Treatment Guidelines Are About Controlling Costs

It occurred to me reading this morning's news that medical guidelines aren't really about providing the best medical care to an injured worker, but to minimize disputes in court about the provision of and payment for medical procedures.

The Louisiana Workforce Commission (LWC) says medical treatment guidelines implemented July 15 already have saved the state's workers’ compensation system approximately $2.5 million in potential litigation costs.

How?

LWC, in a statement on Monday, explained that, “If the recommended care falls within the guidelines, it should be approved automatically by the employer or insurance carrier. If it falls outside the guidelines, an insurance carrier can deny it.”

The commission noted that prior to implementation of the medical guidelines on July 15, all medical disputes were litigated in court, “where they would take an average of 15 months to resolve.”

By contrast, the commission reported, 98 medical disputes had been submitted to the medical director as of Sept. 30 and were resolved in an average of days.

The commission said the new method of resolving disputes “has eliminated the need for depositions, independent medical exams, second medical opinions, court reporters and attorney fees in each of those cases.”

Costs for resolving the disputes under the previous system typically were “in the neighborhood of $25,000 per case,” so the commission calculates that keeping the 98 disputes out of the courthouse saved approximately $2.5 million.

So, I finally get it. Treatment guidelines aren't about providing quality care to injured workers. They're all about controlling costs, which may or may not be good in the long run depending on where you sit on the cost control equation.

I'd have preferred to see a report from LWC that since the adoption of treatment guidelines the return to work rate of injured workers has improved, or that medical severity has decreased, etc.

I suppose eventually those statistics will eventually be disclosed. Until then, for states that don't yet have treatment guidelines, LWC's experience provides argument for their adoption because controlling costs is what workers' compensation seems to be all about these days.

(The Louisiana Association of Self-Insured Employers (LASIE) is challenging the commission’s adoption of the guidelines contending that the guidelines are not “evidence-based,” as required by the Legislature, and were not adopted in accordance with open meetings law requirements.)

workers compensation, work comp, injured worker

Survey Asks Your View on Challenges and Disability

The tides are changing and I have decided to grab my board and surf it!

More specifically, it has been an argument of mine for some time that workers' compensation in its current  various iterations throughout the world is not compliant with today's economy nor social needs.

Employers grumble that it costs too much and there has been a return of civil liabilities that impose new risks that weren't bargained for 100 years ago.

Employees complain that the system does not provide the medical care that was promised, is inefficient in the delivery of benefits, and is no longer fault free.

There are several people in this world who have made it their mission in life to do something about how society deals with the productively challenged. One of them is Christopher Brigham, MD.

Most of you who read this blog know of Dr. Brigham as the Senior Contributing Editor for the AMA Guides to the Evaluation of Permanent Impairment, Sixth Edition and the Chairman of Impairment Resources, a company he founded that reviews and corrects medical report impairment rating. Some of you like him, some of you don't, and some have no opinion.

Over the years I have come to know Dr. Brigham pretty well on a professional level, and more so on a personal level.

What I have found is that those who don't like him, don't understand his mission - they feel threatened that Dr. Brigham will take away or "impair" the way they make a living (sorry, I just couldn't avoid the pun).

Many of those who do like him do so because they think that he is in favor of reducing costs associated with disability indemnity.

Neither of these viewpoints is accurate. The mission of Dr. Brigham is simply to help society realize that those who go through life changing events, such as a work injury, may face new challenges, but are not "disabled".

To that end, Dr. Brigham is engaging in research and has posted on the web a survey to gauge the sentiments of people towards challenges and disabilities. Though the survey is tied to his speech at the upcoming National Workers Compensation and Disability Conference in Las Vegas, on November 9, the results of the survey will provide a broader base for research.

So far Dr. Brigham has obtained several hundred responses.

The survey is located at:

http://survey.constantcontact.com/survey/a07e568pdrtguanghh8/start

The survey is anonymous. Obviously you can identify yourself if you desire.

We as a nation are in the middle of a profound debate about medical care and access to care. A part of that debate must deal with how to engage those people facing the challenges of either physical or mental impairment (or both simultaneously) and all of the outside influences or pressures these people face. 

You owe it to society to participate and provide your opinion to help shape the debate about the future of how this nation deals with medical care and the treatment of those challenged with adverse physical or mental conditions.

workers compensation, work comp, injured worker

Is CA Work Comp Litigation Unconstitutional?

California is again a poster child of a work comp system where procedure trumps substance and the injured worker gets the short end of the stick (with the employer getting a copy of that short end).

