Tag Archives: judy adlam

Post-SB 863: Now How Do We Contain Costs?

Several recent articles and publications have highlighted the challenges we continue to face in California workers’ compensation. Following the “state of the state” report in August by the Workers Compensation Insurance Rating Bureau (WCIRB), Mark Walls noted in an article that the challenges in California continue to mount as California now accounts for 25% of U.S. workers’ comp premiums, with some of the highest medical costs in the nation.

The recent Oregon report noted that California now has the most expensive comp system in the nation, having risen from the third most expense in 2012 to the #1 spot — a dubious distinction that should serve as a continued call to action.

As Walls so aptly noted, we in California need to move beyond the notion that we are always going to be different. We cannot continue to mark our “progress” against our own past performance, overlooking the sobering comparison to other states. If we do, we’ll see the return of television commercials touting nearby states as welcoming alternatives for employers.

With no shortage of reforms over the past 15 years, Mark’s comment about our focus on reducing frictional costs in the system without really addressing medical provider behavior rings true.

The recent reform attempted to tackle the frictional costs, particularly the costs of liens and utilization review (UR) disputes. It was assumed that the lien filing fee and statute of limitations on liens would reduce the extraordinary burdens and costs that were expended to both litigate and settle these expensive and often unjustified charges. It was also thought that independent medical reviews (IMRs) would speed the delivery of necessary medical care and would keep UR disputes out of the courts.

Although there certainly appear to be fewer liens, the problem has not been solved. In addition to some inevitable liens for disputed medical treatment, we continue to see liens filed after bills are reduced to conform to the approved fee schedule. In a state with a fee schedule, why should an employer be forced to litigate or settle a lien for charges that exceed the fee schedule? We know we can resist the lien, have a bill reviewer testify at a lien trial and have a good chance of prevailing. Unfortunately, though, the cost of winning is very high, including the cost of the hearing and the larger cost of keeping a claim open, delaying a settlement and maintaining a reserve. This is the very real dilemma that often causes payers to settle a lien that is not owed, rather than defending against it.

What if the prevailing party was reimbursed for the full cost of a lien hearing? Perhaps that would persuade claimants to carefully evaluate their liens before proceeding, while also forcing the defense to evaluate the validity of the lien before allowing the lien to go to trial.

The other significant attempt at reducing the frictional costs was the introduction of independent medical review. What have we seen, as a claims administrator that limits the use of utilization review by empowering examiners to approve significant numbers of diagnostics and treatments? We’ve seen in excess of 97% of the URs submitted to IMR upheld by the IMR process. Yet, for those 97%, our clients have incurred the added expense (IMR is not inexpensive), and the claims process was delayed while the IMR process was completed.

Some oversight is definitely healthy and necessary. The challenge is in finding a less costly, less time-consuming method of ensuring that injured workers are treated fairly — a method that actually changes provider behaviors so that the injured workers who are treated by high-performing providers are not swept up in a system of reviews and re-reviews.

Although no solution is likely to satisfy all constituents, there must be something we can do to provide incentives for the right provider behaviors. What about using all the medical bill reviews and other data to analyze provider behavior and “certifying” providers? The consequences could be:

1- A fee schedule “add on” or bonus for the top quartile of providers
2- A six month “bye” from utilization review for the top 50% of providers
3- Some sort of added oversight for providers performing below the 50th percentile

This is certainly not as easy as it sounds. Perhaps some representative providers would have some suggestions. Perhaps we should engage them in a discussion.

But it doesn’t seem that there can be any harm in considering a “pay for performance” model.

The answers may lie in the data, and they may not. The answers may also lie in the programs of one or more of the 49 states that offer less costly workers’ compensation coverage to employers. It certainly behooves us to look everywhere until we find those answers.

Utilization Review – Evaluating Your Program and Building Toward the Ideal

There are some common sense approaches to Utilization Review that can minimize the unintended consequences, and make your program both effective, and efficient. Suggestions include:

  1. Tighten protocols to allow Adjusters to approve standard diagnostic tests and treatments. Allow early physical therapy treatments to ensure that injured workers get started on treatment immediately and have the benefits of immediacy of care.
  2. Review your costs carefully to be sure you are paying competitive rates. Dig deep to understand what the rates really are, given the wide variances in how charges are applied (See # 2 above). And consider the following ….
  3. Evaluate your medical networks to focus on Physicians who achieve the outcomes that make a difference. Select the “best” Physicians to be in the medical networks — defining “best” based on outcomes (including return to work).
  4. Empower those “best” Physicians to gain the trust of their patients by eliminating the delays and second guessing that comes with requiring the Physician to wait for Utilization Review approval. This can be accomplished by reserving Utilization Review for very complex or non-standard procedures. This can reduce expenses dramatically by eliminating the Utilization Review costs for treatments and tests that are reasonable, necessary and prescribed by Physicians we have identified as the “best.”

    You can then reserve Utilization Review (for those Physicians) for those types of procedures that may still benefit from a second look — i.e. surgeries, advanced rehab techniques, and non-standard therapies.

    Not only can empowering “best” Physicians reduce costs, but it may very well reduce the litigation and protracted claims outcomes that may actually begin when we unintentionally drive that wedge between the treating Physician and the Injured Worker.

  5. Continually measure outcomes in order to reevaluate which physicians are deserving of exemption. Provided physicians with benchmarks of their outcomes (i.e. Return to work, etc.) in order to give them a means to compare their performance and earn “best” status.

Ultimately, if Injured Workers are treated only by the “best,” perhaps Utilization Review would become unnecessary. Perhaps we would eliminate the built in delays that Utilization Review causes, eliminate the expense of unnecessary Utilization Reviews, and focus all our resources on the Physicians and treatments that are likely to result in recovery and return to work.

