Tag Archives: sb 863

Appellate Court Rules on IMR Timeframes

The 2nd Appellate District has issued the first of what should prove to be several appellate decisions on the timeliness of independent medical review (IMR) decisions. The court was considering the assertion by a W.C.A.B. panel that IMR timelines are mandatory and that late IMR means the W.C.A.B. — and not doctors — will determine whether treatment is medically necessary.

In SCIF v W.C.A.B. (Margaris), the court annulled the W.C.A.B. decision and remanded with instructions to issue a new decision. The court’s reason for accepting this case was set out early in the decision:

“…We issued a writ of review because this case presents an important issue of first impression regarding the interpretation of section 4610.6, and because it relates to an issue upon which the appeals board has rendered conflicting decisions.”

In its analysis, the court provided an extensive discussion of the history of authorization for medical treatment, the implementation of utilization review (UR) for treatment requests and the enactment of the statutory scheme for IMR.  As noted by the court in SB 228 and 899, the legislature changed both the standards and process used by an employer to evaluate a request for medical treatment. The legislature adopted the medical treatment utilization schedule (MTUS). The legislature then removed the existing process for resolving medical disputes using dueling doctors and required the use of utilization review, which required review of treatment requests in light of the MTUS.

In 2012, the legislature enacted another set of reforms to address disputes over UR determinations. As noted by the court, a UR determination authorizing medical treatment was binding on the employer but became subject to further review through IMR — but only for the employee. The court further observed that even where an IMR determination is ultimately reversed by the W.C.A.B., the issue of medical appropriateness was to be returned to IMR for further review, not decided by the W.C.A.B.

See also: IMR Practices May Be Legal, Yet…  

Turning to the specific issue before it, the court determined the use of “shall” in Labor Code 4610.6 was directive, not mandatory:

“…The appeals board concluded that section 4610.6, subdivision (d), is clear and unambiguous.  According to the appeals board, “shall” is mandatory, and any IMR determination issued after the 30-day time frame is necessarily invalid. In support of this interpretation, the appeals board cited section 15, which provides “‘[s]hall’ is mandatory and ‘may’ is permissive” (§ 15.). Thus, the appeals board concluded that construing “shall” as mandatory, such that an untimely IMR determination is invalid, comports with both the ordinary meaning and the statutory definition of “shall.” As we explain, however, the issue is more nuanced than the appeals board recognized.

We note that section 15, upon which the appeals board relied in this case to support its interpretation of section 4610.6, subdivision (d), juxtaposes “mandatory” against “permissive,” which arguably suggests the legislature used “shall” in the obligatory permissive sense rather than in the mandatory-directory sense, as the appeals board concluded. (See McGee, supra, 19 Cal.3d at p. 960 [discussing section 15 and concluding that “on its face, the statutory language suggests that the legislature intended the present provision to be mandatory (i.e., obligatory), rather than permissive.”]) However, given the difference in meaning given to “shall” in the statutory context, we conclude section 4610.6, subdivision (d), is ambiguous. Accordingly, we move beyond the plain language of that section and consider its meaning with reference to the rest of the statutory scheme and the intent of the legislature.”

The court commented further on this issue:

“Generally, time limits applicable to government action are deemed to be directory, unless the legislature clearly expresses a contrary intent.  (Edwards, supra, 25 Cal.3d at p. 410.) “‘In ascertaining probable intent, California courts have expressed a variety of tests. In some cases, focus has been directed at the likely consequences of holding a particular time limitation mandatory, in an attempt to ascertain whether those consequences would defeat or promote the purpose of the enactment.  [Citations.] Other cases have suggested that a time limitation is deemed merely directory ‘unless a consequence or penalty is provided for failure to do the act within the time commanded.’”

The court also found the lack of a penalty or consequence for noncompliance to be significant. Citing similar language in actions by the state personnel board, which had been held to be directive rather than mandatory, the court suggested a failure to meet the statutory time frame did not result in a loss of jurisdiction. The court also indicates in its review of the mandatory vs. directory dichotomy that statutes that set time frames for government actions that do not include a self-executing consequence are almost universally construed as directory.

The court also noted that construing the 30-day time frame as directory furthers the legislative objective of SB 863.