The Division of Workers' Compensation (DWC) issued a memorandum system wide last week announcing its decision to issue new qualified medical evaluator (QME) panels in cases where the original request for a panel didn't meet the timelines set in the Sept. 27 Workers' Compensation Appeals Board (WCAB) decision of Messele v. Pitco Foods Inc..

The short-staffed, director-less DWC Medical Unit is reviewing panel requests currently on file and will reject requests that are considered untimely under the Messele decision, the division said in a DWC Newsline published on Thursday.

The DWC also said it will allow requests for new panels in cases where a panel was issued based on a request now considered untimely. The steps to request a new panel vary depending on whether an evaluation has been performed, and are outlined in the division's memo.

If you're not from California this entire process is unfamiliar territory. Basically statutes and regulations are in place that govern specifically when parties to litigation attempt to seek an agreed medical evaluation (AME) and if that fails to request a panel of three doctors (QMEs) from the DWC in which to perform the medical evaluation.

Brad Chalk, president of the California Applicants' Attorneys Association, told WorkCompCentral the division's plans to honor new panel requests when a panel was previously issued could affect thousands of cases and that it takes between three and four months, on average, for a represented claimant to get a QME panel. If a claimant has already gone through the QME process, the new panel request would drag cases out longer and make them more expensive.

The waiting period between when an AME is proposed and when a QME request can be filed is necessary because attorneys race to file the first panel request. The winner is rewarded by getting to select the specialty of the panel. Applicants' attorneys typically want chiropractors or pain management specialists, who are considered more liberal than the specialties requested by defense counsel, which are usually orthopedic specialists.

There are also questions about whether a doctor will be paid for performing an evaluation if the Medical Unit convenes a new panel because the initial request was untimely. Theoretically under existing statutes the physician could not be paid because the medical report that issued via an untimely QME request would be inadmissible, and thus not subject to reimbursement.

What all of this nonsense points to is that workers' compensation is so ridiculously complex as to be completely out of touch with its stated constitutional purpose:

"A complete system of workers' compensation includes adequate provisions for the comfort, health and safety and general welfare of any and all workers and those dependent upon them for support to the extent of relieving from the consequences of any injury or death incurred or sustained by workers in the course of their employment, irrespective of the fault of any party ... and full provision for vesting power, authority and jurisdiction in an administrative body with all the requisite governmental functions to determine any dispute or matter arising under such legislation, to the end that the administration of such legislation shall accomplish substantial justice in all cases expeditiously, inexpensively, and without incumbrance of any character; all of which matters are expressly declared to be the social public policy of this State, binding upon all departments of the state government." (Emphasis added.)

California workers' compensation litigation is so far removed from the stated goal of an expeditious, inexpensive dispute resolution system that it is arguably unconstitutional.

I've been around long enough to have witnessed how we got here - now how do the People of California take back control and bring some common sense to this system?
workers compensation, work comp, injured worker

Express Scripts & Walgreen's - Market Economics Put Fee Schedules to Shame

I commented yesterday that maybe fee schedules aren't all that effective or relevant in the real world of workers' compensation vendor control.

A comment by a pharmacy benefit management (PBM) executive in a WorkCompCentral story this morning caused me to ponder that a little more.

Commenting on the big break up between Express Scripts and Walgreen's, ScripNet CEO Dennis Spooner said to WorkCompCentral reporter Greg Jones that in states where the employer has limited rights to direct care the break up may not make much difference in injured workers' access to pharmacy benefits:

"So if you're on the Express Scripts workers' compensation pharmacy program, you still have the right to go to Walgreens, and Express Scripts can't do anything," he said. "Walgreens will mail a paper bill and it's probably going to be at the full rate in the fee schedule. On generics (in Texas), that's average wholesale price, plus 20%, plus a $4 fill, which is about 50% more than what they would be paying if Walgreens was in the network." (Italics added.)


What caught my eye is that there is such a deep discount in the reimbursement for pharmaceutical benefits - well below fee schedule!


I understand that volume permits certain economies of scale relative to the provision of retail product. What is surprising to me is that the scale of this volume discounting would allow not only for the retail distribution of drugs, but also all of the attendant incidental costs to that drug - manufacturing, distribution,  regulatory load, and of course profit for everyone involved in the distribution chain.

The contract between Express Scripts and Walgreen's covers both work comp and general health and expires January 1 if not renewed or renegotiated.

Walgreens stands to lose $5 billion in annual sales, 7% of its business, by not accepting Express Scripts patients, according to a report by the Chicago Tribune. That probably wipes out its prescription drug profit margin.


This is just the market playing out, and doing what it is supposed to do - wringing efficiencies out of systems to the benefit of the marketplace.


And I assume that part of the Walgreen business model is to get people in to fulfill prescriptions and then sell them other items in the store to recoup sales and profits through other retail sales.

