Tag Archives: california workers compensation institute

‘4-Lanes’ Approach to Work Comp Claims

Claims operations have ascended the value chain from an “island in the stream” technical function into a key facet of the customer value proposition. To handle the growing demands, it’s important to think about work comp claims in terms of four lanes.

The first lane is governed by compliance rules and requires not just compliance awareness, but the knowhow to optimally integrate compliance into the operation.

The second lane is focused on vendor management. This needs to go beyond simply outsourcing non-core competencies. Successful companies concentrate on ways to leverage vendors to achieve superior outcomes and competitive advantage.

The third lane is defined by business rules. This is where automation is fully deployed and constantly improved. This lane draws from rules-driven facets of each of the other three lanes.

The fourth lane is the “interpersonal, interpretative and professional judgment” perspective. It relies on the subjective application of knowledge and human interaction. This lane leverages engagement, training, technology and analytics to continuously accelerate accurate decision making, enhance performance and improve quality.

The four lanes represent perspectives and should not be confused with a company’s organogram. Indeed, each lane touches every facet of any organogram found in the insurance industry today.

The compliance, vendor management, business-rules and professional judgment lanes all benefit from a strong commitment to business process improvement (BPI). Data capture and analytics that support measurement of performance along the entire claims’ value chain is integral to BPI. The BPI discipline uses data to identify best practices, implement those practices, assess their effectiveness and uncover opportunity for further improvement.

Embracing the four-lane view and BPI model will help carriers make strong, data-based decisions as they reconfigure their claims departments to control costs, stabilize case reserving and improve outcomes of their claims operations.

Great tools, talented people and sound business practices are the timeless ingredients of success, as is operational adaptivity. Today’s workers’ compensation carriers are operating in an environment of increased uncertainty and complexity. Carriers face headwinds because of a shift into a healthcare-centric business, which has caught many carriers flat-footed. Medical costs are approaching 70% of the total claims spending in many jurisdictions. The utilization and cost of pharmaceuticals is rising at a rapid rate. According to the California Workers’ Compensation Institute, pharmacy and home-medical-equipment costs have risen by  more than 250% since 2004. Today’s companies must adapt their models to concentrate on effective and efficient delivery of care that improves patient outcomes, exudes customer value and underpins superior combined ratios.

The undeniable reality is that the nature of work comp claims has changed. Traditional ideas on the core competencies necessary to operate an effective claims operation need to be challenged and adjusted. Positive differentiation and sustainable market leadership depend on effectively incorporating the ingredients of success into a well-defined strategy that produces desired results and provides an agile framework for continual business evolution.

Good Answer (Maybe) on Opioids in California

The California Workers’ Compensation Institute (CWCI) has added its voice to the growing national consensus that greater controls are needed over the use of Schedule II medications in workers’ compensation medical treatment and disability management. But the CWCI research must be analyzed in a broader context.

First, we continue to view the abuse of these medications in a “going forward” context – we focus on, how can we stop over-prescribing these medications on claims from the effective date of such reforms? Second, we inevitably take these recommendations out of the context of the state being analyzed — can we say that the Texas closed formulary will work in any state whose system otherwise doesn’t bear any resemblance to the Texas system?

One body of work and thought proclaims the overuse of Schedule II medications to treat industrial injuries is “bad medicine” and should be stopped as soon as possible. Guidelines from Ohio, Texas and Washington, however, recognize the need for prescriptions to relieve acute and chronic pain and provide detailed guidance on moving from acute to chronic pain management. Encompassed within that guidance is recognizing when weaning from these medications, or other early interventions, is appropriate and how to taper dosages to maximize clinical effectiveness and minimize adverse consequences to injured workers.

Many of these concepts are embodied in proposed guidelines from the California Division of Workers’ Compensation (DWC) and the Medical Board of California (MBC). It is encouraging that on Sept. 29 of this year the DWC presented its work to the MBC’s Prescription Task Force at a public hearing and that both agencies are moving forward with compatible guidelines. As seen in other states, notably Washington, inter-agency cooperation is critical so as not to create conflicts between the regulatory agencies that oversee benefit delivery systems and licensing agencies that oversee providers.