“We conclude from these findings that the legislature intended to remove the authority to make decisions about medical necessity of proposed treatment for injured workers from the appeals board and place it in the hands of independent, unbiased medical professionals. Construing section 4610.6, subdivision (d), as directory best furthers the legislature’s intent in this regard. The appeals board’s conclusion in this case — that an untimely IMR determination terminates the IMR process and vests jurisdiction in the appeals board to determine medical necessity — is wholly inconsistent with the legislature’s stated goals and their evident intent.

Finally, and perhaps most tellingly, the legislature provided that, “[i]n no event shall a workers’ compensation administrative law judge, the appeals board, or any higher court make a determination of medical necessity contrary to the determination of the independent medical review organization” (Stats. 2012, ch. 363, § 45, codified at § 4610.6, subd. (i)). We find this portion of the statute — particularly the use of the phrase “in no event” — to be a frank expression of the legislature’s desire to remove the issue of medical necessity of proposed treatment from the jurisdiction of the appeals board in all cases subject to IMR. The legislature’s intent would be defeated by giving section 4610.6, subdivision (d), mandatory effect, as the appeals board did in the present case.”

See also: 20 Work Comp Issues to Watch in 2016

Additionally, the applicant attorney argued that the W.C.A.B.’s holding in the Dubon case (Dubon 2) supported the W.C.A.B’s usurpation of authority to decide medical treatment. The court noted the holding in Dubon 2 is supported by the AD’s regulations providing that IMR applies solely to timely and procedurally proper UR but that no similar regulation existed for IMR. The court declined to comment on the W.C.A.B.’s decision in Dubon 2 as the issue was not before it.

Comments and Conclusions:

There are currently two other cases pending in the appellate courts, both in the 3rd appellate district — on this same issue and, interestingly, this case was not the first grant on the issue. However, the court set a very aggressive briefing schedule and, even with multiple amicus briefs it heard, considered and decided this case in, what is by appellate standards, a very short time (less than six months). Clearly the court was very interested in this issue, which had multiple W.C.A.B. panel decisions with conflicting holdings.

The court, in its decision, also rejected arguments offered by both the applicant and the W.C.A.B. that untimely IMR resulted in unnecessary delays — a rationale offered by the majority panel in both Dubon and Margaris. The court, very astutely, noted this argument made no sense given the time frame for obtaining QME opinions or litigating medical treatment issues before the W.C.A.B.  The court pointed out that, even with the delays in completing IMR, the W.C.A.B. decision was more than 13 months after the initial decision in UR and more than 10 months after Maximus rendered its decision. The court was clearly, and properly, skeptical of the argument that letting the W.C.A.B. decide medical issues would result in a more prompt disposition.

The court did offer an option to applicants to challenge untimely UR through the ability to file a petition for writ of mandate to compel a decision. While a statutorily viable option, this is impractical, especially in light of the current timeliness of most IMR determinations. Further, the issue here has never really been the timeliness of IMR. The goal for the applicant attorney bar, and apparently some of the commissioners, has been to usurp the medical decision making process from being medically driven to being litigation-based.

The decision does not provide a lot of nourishment for those who are waiting for some sliver of light on the Dubon 2 issue. The court, in its footnote, declined to really comment on Dubon 2, but it did note there was some basis for the W.C.A.B.’s decision. However, the very strong language of the court emphasizing the public and legislative policy behind having medical decisions made by physicians, and the much greater speed and certainty of the UR/IMR process over the legislatively disfavored litigation process, may provide some hope that, given a chance, the appellate court would also reject the W.C.A.B.’s arguments in support of Dubon 2.

Court Dumps Lien Filing Fee Challenge

The 2nd District Court of Appeal has handed down a decision affirming the legislature’s creation of the lien filing fee as part of SB 863. In Chorn v. W.C.A.B., a physician (Robin Chorn M.D.) filed a complaint that was joined by two injured workers in an effort to challenge, on constitutional grounds, the imposition of a lien filing fee. The court, with frequent references to Angelotti Chiropractic Inc v. Baker, rejected similar arguments that were raised, which, unsuccessfully, (thus far) challenged the lien activation fee provisions of SB 863.

First, the court dealt with the issue of judicial standing for the injured workers—whether they could raise an issue of constitutionality regarding the lien filing fee provisions and in short order dismissed their claims in the case.

