Tag Archives: fee schedule

Workers’ Comp Is Under Attack

This is the Year of Awareness — awareness by the general public about workers’ compensation issues.

There is the series by ProPublica, with three installments so far and more to come. You might not like it, but Michael Grabell and his team are accurately portraying pain points in workers’ compensation.

The Federal Occupation Safety and Health Administration’s review of the literature over the past couple of decades also fuels the fire about the inadequacy of workers’ compensation, and the spill of employer obligations onto the general taxpaying population.

Last year, the Texas Tribune ran a series, “Hurting for Work,” that criticized that state’s work injury protection system (or lack of it).

And a Florida trial judge has taken the position that workers’ comp is no longer of constitutional grade.

Now, Mother Jones has published an article it says exposes the true intent of the opt-out movement: to diminish benefits across the nation. Opt-out supporters contest that conclusion and say they only want employers (in this case, only big business can afford the resources to opt out) to be able to provide better benefits in a more consolidated manner to their workers. Proponents are not, however, shy about confirming that their intent is to take opt-out nationwide, to all states.

The latest test case is Tennessee, where Sen. Mark Green’s SB 721 has gone through several amendments in an attempt to address critics — albeit, in my opinion, these amendments fall far short.

There are two major problems with opt-out, and in particular with SB 721 if it is to be used as a model: 1) the cap on lifetime medical benefits; and 2) the lack of accountability to public regulators.

Most state workers’ compensation systems have a limitation on both temporary disability indemnity and permanent disability indemnity. There has been for a long time a debate as to the adequacy of indemnity benefits to keep the paycheck-to-paycheck worker sustained during recovery, and those benefits differ greatly from state to state. This debate is sure to continue regardless of what “reform” ever gets passed.

This debate also applies to the adequacy of permanent disability indemnity– whether it adequately compensates for the loss of an eye, etc. Again, where one gets hurt makes a huge difference in how much money a disability is “worth,” and the debate about this will never settle.

The provision of medical benefits for the lifetime of an injured worker, however, has never been on the table — that is a topic that is simply sacrosanct, for the very simple reason that it was part of the original grand bargain.

State reforms have, however, over the past two decades done as much as possible to eviscerate lifetime medical by requiring adherence to guidelines, by scaling based on co-morbidities, by forcing third-party reviews and by trimming reimbursement or rebalancing fee schedules, among other tactics.

These efforts have been in reaction to perceptions that employers are unfairly paying for someone else’s problem, or to abuses by unscrupulous providers. Broad-brush attempts to correct these problems reel in unsuspecting victims, just as tuna nets capture innocent dolphins.

The Mother Jones article is critical of the lobbying efforts of the Association for Responsible Alternatives to Workers’ Compensation, implying that its big-company sponsorships and spending is sinful.

It’s not — it’s just political reality. Just because a bunch of people with resources get together on a specific mission is not a reason to castigate either the people or the mission. It’s done on both sides of nearly any debate. That’s how we do things in America.

Painful as it is for this industry, though, the fact is that workers’ compensation is under attack — from all sides.

Employers are sick and tired of the cost of the system and how little control they have over it. They’re paying for it and don’t see much if any value or return on investment.

And guess what? Workers who go through workers’ compensation are likewise sick and tired over the cost of the system and how little control they have over it.

Is this the fault of us, the professionals who have the task of administering benefits?

In part, yes.

But the larger issue is what society wants, and what all this attention lately is telling me is that society wants a way to provide security to both business and workers — in a manner that is better than what workers’ compensation has devolved into.

I don’t view opt-out as evil. I do view it as a necessary element in the debate about the adequacy of workers’ compensation to deliver on its original promise: protect employers from economic ruin when someone gets hurt, and protect the worker who got hurt.

If you take ARAWC’s mission at face value, what the group wants to do is laudable. It is saying that state workers’ comp systems no longer are a viable piece of the social contract, that private industry can do it better.

Maybe it can, if there are reasonable protections that meet the essential elements of work injury protection — and that means taking care of an injury for life and not stacking dispute resolution in favor of one party or the other.

But this column isn’t about ARAWC, or opt-out; it’s about an awareness that is developing.