To take advantage of the potential cost savings in California’s complex workers’ compensation system identified by CWCI and the Workers Compensation Research Institute (WCRI), however, more needs to be done than adopting a closed formulary. That aspect of the Texas system requires prior authorization before prescribing an “N” drug, which includes Schedule II pain medications. After all, the California system already has: (1) claims administrators’ authority to direct medical care though the medical provider networks (MPNs); (2) the ability to adopt formularies through the MPN; (3) utilization review; (4) a medical treatment utilization schedule (MTUS) that sets forth presumptively correct guidelines for treatment, and; (5) post-Senate Bill 863 (DeLeón), independent medical review (IMR) for resolution of treatment disputes.

We are continuing to have the discussion  regarding Schedule II medications because over the past decade the controls that have been put in place to manage the care and cost of medical treatment more efficaciously and efficiently have not produced the desired results. Some of this can be attributed to the pre-SB 863 environment where the MTUS was regularly subverted through the med-legal process. Claims where high level of opioids and other medications were approved for continuing treatment are still in the system and are now subject to IMR. While the adoption of IMR may be viewed as beneficial from a payment standpoint, it is not automatically beneficial in terms of patient care. As the actions of other states have shown, for those who have become addicted or incapacitated because of their overuse of these medications – at the direction of their treating physician – necessary care means more than saying you shouldn’t have had these, or as much of these, so we’re cutting you off.

Also, more needs to be understood about the universe of claims that will be most immediately affected by a closed formulary – long-term, open claims and claims where compensability has been denied, whether completely or whether there is a dispute over a consequence of an accepted claim. As the DWC moves forward with its new Guideline for the Use of Opioids to Treat Work-Related Injuries, there needs to be more specific treatment of legacy claims or any claim where the liability of the employer is in dispute. The MBC’s Pain Management Guidelines, currently under revision, are applicable to all practitioners regardless of the nature of the injury or illness or the mechanism by which a provider is compensated. The DWC would do well to incorporate that work product into the MTUS as a reminder to all providers that, even if the claim is not accepted, it is not “off the grid,” and the MBC requirements still apply.

Finally, the claims administration community needs to take a long hard look at how we review these cases. There is a universe of claims where Schedule II medications are being approved that would not seem to be supported by best medical evidence. Payers are an integral part of the close monitoring of claims where pain management is indicated and determining when it is appropriate to start tapering use of opioids with a goal of returning the injured worker to employment. As noted by the MBC in its draft revised Pain Management Guidelines, when referring to workers’ compensation:

“The use of opioids in this population can be problematic. Some evidence suggests that early treatment with opioids may actually delay recovery and a return to work. Conflicts of motivation may also exist in patients on workers’ compensation, such as when a person may not want to return to an unsatisfying, difficult or hazardous job. Clinicians are advised to apply the same careful methods of assessment, creation of treatment plans and monitoring used for other pain patients but with added consideration of the psycho-social dynamics inherent in the workers’ compensation system. Injured workers should be afforded the full range of treatment options that are appropriate for the given condition causing the disability and impairment.”

As payers, we have the ultimate leverage to make certain treatment of injured workers meets this standard. But if we simply want to find a quicker, better way to say “no” when a request for authorization is faxed in, then a closed formulary will only be yet another attempt at lowering medical treatment costs that failed to meet expectations.

Paging Dr. Evil: The War Over Opioids

Over the past several years, the epidemic of prescription drug abuse under the guise of “pain management” has generated headlines all across the country. The improper use of Schedule II medications in the workers’ compensation system is a part of this public health crisis. Publications by the Workers’ Compensation Research Institute (WCRI), the California Workers’ Compensation Institute (CWCI) and the National Council on Compensation Insurance (NCCI) have underscored not only the costs of such abuse but the tragic consequences to those who, through no fault of their own, have been consigned to a life of addiction and disability. Those tragedies are unnecessary and avoidable.

When it comes to workers’ compensation, the payer community has been at war with the provider community for generations. In some respects, the debate can be reduced to a clash of two business models  — the claims payer wants to reduce workers’ compensation costs while providing mandated medical care, while the care provider must build a business model around a dazzling array of payment (and paperwork) systems to maintain profitability. It is, in part, the economics of healthcare that so confounds payers and so stymies providers who are honest and ethical but who nevertheless still have to keep their offices open and a roof over their heads.

But consigning the issue of opioid abuse to this paradigm is too easy an exercise.

Equally significant, regrettably, are the problems associated with the insular world of workers’ compensation and how regulatory decisions are made within this highly regulated, if not suffocating, environment.