From the ruling:

Petitioners Kalestian, Vounov and Buie contend they have a “real and direct interest in challenging constitutionally infirm provisions of law that are transparently intended to impair access to expeditious treatment of their workplace injuries.” They claim that “the imposition of a lien filing fee that bears no connection to the value of the services rendered will make it less likely that medical providers will offer or render care to workers’ compensation patients on a lien basis,” and will “deprive injured workers of any choice as where [sic] they receive their care (if they receive care at all),” thereby “impairing the promise of unencumbered access to medical treatment of their injuries.” But petitioners have not submitted any evidence in support of these claims or any details of their alleged injuries beyond the bare assertion that they have “been denied medical care access as a consequence of SB863.” Moreover, they have not demonstrated that they are more affected than the “public at large” by the operation of sections 4903.05 and 4903.8, or that their constitutional challenges, if successful, would directly affect their rights.”

See Also: Hidden Motives on Workers’ Comp

After dismissing the causes of action by the purported injured workers (no doubt added into the mix in an unsuccessful effort to piggyback onto a more sympathetic plaintiff than the medical provider), the court turned to the multiple arguments raised by the medical provider plaintiff.

On the issue of the imposition of a lien filing fee as an impermissible “encumbrance” on the system, the court was unimpressed, noting the plaintiff failed to cite any legal authority as the basis of its assertions. The court pointed out that the courts have rarely been willing to substitute their judgment for the legislature’s in its efforts to create or maintain a system of workers’ compensation. Noting the legislature’s findings regarding workers’ compensation abuse on a broad scale, the court found the imposition of a $150 filing fee to be a rational exercise of legislative authority.

The court then sequentially addressed the additional arguments: right to petition, due process, equal protection and right to contract.  In each argument, the court found the medical lien provider failed to demonstrate a constitutional violation based on the obligation to pay a filing fee. The court was particularly swayed by the fact that the lien claimants could, upon meeting the statutory criterion and prevailing in litigation, recover their fees:

“…The compromise effected by section 4903.05—lien claimants must pay to file their liens, but may recoup their filing fees if they ultimately prevail—sufficiently protects the due process rights of lien claimants while serving the legitimate goal of deterring frivolous filings.”

The court was particularly dismissive of the claim of contractual impairment, as the court noted the contracts that the plaintiff claimed were being impaired had not yet been created. The statutory prohibition on impairing contractual rights essentially prevents the government from changing existing contracts, but it does not extend to future contracts.

The petition requesting an injunction enforcing the lien activation provisions of SB 863 was denied for the medical lien provider and for the injured worker plaintiffs, with respondents to recover their costs.

Comments and Conclusions:

This case had more or less dropped off the radar, particularly since the initial filing by the medical lien provider, Dr. Chorn, The refiled petition was filed directly with the Court of Appeal, the first level of appellate review that can consider constitutional issues. As a result, there really is no factual record to review. The court’s decision rests almost entirely upon statutory interpretation and the court’s conclusions (based on much the same logic as in the Angelotti case) that the legislature has broad discretion. The imposition of a recoverable filing fee turns out to be no more of an impermissible exercise of the legislature’s power than the activation fee.

This case is likely to be appealed to the California Supreme Court, where it is almost just as likely to fail.

Legislative Preview for Work Comp in 2016

Common wisdom suggests that major workers’ compensation legislative activity won’t take place during an election year. For 2016, that would seem to hold true.

That is not to say, however, that various interested parties will be sitting idly by, waiting for the clock to turn to 2017.

CENTERS FOR DISEASE CONTROL ADD TO THE LIST OF CHRONIC PAIN GUIDELINES

On Jan. 13, the Centers for Disease Control and Prevention (CDC) closed the public comment period for its proposed Guideline for Prescribing Opioids for Chronic Pain. According to the CDC, the guideline is being proposed to offer “… clarity on recommendations based on the most recent scientific evidence, informed by expert opinion, with stakeholder and constituent input considered.”

The guideline goes to great lengths to address two important issues. The first is that current guidelines in many states – both public and private – are based on dated information. The second, which is critical, adds to the growing number of voices to say that best practices for providers include accessing physician drug monitoring programs (PDMP) to reduce the risk of doctor shopping and toxic – and sometimes fatal – mixtures of prescription drugs when the patient provides incomplete histories or none at all of their drug use (both prescription and illicit).

This need to access a PDMP before, and during, treatment with opioids is echoed by the Medical Board of California (MBC) and the DWC. Their comments also underscore a considerable problem facing California policymakers when trying to create incentives for providers to use the Controlled Substance Utilization Review and Evaluation System (CURES) without directly mandating access.