Express Scripts doesn't feel that access to pharmacy benefits for its customers is going to be affected, which is part of the reason why it is using its market clout to muscle Walgreen's:

"If Walgreens chooses to leave our network, we will still have more than 56,000 participating pharmacies, more than enough to meet all client guarantees for access," Express Scripts said in an emailed statement to reporter Jones. "On average, another network pharmacy that provides the same service for a lower cost is located within a half mile of any Walgreens."


Alex Knight, a PBM consultant and vice president of sales for ProCare Rx in Collierville, Tenn., said losing access to the 7,779 drugstores Walgreens operates won't have a significant impact on the ability of Express Scripts customers to fill a prescription.

"In the U.S., there are 65,000 retail pharmacy locations," Knight said. "There are 20,000 McDonalds, and no one says they have a hard time getting a Big Mac."


Market economics at work challenging fee schedules ... indeed.

workers compensation, work comp, injured worker

Fee Schedule, Schmee Schedule

In a meeting yesterday with a prominent and successful medical management company owner who processes and collects his customer's workers' compensation treatment bills, he admitted that he ALWAYS bills out procedures at 40 to 100 percent of fee schedule.

The reason is because regardless of what is billed out, insurance carriers routinely seek a discount in the payment/settlement of the bill, even if the bill is at fee schedule.

In order for his customers to make a profit then, the medical management company must over bill in order to collect at least the regulatory amount. And through clever tactics involving bundling of bills often times some amount in excess of fee schedule can be collected.

Add to this that it may take years to collect that receivable and the issue of cash flow plays prominently in the overall gaming of the system - by both carrier and provider.

The absurdity of this game is pervasive in workers' compensation, regardless of whether it is California, Texas, Florida, New York, Illinois ... Alaska.

So I'm trying to understand the utility of a fee schedule when it seems to be so universally ignored?

I had opined in an earlier post that a proposal to create a copy service fee schedule would benefit both payers and the copy services, but now I'm starting to wonder whether that is in fact a correct analysis.

Will a schedule just end up being ignored like it is with medical billing, and the problem of unpaid bills clogging the system with lien controversies just going to return, except with an even greater degree of technicality due to some "schedule"?

And while we're at it, how about educating the people that are responsible for outputting medical bills and collecting them - I'm talking about the line workers who are actually responsible for generating the paperwork?

As an example, our customer service representatives routinely take calls from clerical staff at medical collection agencies seeking to use the California EAMS system through the DWC Direct filing system. These line workers display a complete ignorance of the legal requirements in filing certain documents, such as liens or Declarations of Readiness (DOR).

In fact in a call just the other day the customer told our representative that they don't serve DORs on anyone, they just file them - that is how they were instructed to process this paperwork!

The customer was completely ignorant of Regulation section 10250 that mandates that DORs are to be served on all parties and lien claimants on a case!

Or the customer who told our representative that she was instructed to file a lien at the moment a billing goes out to the carrier - again completely ignorant of the requirement that there is a waiting period and completely ignorant of the fact that she is lying, under penalty of perjury, on the face of the lien claim form that she complied with Regulation 10770.5 time periods.

We take calls like this on a daily basis.

Everyone tries to save a penny in this system but expends a buck doing so....
workers compensation, work comp, injured worker

What the Occupy Movement Has to do with Work Comp

Does the current "Occupy Wall Street [insert local protest location here]" have any relevance to workers' compensation?

I ask this because the movement, which has no real leadership, and seems to encompass a myriad of issues without any stated goals, does seem to have one common theme - growing unrest of the American population with the way things are.

Indeed, the Occupy movement in this regard is no different than the "Tea Party" movement that sprang up a couple of years ago. Though the Tea Party appeal is to conservative voters, and Occupy seems to be associated more with liberals, Occupy seems quite willing to accept into its ranks anyone who are not part of the 1%.

The 1% of course are the top people in the US that control 40% of the nation's wealth and are a focus of Occupy's protestors who see them as the perpetuation of pockets of affluence amidst great swaths of deprivation.

Is that what the Occupy movement is really about?

Or is it, as some commentators state, about "corporate greed"?

That doesn't seem accurate to me either, because if one were truly objecting to corporate greed then one would just buy a share in a company or two then attend shareholder meetings and voice objection in a more direct manner.

What is accurate is that the Occupy movement spawned out of the sorry state of our economic affairs that was precipitated by the stewards of our economy losing sight of the big picture for the sake of short term goals.

And every Tom, Dick and Harry had a part of it too by succumbing to the intoxication of easy debt and the story line that a home is a cash register.