Some states get the process right. Oregon and Washington have transparent and inclusive processes to engage claims payers, worker representatives, providers and regulators on important issues of occupational medicine. The Oregon Medical Advisory Committee has as its charge: “…to advise the director, with a diversity of perspectives, on matters relating to the provision of medical care to injured workers. The ‘director’ is the director of the Department of Consumer and Business Services or the administrator of the Workers’ Compensation Division (WCD).” That’s a lot larger charge than adopting treatment guidelines in a rule-making process.

In Ohio, Gov. Kasich’s Opiate Action Team developed prescribing guidelines in a process that involved all key public and private stakeholders: “The clinical guidelines are intended to supplement — not replace — the prescriber’s clinical judgment. They have been endorsed by numerous organizations, including: Ohio State Medical Association, Ohio Osteopathic Association, Ohio Academy of Family Physicians, Ohio Chapter of the American College of Emergency Physicians, Ohio Pharmacists Association, State Medical Board of Ohio, Ohio Board of Nursing, Ohio State Dental Board, Ohio State Board of Pharmacy, Ohio Hospital Association, Ohio Association of Health Plans and the Ohio Bureau of Workers’ Compensation.” Like Washington, Ohio maintains a monopolistic state fund to provide workers’ compensation benefits. Ohio’s Bureau of Workers’ Compensation uses the same guidelines as every other provider of medical services.

And, of course, there is the large body of work being done by the Agency Medical Directors Group in Washington. That entity coordinates medical treatment among all state agencies providing medical care, including their state-run workers’ compensation program at the Department of Labor and Industries. Professional licensing boards and medical associations are also an integral part of that process.

Why aren’t these collaborative initiatives the template for further prescription drug reforms in states like Arizona or California? The much-lauded Texas closed formulary wasn’t created in a vacuum, and policymakers in that state recognized that open (“legacy”) claims required special treatment. As reported in TexasMedicine, the publication of the Texas Medical Association, “The regulations require physicians and carriers to formally discuss the pharmacological management of these patients. Ideally, the two parties would agree before Sept. 1 (2013) on how to proceed. That agreement could include a weaning schedule, a plan to continue the patient on the N drug or other alternatives.” California didn’t do that when making the transition from a judicial medical dispute resolution process to independent medical review, and Arizona has on the table a review/dispute process that will be equally jarring for open claims

It would be remarkably naïve to suggest that a more transparent approach to the development and application of treatment guidelines and having processes in place that encourage a peer-to-peer dialogue between requesting and reviewing physicians would result in an immediate drop in prescription drug abuse. But it would also be remarkably cynical to proclaim that the approach won’t have an effect.

The current workers’ compensation monologues over Schedule II drugs needs to be replaced with a dialogue that has as its goal not only the delivery of appropriate care to those who will be injured at work in the future but that also addresses the sad legacy of the abuses of past decades and offers help to those who so desperately need it now.

What An Employer Can Do To Reduce Soft Tissue Injuries In The Transportation Industry

The trucking industry accounted for nearly 20 percent of all days-away-from-work cases in 2011. Correspondingly, trucking was among the seven occupations which had an incidence rate greater than 300 cases per 10,000 full-time workers and who had greater than 20,000 days-away-from-work cases.

OSHA defines a Musculoskeletal Disorder (MSD) as an injury of the muscles, nerves, tendons, ligaments, joints, cartilage and spinal discs. They identify examples of Musculoskeletal Disorders to include: carpal tunnel syndrome, rotator cuff syndrome, De Quervain’s disease, trigger finger, tarsal tunnel syndrome, sciatica, epicondylitis, tendinitis, Raynaud’s phenomenon, carpet layers knee, herniated spinal disc, and low back pain.

The average cost of a work-related soft tissue injury in the trucking industry exceeds any other industry. According to the U.S. Bureau of Labor Statistics (BLS), Musculoskeletal Disorders nationwide typically account for 33% of work-related injuries, while the incidence of Musculoskeletal Disorders in the transportation industry is 60-67%. The Bureau of Labor Statistics also noted that there were 1.4 million total transportation workers, and each year 1 in 18 is injured or made ill by the job.

These higher rates of injury can be attributed in part to several factors. Due to the nature of their work, many drivers maintain a poor diet, rarely get enough sleep, and are sedentary. As a result, they find themselves more susceptible to heart attacks and diabetes, as well as a myriad of strains, sprains and various other Musculoskeletal Disorders.