This dilemma is best summed up by the analysis of Senate Bill 482 by Sen. Ricardo Lara (D – Bell Gardens) that is at the Assembly Desk pending referral to committee. The bill, which would mandate participation in the CURES system as well as other measures to curb the abuse of opioids, has garnered opposition from medical associations and one medical malpractice insurer. The opposition, according to analyses by legislative staff, is based on two issues – the first being whether the CURES system is capable of handling the volume of inquiries a mandate would engender, and the second being concern that requiring CURES access will become a standard of care that could subject providers to malpractice liability.

As to the former, this issue arose during the campaign waged against the 2014 ballot measure Proposition 46. According to the non-partisan Legislative Analyst’s Office (LAO), “Currently, CURES does not have sufficient capacity to handle the higher level of use that is expected to occur when providers are required to register beginning in 2016.” This raises an important question – does the CURES system now have the capability to meet the demand that a mandate would create? If it doesn’t, then the legislature needs to understand why.

As to the second issue, it is difficult to comprehend the level of distrust that is subsumed in the position that opposing a mandatory review of possible prescription drug abuse by a patient would establish more potential malpractice liability than knowing that the CURES database exists and not checking it. In time, perhaps, it will be the appellate courts that resolve that issue.

There is no shortage of guidelines that address the appropriate use and cessation of use of opioids for non-cancer chronic pain. The DWC is finalizing its latest iteration on this issue as part of the MTUS. It will differ from both the CDC and the MBC guidelines to some degree, but the overall treatment of this issue is very similar. In addition, the division will be implementing a prescription drug formulary as required by Assembly Bill 1124 by former Assembly member Henry Perea (D – Fresno). That, too, will likely provide opportunities to address the proper use of opioids in the workers’ compensation context, preferably after the chronic pain guidelines are completed.

As noted by the CDC and the MBC, and implicit in the DWC’s guidelines, this is not just a question of UR. If all the work by the division is simply viewed as a more effective way of saying “no” regardless of the circumstances, then the public health issues associated with the abuses of opioids will continue.

Workers’ Compensation Insights is a bi-monthly publication of Prop 23 Advisors. Subscribers will receive in-depth analyses of pending California legislation and regulations, review of important WCAB and appellate court decisions and commentary on trends within the system in California and nationally. To read the rest of this newsletter, click here.

20 Work Comp Issues to Watch in 2016

In an “Out Front Ideas with Kimberly and Mark” webinar broadcast on Jan. 12, 2016, we discussed our thoughts around the issues that the workers’ compensation industry should have on its radar for 2016. What follows is a summary of 20 issues that we expect to affect our industry this year.

  1. Election Cycle

Everyone knows that this is a presidential election year. But election time also means governor and insurance commissioner seats are available. State insurance commissioners are elected in 11 states and appointed in the other 39. In the coming election, there are 12 gubernatorial seats and five insurance commissioner positions to be decided. The workers’ compensation industry needs to be paying attention to these elections because the insurance commissioners can have significant influence over procedures, policies and enforcement in their states.

  1. Viability of Workers’ Compensation

It is important for all of us to consider the continuing viability of workers’ compensation. Is the grand bargain still doing what it was established to do? There is a growing debate around the gaps and shortcomings of workers’ compensation. Our industry needs to engage in a critical analysis of these issues.

  1. Federalization

In October 2015, 10 high-ranking Democrats on key Senate and House committees sent a letter to the Department of Labor asking it to conduct a critical review of state workers’ compensation systems. Some are concerned that this is a sign we could see federal government involvement in state workers’ compensation systems.

In some ways, the federal government is already involved in workers’ compensation. For instance, OSHA has a tremendous impact on workers’ compensation. Medicare Secondary Payer Compliance is another example of federal law affecting the system.

Recent criticisms of workers’ compensation have focused on the vast benefit differences between states. There is also growing concern that workers who are permanently disabled are pushed off workers’ compensation and onto Social Security disability. With Social Security raising solvency concern, lawmakers will be receptive to discussions on how to keep workers’ compensation from shifting long-term claims to the federal government.

This is a substantial issue to watch in the coming years, and there is a significant chance that the federal government will suggest minimum benefit recommendations to the states at some point. This could especially affect states that have hard caps on the total amount of indemnity benefits that an injured worker can receive.