Utilization Review A Tool for Controlling Costs, or a Cost Driver Itself?

Can there be too much of a good thing? The answer here is a definite “yes.” While Utilization Review can be used to ensure that medical treatment for injured workers is based on evidence-based protocols, it definitely comes at a cost — sometimes a very high cost. Too much Utilization Review can have several unintended consequences that impose “costs” — both monetary and otherwise. These include:

#1 — Delay In Treatment
Utilization Review is not instantaneous. Guidelines allow claims payers five days to turn around the Utilization Reviews. While five days is certainly reasonable in terms of the need for referral, review and approval/modification/denial, it is quite a long time when viewed through the lens of the waiting injured worker and the physician. It can mean five days of extra pain, and five days of added uncertainty.

#2 — Rising Costs
The cost of Utilization Review is not insignificant. Most range from $100 – $300 or more. Considering that this can be more than the cost of some therapies, it becomes evident that unnecessary UR reviews serve to drive up costs, rather than contain them.

#3 — The Wedge
This is likely the most serious of the consequences. Most of us have at some time experienced the frustration of being told by our physician that we need a procedure or a test, but that it has to first be approved by “the Insurance Company.” Although we may have become used to this, it certainly causes us to leave the doctor’s office uncertain about what the next steps will be.

In the case of Work Comp and Utilization Review, the regulations allows for up to five days for the UR process to be completed. Therefore, the Physician must wait before scheduling the procedure, diagnostic test or therapy session. And the irony is that in many cases, “the Insurance Company” selected the Physician or developed the network, and then is “second guessing” the network Physician, driving a wedge between the Physician and patient when we should be supporting the very relationship that is fundamental to returning the Injured Worker to pre-injury condition.

If I were an Injured Worker who visited a Network Provider at the direction of my Employer, and then was told by that provider that I’d have to wait for “the insurance Company” to approve the test, I might wonder why I should trust a Physician that “the Insurance Company” doesn’t even trust!

Rethinking The Incentives Built Into The Workers’ Compensation System

A few months ago, my husband began experiencing back pain. First it was nagging, then moderate, and within a couple of days it had reached an intolerable level. I was shocked to see this stoic man with a “mind over matter” approach to his health succumb to such pain. He was completely unable to function.

And so the medical journey began. First came a prescription for opiates, and then came diagnostics (yes, in that order). Next came an epidural injection and then therapy and exercise. At this point, the story sounds much like what we experience in Workers’ Comp on a daily basis. The difference was … this was not Workers’ Comp. My husband is a self-employed realtor. If he doesn’t work, there is no opportunity for pay. There would be no Temporary Disability, no Permanent Disability, no “add on” disabilities, no attorneys. The only motivation was to recover quickly enough to be able to work.

We found the best specialists, in this case opting for a spine clinic that specializes in treating athletes. Diagnostic tests were completed within days, and the epidural was done within a week. No Utilization Review delays. No authorizations. No shopping for discounted diagnostics. No delays … on anyone’s part. It was truly the “sports medicine” approach — excellent up-front treatment, with everyone focused solely on achieving a positive outcome. He cooperated fully with his physician’s advice, doing all the exercises prescribed while at the same time steadfastly refusing to accept any limitations. And his only financial incentive was to be well enough to work. And therein lay my “light bulb” moment.

It would be naïve, of course, to assume that motivations alone can make the difference. Granted, the underlying condition was amenable to quick results. But we all know that much of the time when we see protracted outcomes, it was not the underlying condition that caused the outcome. Many of the outcomes we see are the result of the “system” and those of us who make our living from the system.

Do we do everything in our power to assist the injured worker in his recovery? Do we contribute to the problem unintentionally by incenting the wrong behaviors, or through our application of the very principles meant to protect the injured worker? In particular, do we use Utilization Review as a tool, or as a crutch?

Utilization review allows us to curtail physical therapy at 24 visits. But is that the right thing to do? Likely some circumstances warrant the use of the “cap,” while others do not. While we should use the tool to prevent abuse, shouldn’t we also apply common sense? Research tells us that for people taking opiates, it is critical to keep moving and avoid retiring to the couch. It seems that until we are able to wean the worker off the opiates the therapy is likely actually therapeutic. What about the person who is improving? Should we curtail the therapy before the results are achieved?

It is also fairly common practice to deny gym memberships through Utilization Review. But, for a motivated injured worker, isn’t the gym the most cost-effective way for an injured worker to build strength and restore function? In most cases, a month’s gym dues are less costly than one or two physical therapy treatments.

What about Functional Restoration? Wouldn’t it make sense for us to consider functional restoration in cases that appear amenable? It can be the most effective tool in returning some motivated people to full function and to work!

In addition to the lessons about utilization review, my husband’s injury has heightened my awareness of the issue of cooperation and financial incentives. I believe it’s appropriate to ask ourselves whether the system motivates cooperation or whether it actually motivates “claimant behavior.” Does the person who cooperates fully with the medical rehabilitation plan often end up with a much smaller payday than the person who “works the system?” Is the system fraught with unintended financial consequences?

What if we took a practical approach to Utilization Review, and also offered financial incentives to get well, rather than to sustain ongoing disability? What if we provided incentives to go to therapy, or go to the gym? What about Incentives to cooperate? What about incentives to participate in functional restoration of all different types?

Without turning the system upside down, we can certainly turn our thinking 180 degrees. Perhaps we can find a way to reward injured workers for doing the right thing. And perhaps we can use Utilization Review as a tool, and not as a crutch, to make smarter decisions about the treatments we approve. We can shortcut the unnecessary and costly Utilization Review and give injured workers the best possible chance to recover. Its the right thing to do. And its good business, as well.

Note: In case it occurs to anyone, I did get a HIPPA compliant release from my husband before sharing his story!