Additionally, the percentage of older workers is higher in transportation than in most industries, with the Transportation Research Board estimating that up to 25 percent of truck drivers will be older than 65 by 2025, translating into more severe Musculoskeletal Disorder claims.

These factors are contributing to more workers’ compensation claims for drivers which increase employers’ costs. As part of the job, many truck drivers are required to unload the goods they transport, leading to serious sprains and strains. Heavy lifting after long periods of sitting can increase the likelihood of severe sprains and strains. In addition, drivers often rush at the delivery site in an effort to meet the demands of tight schedules. This combination contributes to 52% of the non-fatal injuries in this industry, with trunk and back claims accounting for 70% of these cases.

Due to its unique workplace circumstances, the commercial transportation industry is at higher risk for increased frequency of injuries and costs to the industry. The following describes the framework of this dilemma:

  1. Commercial transportation jobs expose workers to high physical demands and extended hours of exposure.
  2. The transportation industry experiences one of the highest work-related injury rates among all workplace sectors.
  3. The transportation industry experiences a high level of turnover on an annual basis, which results in a high number of newly hired employees exposed to unfamiliar and physically demanding tasks.

While this is an industry-wide issue, we will focus on California in order to illustrate how problematic it truly is. In March of 2010, the California Workers’ Compensation Institute (CWCI) issued its latest scorecard for the California Trucking Industry. Over eight years, $480 million dollars was paid in medical and indemnity costs alone. The study found that, even though this industry accounted for only 1% of all California industrial claims, they accounted for 1.8% of the state’s workers’ compensation paid benefits. It was also found that medical and indemnity payments were higher than any other industry. The average lost-time direct claim cost at $18,587 is 41% higher than the industry average in California. The indirect costs in this industry range from a 2x to a 10x multiple, and in an industry known for low profit margins, controlling costs is critical.

It should also be noted that California can retain jurisdiction of a workers’ compensation claim even if the injury did not occur in that state; the employee only has to live in California, drive through California or have been hired out of California. This is such a significant problem that in 2010 the U.S. Department of Transportation initiated the Compliance Safety Accountability measure of driver’s fitness. This is specific to transportation, is publicly available, and the ratings are tied to insurance rates and letters of credit.

With the numerous reforms taking place in 2013 and the Centers for Medicare and Medicaid Services (CMS) Mandatory Reporting Act, it is now essential that employers become proactive and only accept claims that arise out of the course and scope of employment. Medicare has mandated all work-related and general liability injuries be reported to CMS in an electronic format. This means that CMS has the mechanism to look back and identify work comp-related medical care payments made by Medicare. This is a retroactive statute that will ultimately hold the employer and/or insurance carrier responsible for these payments.

Should CMS have to pursue the employer in court, the amount owed is doubled. The insured or employer could pay the future medical cost twice — once to the claimant at settlement and later when Medicare seeks reimbursement of the medical care they paid on behalf of the claimant. There is no statute of limitations on compliance with the MSA requirements. CMS can review claims closed last year, five years ago, or even longer to check for compliance. Penalties and fees for noncompliance are $1,000 per day if medical care is not paid within 30 days.

Historically, soft tissue injuries have been difficult to diagnose and even harder to treat due to the broad spectrum of disorders related to soft tissue. Most diagnostic tests are not designed to address Musculoskeletal Disorders and are unable to document the presence of pain or loss of function … two key complaints.

Employers need a way to manage their Musculoskeletal Disorder exposure and provide better care to their injured workers. The key to managing this problem is for employers to obtain the ability to only accept claims that arise out of the course and scope of employment. The only viable solution for employers is to conduct a baseline soft tissue assessment in order to establish pre-injury status. The baseline must be job and body part specific and objective to comply with the Americans with Disabilities Act Amendments Act of 2008.

The baseline assessments are not read or interpreted unless and until there is an injury. By not identifying a potential disability, employers are able to conduct baseline assessments on new hires as well as existing employees while maintaining compliance with the Americans with Disabilities Act Amendments Act. If there is a soft tissue injury, the employee is sent for a post-loss assessment to determine what and if there is any change from the baseline assessment. If no change is noted (no acute pathology), then there is no valid claim. This proven baseline program is known as the EFA Soft Tissue Management Program (EFA-STM Program), which utilizes the Electrodiagnostic Functional Assessment to objectively provide this data.