  1. Affordable Care Act

The Affordable Care Act (ACA) will continue to be a subject of discussion in 2016.

The implementation date of the high-cost, employer-sponsored health plans tax, dubbed the “Cadillac tax,” was recently delayed from 2018 to 2020. It imposes an excise tax of 40% on health plans whose value is more than $10,200 for individual coverage and $27,500 for a family. Regardless of the delay, employer-sponsored benefit plans have evolved over the past five years in preparation to avoid the additional tax. The formerly rich benefit plans were dropped in an effort to provide benefit plans within ACA’s requirements and often replaced by higher-deducible plans with reduced benefits.

NCCI and WCRI have both conducted studies on how the ACA has affected workers’ compensation. Results have not conclusively tied treatment delays or actual cost shifting to workers’ compensation. We believe continuing studies by these organizations and others are important to evaluate the impact of ACA on workers’ compensation.

Other issues that should be monitored include consolidation of health systems, providers and insurers. In 2015, there was more than $700 billion of consolidation in the healthcare marketplace. This is driven, in part, by the ACA, because scale and size assist providers with efficiency, purchasing power and the need to provide a continuum of care.

Another issue where the ACA could affect workers’ compensation is changing reimbursement models. Medicare is looking to shift into a value-based reimbursement model, and many state fee schedules are based on Medicare rates.

Although not specifically related to ACA, a healthcare topic to keep an eye on is drug pricing. Drug pricing will continue to be a topic within the media, PBMs, employer benefit managers, health plan experts and the political arena. Prescription drug pricing increased more than 10% in 2015, and this trend is expected to continue. This has an impact on the cost of workers’ compensation claims.

  1. Holes in Workers’ Compensation

What many people do not realize is that workers’ compensation protections are not available to all workers within the U.S. In 14 states, smaller employers with five employees or fewer do not have to secure coverage. In 17 states, there is no legal requirement for coverage of agricultural workers. Half of the states do not require coverage for domestic workers, and five states specifically exclude coverage for these employees. There are also states that create exceptions for certain types of workers, such as state employees in Alabama. Finally, we have seen from court cases around the country that occupational diseases that take several years to develop are often barred by the statute of limitations, leaving workers with no recourse for benefits.

These holes are yet one more thing that critics point to when talking about the inadequacy of workers’ compensation. The occupational disease issue is particularly concerning because it is very easy to question the fairness of barring a claim under the statute of limitations and, at the same time, denying the injured worker the ability to pursue a claim in civil court under the exclusive remedy protections of workers’ compensation. This is another area where we will not be surprised to see the federal government give recommendations.

  1. Blurred Lines Between Workers’ Compensation and Group Health

The employee health model is evolving. Employers are finding the need to provide a consistent healthcare experience for their workforce and plan members. Employers would like to find a model that provides both quality care and consistency for their employees, regardless of whether the need for treatment arises from a work injury or at home. Because a healthy workforce is a productive workforce, employers also feel that there is a need to tie health and productivity together.

We will continue to see health systems build accountable care organizations (ACO) and enter the health plan, insurance and risk-bearing arena with the goal of directly selling to and partnering with employers. ACOs are an attractive model for employers supporting a healthier workforce by extending the culture of health philosophy from work to the home for their employees and their families.

Mental health is a top driver for absence across employers and not simply a health cost concern. Mental healthcare should be as important as physical healthcare and is currently a focus of population health and employer programs. Employers are looking for healthcare models, which consider the person as a whole and offer consistent, engaging behavioral health and wellbeing programs for the workforce.

Workers’ compensation key stakeholders should be a part of the evolving health model discussions and early stage planning so as not to be left in the dark as health models change.

  1. Options to Workers’ Compensation

We all know that Texas has a unique system that allows employers to completely opt out of workers’ compensation benefits. The term “opt-out” refers only to the Texas system. Employers in Oklahoma have an option to workers’ compensation that allows them to develop a private benefit plan that replaces state-mandated workers’ compensation. It is this concept of an option that is looking to spread to other states. Bills on this issue will be reintroduced in Tennessee and South Carolina this year, and other states have begun preliminary discussions.

Some employers feel that they can provide better benefits to their injured workers at a lower cost with these option programs. Others are concerned that these programs lack the controls and oversight of state workers’ compensation. One thing is certain: This issue is not going away any time soon. Perhaps these discussions around options to workers’ compensation can lead to discussions about workers’ compensation reform, including employer medical control, increasing thresholds of compensability and reducing the bureaucracy of the workers’ comp system.