Workers’ compensation used to hide in the shadows of healthcare and disability. Ask anyone just a few years ago about work injuries and you’d get an earful about “workman’s compensation” and how a neighbor is cheating the system.

Now the public is beginning to ask: What are all these businesses doing for their pay when there’s all these people who are being thrown to the curb for trash pick-up day? Why are businesses paying for services that don’t seem to be delivered on time or in enough quantity? How is it that an insurance company that agreed to take care of an injured person for life can delegate that obligation to public welfare?

As I see it, the public assault on workers’ compensation, the trend that is developing toward opt-out systems and the overall malaise that seems to have settled over work comp portends a much-needed, long-deserved debate.

The public is asking questions. Hard questions. Because the public isn’t seeing the value in work comp that had been promised (and delivered) for so long.

We’re entering into a whole new era of business vs. labor dispute. The haves and the have-nots are drawing lines in the sand.

The last time this happened, the federal government threatened imposition. It could happen again.

What we rely on for work injury protection systems will be vastly different in 10 years than what exists now. It’s clear to me this is what’s happening.

Less clear is what will actually exist in 10 years.

This article first appeared at WorkCompCentral.

How Medicare Can Heal Workers’ Comp

Workers’ comp in every state should carve out its medical line and relinquish it to Medicare. The respective statutory systems for indemnity benefits would remain. This scenario, albeit challenging in execution, would correct the cause of many systemic workers’ comp ills.

First, we must admit that the root of most WC problems lies in the delivery of medical care. Workers’ compensation medicine inhabits its own “bizzaro-world,” often lacking both clinical science and common sense. This is not the fault of most medical practitioners themselves, but more because of the pervasive manipulations, exaggerations and legal stretching of sensibilities that defy the clinical standards used in other venues.

The ubiquitous, counter-intuitive flaw is that WC medicine often is used to expand a claim rather than provide a cure. Anyone in the WC business can agree to the following truths as just a sample of medically related frustrations:

– Most any study performed shows higher costs and worse outcomes in WC medicine than in other settings. Common injuries take longer to heal when they are WC claims.

– Hearing judges regularly disregard clinical opinions in favor of subjective evidence. A common judicial outcome is to award illogical progressions, allowing diagnoses to expand as problems progress through various body parts.

– Causal relationship has an extremely low and speculative threshold when injuries are combined with chronic overlays and co-morbidities.

– Chronic conditions are accepted as arising out of incredibly specious initial traumas.

– Multiple surgeries and lifetime narcotic regimes are embraced in the face of perpetual and repeated failures to cure, all to the general detriment of claimants’ health.

– Various entities have profit streams directly related to churning medical care.

– Most of the pendulum-swinging effort in statutory legal reform amounts to limited attempts to control medical systems already tainted by legal gamesmanship. Therefore, the results don’t always support optimal clinical perspectives or patient well-being.

WC professionals may have a jaded viewpoint and accept this nonsense as part of the game. I ask you to consider a world where WC medical care was a non-issue. How much conflict and cost could be taken out of the system?

Let’s take it another step and consider ridding the current system of Medicare Set Asides (MSAs). We all know MSAs and their surrounding requirements increase cost, require added resources and waste temporary total disability (TTD) money in process delays. MSAs are a hijacking of any given state’s ability to allow compromise settlements over unproven causal relationships. In effect, when no one has determined direct causal relationship, MSAs simply decree all future care be paid, in advance, as an addendum to a settlement. Another terrible dynamic of this hijacking is how Medicare profits from the wild abandon in WC medicine, as a litany of future responsibilities can be attached to a claim absent a clinical “reasonable and customary” test by which Medicare itself might never accept such treatment requirements.

Through the MSA process, Medicare enjoys an exceptionally advantageous position with respect to WC. However, the playing field can be leveled by giving Medicare every claim from day one.

There should certainly be a direct reimbursement requirement from WC claim payers to Medicare for related care provided. I argue that this scenario would be much less costly and more efficient and fair than the current big-picture scheme that is WC medicine.

Here are a few practical thoughts in application that require no big changes:

-Medicare uses its current rules for “reasonable and necessary” to approve all care and to formally conclude treatment. Disputes can be handled via existing channels available through Medicare.

– Medicare uses its current fee schedules.