So the "corporate greed" that is the subject of Occupy stems from the feeling that the financial industry owed the American public a greater responsibility to keep us safe from ourselves and not provide the devil's temptations? I guess that's what these people are saying.

Workers' compensation, when all the "benefits" and legal trappings are removed, is just a financial industry product. The industry and systems exist on the magic of financial theatrics, providing a mechanism of cash flow through investments to spread the risk of the occasional work injury among millions of workers and their employers.

In the context of financial risk management, workers' compensation has as the root of its existence the creation and maintenance of a societal value: that the economy depends upon the existence of healthy individuals to do work.

Are we, as individuals in the workers' compensation industry, part of the problem that is the essence of Occupy? Are we failing to provide society value?

When workers' compensation is mentioned to the small business owner, heck even the big company risk manager, signals of disgust are typically relayed through facial expressions. After 100 years, employers fail to see the value in work comp.

Likewise, mention workers' compensation to the average worker, if they even know that there is such a thing as work comp, and it becomes a topic of disdain.

Here is what Occupy is all about - the failure of our society to return value to the common man.

Ask yourself when you sit at your desk to review a case file, or to propose an employer's base rate, or take the pulse of an injured worker, whether you are returning value to society.

The nature of our existence is to ensure that the wheels of commerce continue to turn as smoothly as possible. When there is friction we aren't doing our jobs, and we aren't returning value to society - and that makes employers and employees mad.

workers compensation, work comp, injured worker

CA Copy Service Fee Schedule a Smart Move

Readers from states other than California always marvel at the odd customs, practices and laws governing workers' compensation in the Golden State.

So I'm sure there's some chuckling outside of the state's borders when reading about the latest debate - a fee schedule for photocopy services.

I don't know about the practice of obtaining medical and employment records in litigation outside of California because I've never practiced law outside of the state, but the ability to get prior records of an injured worker that is litigating in the work comp system is a critical piece of the puzzle.

It all comes down to "substantial evidence" - whether the proffered evidence can be deemed sufficiently reliable in the face of other information to support an award of benefits, or the denial of benefits.

In California practice, the general strategy of the applicant side upon case intake is to question the injured worker about the injury, prior medical, prior cases, employment history, etc. then set about to procure records that would support the story. Hopefully the applicant is an accurate, truthful historian, and the records bear this out so there is no dispute later on down the road. This makes for smooth litigation.

On the defense side the practice is to review the case file upon intake in detail, noting any historical points of interest and then procuring the records to see if there are any anomalies or, if the record is solid, to know that credibility in history is not an issue.

In either case, the methodology for procuring records by the applicant side versus the defense side is different, in part because of the laws that govern discovery, in part because of contractual relationships, and in part because of custom. Applicant record procurement, governed by practices dictated by the Code of Civil Procedure and the Evidence Code, follow a more rigid, detailed procurement process due to records authentication requirements as a consequence of the timing of record procurement. The defense record procurement process is more relaxed, typically because records may be obtained prior to the initiation of litigation and thus through signed authorization rather than via subpoena.

The question raised by the new Administrative Director of the Division of Workers' Compensation (AD), Rosa Moran, is what is reasonable for copy service fees. The goal is to come up with a fee schedule to reduce disputes regarding the payment for these services. This is geared towards applicant record procurement because defense record procurement is done via contracted services whereas applicant record procurement is paid for after the fact.

And remarkably, at least from our reporting, copy services are quite in favor of a fee schedule because this will reduce disputes on payment, thus reducing collection costs and improving cash flow.

The key is that applicants must be able to procure their own sets of records because otherwise mistrust in what the defense actually provides in the discovery phase of litigation will ruin any potential cost savings.

Applicant fears are not without substance. From my prior practice years, though rare, there were occasions where the records my defense client obtained were in fact different than the records obtained by the applicant attorney, even though ostensibly both sets of records came from the same entity.

So in order for regulation of photocopy services in California work comp litigation to work, several elements must be preserved:

1. Injured workers (applicants) must be able to procure records independently of the defense, regardless if the defense may already have those records.
2. The regulations/fee schedule must be sensitive to the differences in the cost components of procuring records by applicants versus defense.
3. The fee schedule needs to be based on an actual cost review with a reasonable profit component. There are several methods this can be accomplished and the AD should explore all alternatives to establish the most reliable methodology to get the best data.

The Commission on Health and Safety and Workers' Compensation (CHSWC), estimated in its 2010 Lien Report that copy service disputes account for about 17% of liens. The commission also said the amount in dispute in copy service liens ranges between about $600 and $750. 

Establishing a fee schedule for copy services should, in theory, lead to a significant reduction in lien filings and litigation at the board level.
workers compensation, work comp, injured worker