability indemnity (i.e. full weekly salary rather than the capped TTD weekly benefit) for 52 weeks.

The net amount to the injured officer can be dramatic.

And the cost of that benefit can also be dramatic in comparison to TTD.

The 1st DCA, in County of Alameda v. WCAB (Knittel), No. A135889, concluded that salary continuation benefits paid to Alameda County Deputy Sheriff Bryan Knittel counted toward the Labor Code's 104-week limit on payments for an injury causing temporary disability.

Police officer's associations are upset, arguing that giving public safety officers three years of benefits will "in many circumstances allow them time to recover and get back to work." Cutting off benefits after two years means that officers have less time to recover, which can effectively "force them out of the job and onto a disability retirement," thus forcing these people onto the public disability roles.

There are many scientific studies regarding disability status and return to work.

If a claimant isn't back to work after two years of being off work, they aren't returning.

That's pretty much the bottom line.

Time to move that person to the permanent disability roles.

Medical networks and public safety benefits - the complex world of work comp is ever evolving, constantly changing, and continuously entertaining.

The Fight Over MPNs Isn't About Treatment

I learned very early on in my workers' compensation legal career that medical control was control over the entire case.

My mentor, the legendary Rene Thomas Folse, PhD, JD, and probably the smartest man I have ever known, emphasized this lesson to me many times very early on as I was gaining experience in workers' compensation litigation - control over who engages the injured worker for medical considerations will control how the case concludes.

Indeed, it is this reality that drove the creation of Medical Provider Networks in California's "reform" law of 2004, and other states' reforms.

And it is this reality that is STILL driving intense litigation as the sides battle over medical control so that the "winning party" can get the upper hand in the cards being dealt in the determination of temporary and permanent disability indemnity, because as we all know, it is the indemnity component of a work comp case that drives its value to the parties (and in particular the injured worker and those working for him or her).

Recent California Workers' Compensation Appeals Board (WCAB) panel opinions highlight the importance, and illogical madness, of the fight for control.

In Matancias v. Milk Maid Dairy et al. WCAB Commissioners Ronnie G. Caplane and Frank M. Bass ruled that Milk Maid Dairy did not give proper notice of its MPN to employee Juan Carillo Matancias and therefore had to pay for the treatment that Mantacias obtained on his own at the San Joaquin Accident & Medical Group.

Matancias was injured on Oct. 31, 2007, when a cow giving birth to a calf pushed him through a fence. He received treatment that day from Dr. William Yale, who was part of Milk Maid's MPN.

Milk Maid sent Matancias a notice of its MPN and his rights on Nov. 15, 2007, but this notice did not identify which doctors were part of the network.

In May 2008, Dr. Yale released Matancias from his care. Matancias then began seeing Dr. Charles Lewis, who was part of the San Joaquin Accident & Medical Group, but not part of Milk Maid's network.

Milk Maid and its insurance carrier sent multiple letters to the medical group objecting to the services being provided by Dr. Lewis, which gave rise to the group's lien claim for $15,005.33.

Matancias and Milk Maid settled his workers' compensation claim for $20,000 in 2010. As part of the settlement, Milk Maid agreed to pay, adjust or litigate any liens of record.

The dispute over the San Joaquin Accident & Medical Group's lien went to trial before Workers' Compensation Administrative Law Judge Robert Norton last year, four years to the day after the date of Matancias' injury.

Norton determined Matancias had self-procured reasonable medical treatment from the medical group with a reasonable value of $6,304.87 and awarded that amount.

Milk Maid sought review by the WCAB, which denied reconsideration.

Caplane, writing for the majority, said Milk Maid had failed "to provide proper notice to applicant of his rights in the MPN," noting specifically that it never told Matancias "he could challenge his release from care by Dr. Yale as part of his rights in the MPN," and it provided no evidence showing that Matancias was notified that his later treating doctors were not part of the MPN.

"Moreover, defendant did not establish that it ever cured the defects in its notice to applicant after he began treating (out-of-network) so that he could be transferred into its MPN in conformity with applicable statutes and regulations," she added.

All of this, Caplane said, "evidence(d) a failure to provide reasonable medical treatment, such that defendant is liable for the medical treatment applicant self-procured."

Moresi, however, opined that "defendant established at trial that the initial treating physician Dr. Yale was in its MPN and he provided medical treatment for seven months before applicant chose to treat outside the MPN."

"The record also shows that defendant notified applicant of his rights in the MPN on November 15, 2007, while he was treating with Dr. Yale, and that defendant repeatedly notified lien claimant that it was not in defendant's MPN and was not authorized by defendant to provide medical treatment," Moresi contended.

He added that he did not think Milk Maid should have been obligated to prove that its MPN was authorized since the "lien claimant did not raise authorization of the MPN as an issue at the pretrial conference notwithstanding its obligation to identify all evidence and issues in dispute at that time," and " because it is reasonable to infer that the 'law has been obeyed' unless a party asserts otherwise."

Moresi pointed out that "the status of defendant's MPN may be easily determined from a reliable source by accessing the Department of Workers' Compensation website, which shows that defendant's MPN has been approved by the (Division of Workers' Compensation) administrative director since Dec. 30, 2004."

Disputes over proper MPNs have prompted a series of decisions from the WCAB, including Knight v. UPS, where a panel ruled that a payer must notify the applicant of the employer's properly-established MPN or it will be liable for the reasonable cost of medical treatment self-procured by the employee.

The WCAB also issued an en banc decision in Valdez v. Warehouse Demo Services, which held that when an employee has obtained unauthorized treatment outside of an employer's properly noticed and validly established MPN, reports from a non-MPN physician are inadmissible.

Earlier this year, the WCAB released a panel decision in Clifton v. Sears Holding Corp., which said employers may use judicial notice to show that they have a properly established MPN and satisfy the initial burden of proof that they provided valid notice of the MPN to the applicant by introducing the MPN notices that were given to the applicant into evidence.

But all of these decisions miss the reality of the situation, which is that medical control is not about delivering proper treatment - it is about driving the indemnity equation.

And wasn't that the basis for the 2004 reform laws in the first place - minimizing the amount of indemnity paid to injured workers?

Many of those who read this blog will place blame on the attorneys representing injured workers, and in my opinion that is misdirecting the argument, because attorneys are going to do what attorneys are trained to do - apply the law to specific factual situations in an attempt to drive the outcome for which the greatest motivation is rewarded, and in workers' compensation it is indemnity.

What happens with law over the years is that "holes" in the law are discovered as different fact patterns emerge that legislative authors could not anticipate (or choose to let courts figure it out…). This natural evolution of the law is derided by those objecting to the outcome as "manipulation", but the when the coin flips such evolution is celebrated.

So it is with MPNs. The assumption when the MPN law was put on the books was that certain notices would issue from the employer to the employee, but there was no consideration for HOW that was going to be accomplished.

And that is what the problem is with MPNs - the carrier community that supported the proposition does not take sufficient control over the notification process, leaving most of the process up to the employer to execute.

The employer in most cases does not have the resources, the skills, the knowledge or the motivation to do all that is necessary for the proper enforcement of an MPN.

But, if the carrier community took control over the notification process I suspect it would find that doing so would drive the costs up so high that there would be no net savings behind MPNs. Carriers would have to know who all of an employer's employees were at all times and would have to keep records of all of the notices supplied at all times through out an employer's policy history - this would be an incredibly complex, and expensive task.

So, I said it before and I'll say it again - the root of the problem isn't medical treatment, it is the motivation that drives the medical treatment.

Change the reward system and change behavior. Until then, deal with the law as it evolves.