– Medicare uses its current rules for determining “chronic” conditions as opposed to curative treatment. This is the arbiter for otherwise obstinate, litigated maximum medical improvement (MMI) arguments and sets the bar for drawing down the WC reimbursement requirement and transferring a case to group health if continuing care is necessary.

Here are additional suggested changes to support the concept:

– Questionable causation or responsibility for migrating diagnosis could be given a percentage likelihood that would be applied to Medicare reimbursements. Independent physicians from opposing sides could put forth opinions, and a review process could establish the percentage applied to the life of the medical case. For example, a clinical consensus decrees that aggravated shoulder pain is 25% likely as due to job-related issues, and therefore future Medicare reimbursements from WC are 25% of cost.

– Extent of disability and permanency could still be determined by state-sanctioned independent medical exams (IMEs) and litigation process. The difference would be limits on the opportunity to exploit medical opinion, as Medicare would refer for these opinions, and aspects of Medicare’s rules and controls and requisite threat of sanctions would govern the providers.

– Medicare would need to categorize WC-preferred providers with appropriate qualification in occupationally related medicine.

– The ability to actually settle medical costs would no longer exist in any state.

– New employer insurance products or funding mechanisms could be invented to cover “Continuing Medicare Reimbursements” on certain classes of long-term claims where indemnity is fully closed, as well as the sporadic one-off future claims that might arise as allegedly part of an initial WC claim, with a “claims made” type of trigger. No more MSAs.

In conclusion, this concept would profoundly improve WC in four ways:

1) It provides a nationally accepted level of care to injured workers.

2) It brings clinical common sense to an otherwise specious and manipulated system.

3) It ends the oppressive impact of MSAs.

4) It saves an incredible amount of direct costs, frictional costs and resources while reducing litigation.

This idea is radical, but, among the calls to revise the grand bargain, it does not totally explode the current state system. I say, let the debate begin!

Cutting Prices of Drugs Dispensed by Doctors

A new study from the Workers Compensation Research Institute (WCRI) showed that Georgia’s changes to the reimbursement rules for physician-dispensed drugs reduced the average price per pill paid by 25% to 40% for most of the drugs commonly dispensed by physicians. However, the post-reform prices paid for physician-dispensed drugs were still 20% to 40% higher than the prices paid to pharmacies for the same drug.

“In many states across the country, policymakers are debating whether doctors should be paid significantly more than pharmacies for dispensing the same drug,” said Dr. Richard Victor, WCRI’s executive director. “Policymakers in Georgia adopted new rules to narrow the price difference, and the research continues to show the new regulations did not discourage physicians from continuing to dispense these drugs at lower prices, which was a concern.”

The study, Impact of Physician Dispensing Reform in Georgia, 2nd Edition, is an update to the 2013 WCRI study that examined the early results of Georgia’s reform using pre- and post-reform data. With an additional year of data, the study found that there was little change in the prevalence of physician dispensing in the second post-reform period after an initial drop (from 36% pre-reform to 28% in the first post-reform period and 27% in the second post-reform period) while the share of drug costs for physician-dispensed prescriptions had a further five-percentage-point decrease (from 49% to 34% and now 29%).

Georgia’s rule changes, effective in April 2011, capped the reimbursement amount for physician-dispensed prescriptions to the average wholesale price (AWP) of the original drug product used in the repackaging process if a repackaged drug is dispensed. The reform did not limit physicians’ ability to dispense prescription drugs. Georgia is one of the 16 states that have made legislative or regulatory changes to address cost issues related to physician dispensing.

Before the rule change, for example, a prescription for hydrocodone-acetaminophen was paid at $0.48 per pill when filled at a pharmacy, but $1.06 per pill when filled at the doctor’s office—a price difference of 121%. In the two post-reform periods, the price difference for the same drug was significantly reduced but still at 34% to 39%.

The data used in this analysis of Georgia’s pharmacy fee schedule reform came from payers in Georgia that represented 46% of the claims in the state workers’ compensation system. The pre-reform data consist of claims from 3,851 injured workers with more than one week of lost time. These claims arose between April 1, 2010, and Sept. 30, 2010, with 24,672 prescriptions filled through March 31, 2011. The data for the first post-reform period consist of 3,960 claims that arose between April 1, 2011, and Sept. 30, 2011, with 24,925 prescriptions filled through March 31, 2012. The data for the second post-reform period consist of 4,164 claims that arose between April 1, 2012, and Sept. 30, 2012, with 25,325 prescriptions filled through March 31, 2013.

25 Axioms Of Medical Care In The Workers Compensation System

  1. The right medical care at the right time is always in the best interest of the injured worker and almost always will result in the lowest claims costs.
  2. The right medical care at the right time will (almost always) result in an earlier return to work with less permanent residual disability.
  3. Evidence-based medicine is the right care for the legitimately injured workers. (There is a hierarchy on how to apply evidence-based medicine).
  4. To control worker's compensation medical costs requires both a fee schedule and an ability to control the frequency and the appropriateness of treatment. One without the others usually results in massive increase in medical costs for the system.
  5. The medical treatment fee schedule should be clear, easy to use, accurate and reflect the latest technology.
  6. A fee-for-service system may result in incentives for physicians to over-treat, inappropriately.
  7. In many jurisdictions Worker's Compensation is generally the last fee-for-service system.
  1. As long as workers compensation uses a fee-for-service system, medical utilization review is needed to make sure that the physicians will treat adhering to evidence-based medicine.
  2. Pharmacy utilization is problematic because of the “Medicalization” of the general population. (Medicalization is the direct advertising of symptoms and diagnoses to the general population by drug manufacturers, resulting in an overuse and/or misuse of some types of drugs and therapies).
  3. There is a significant problem with “off label use” of drugs in the worker's compensation system. (Off Label is the use of a drug for treatment that was not the reason for its approval from the FDA).
  4. Medical decisions should be made by medical professionals. Most Workers' Compensation judges, attorneys, and claims adjusters have little to no formal medical training and are not medical professionals.
  5. Poorly (inappropriate) placed incentives will result in poor medical outcomes. (There are several studies that demonstrate that allowing physicians to do self-referrals or to dispense pharmacy goods from their offices will usually result in a utilization of unnecessary services or inappropriate usage of drugs).
  6. Even if the doctor is not dispensing the drugs, opiates require regular visits to the doctor for renewal of the prescription and also may involve expensive drug testing; so there is a financial interest on the part of some doctors to prescribe opiates.
  7. Some physicians who prescribe opiates do not fully appreciate the addictive power of the drugs that they are using or the difficulty in detoxing the patients.
  8. There are currently enough treating physicians and specialty physicians in most urban areas; however there are not enough physicians (treating, orthopedic or neurosurgeons, etc.) in the rural areas to meet the demand. This problem will only get worse as the population ages and more doctors retire. It will also get worse if physicians leave workers' compensation due to the demand for their services due to the implementation of the federal universal health care programs.
  9. Many surgeons and other physicians want to perform their craft (do surgery, provide injections, etc.). They truly believe that their surgery or injections will work even if the prior treatments have not been successful or if current evidence-based medicine says surgery is not appropriate.
  10. Every patient looks like a good candidate for an MRI when there is an MRI machine in the doctor's office.
  11. Not every person with a surgical or potentially surgical condition is a good surgical candidate. Though pre-surgical psychiatric evaluations are required for spinal cord stimulators (post spine surgery), the same is not true for many other surgeries.
  12. It is difficult for a patient who is in intractable pain to believe that strong medications (including opiates) are not appropriate or are not good.
  13. It is difficult for a patient who is in intractable pain to believe that not having back surgery will have the same ultimate result as having surgery when the surgeon is saying (with confidence) that the surgery will cure all. Even though current evidence-based medicine says differently.
  14. Because “doing something is better than doing nothing” when the patient is in intractable pain, if the surgeon says surgery will not be successful, the injured worker will attempt to find someone who will say that the surgery “will be more successful than not having surgery,” and will then attempt to have the surgery.
  15. Patient advocacy is the application of appropriate treatment and patient encouragement that allows the patient to remain as functional and productive as possible.
  16. Patient advocacy does not always mean the pursuit of treatment a patient desires.
  17. Patient advocacy may require the physician to decline to do the treatment sought by the patient when that treatment is inappropriate.
  18. In Workers'Compensation, there are many (known and unknown) underlying non-industrial, psyche/social issues that may hinder or completely stop optimum medical recovery.