  1. Evolving Claims Model

There are significant discussions around the evolving claims model. The industry realizes that we need to focus more on the injured worker as a consumer. The model needs to focus more on advocacy, but what does this really mean? Should there be a person who assists the injured worker in understanding the claims process, or is there a need to change the culture of our industry to be less adversarial?

Other parts of the evolving model involve who actually touches the claim. Are there elements that could be automated? Should there be more specialization with different individuals performing different tasks instead of the current model where the claims adjuster is a generalist performing multiple tasks across multiple jurisdictions?

The claim handling model also needs to adapt to new technology and the way in which different generations want communication. Some injured workers prefer text instead of e-mail or phone calls. Some like to access claims information in an app on their mobile device or simply, 24/7, as they want it that moment. The model must evolve to take full advantage of new technology and communication methods.

The March 15 “Out Front Ideas with Kimberly and Mark” webinar will focus on the evolving claims model and include guests who are passionate about an advocacy-based design.

  1. Florida Supreme Court

Over the last two years, four cases challenging the constitutionality of various aspects of the Florida workers’ compensation statutes have made it to the state’s Supreme Court. The first of those cases, Padgett, ended in late December when the Supreme Court declined to review it. That case had been thrown out on procedural grounds during the appeal process, so the Court of Appeals and Supreme Court never addressed the underlying constitutional challenge.

There are three cases still to be decided:

  • Westphal, which deals with caps on temporary disability benefits.
  • Castellanos, which addresses limitations on attorney fees.
  • Stahl, which focuses on post MMI medical co-payments and the elimination of permanent partial disability payments.

The expectation is that the Florida Supreme Court will address all of these cases in 2016, but nobody knows when that will occur.

  1. Bureaucracy

Workers’ compensation is one of the most highly regulated lines of insurance, and regulators are increasingly aggressive in pursuing fines and penalties. Every form filed and every payment transaction is an opportunity for a penalty. EDI allows regulators to automate the fines and penalties. Some states perform retrospective audits on activity five to 10 years in the past. The IMR process in California adds administrative cost to claims without necessarily improving outcomes, and states with self-imposed penalties may be driving up the cost of doing business beyond the benefit of the penalty payment. Lobbying is becoming an increasingly important area for payers and service providers to consider.

The significant costs associated with the bureaucracy of workers’ compensation regulations are not improving the outcomes on claims. Most of the money collected from the fines and penalties is paid to the states. The programs may cover the operating costs of state workers’ compensation division and not be paid to the injured worker or medical provider.

This topic is an important issue to watch in 2016 and will be the topic of our Feb. 9 “Out Front Ideas with Kimberly and Mark” webinar.

  1. Regulatory Change

There are four states in particular that we should be keeping an eye on in terms of potential regulatory reforms in 2016:

New York

Employers in New York are continuing to push for additional workers’ compensation reforms to reduce their costs because the savings projected with the last round of reforms never fully materialized. Whether there is enough momentum to get a bill through this year remains to be seen, but the efforts are there.

Florida

In Florida, the situation is going to depend on what the state Supreme Court does with the cases mentioned earlier. If any of those cases punch holes in the constitutionality of the workers’ compensation law, then the legislature is going to need to address this. Again, this is a waiting game.

Illinois

Illinois Gov. Rauner has made it a priority to enact workers’ compensation reforms to reduce employer costs. But his efforts have been blocked by the state legislature, and there is a budget stalemate in the state. There has been much political back-and-forth on this budget and the workers’ compensation reforms. It remains to be seen if the governor has the political muscle to get his legislation passed.

California

Ever since the Schwarzenegger workers’ compensation reforms in 2004, and continuing with SB 863 passed by Gov. Brown, the California legislature has been trying to undermine these workers’ compensation reforms. Every year, multiple bills are passed by the legislature, and every year both Gov. Schwarzenegger and Gov. Brown have vetoed those bills. Gov. Brown is committed to preserving his workers’ compensation reforms, and there are three years left on his term. Once he is gone, there is concern about what could happen with workers’ compensation in California. But, for now, significant change is not expected.

  1. Talent Acquisition

Talent acquisition and retention is probably the biggest issue facing the entire insurance industry. Consider:

  • 25% of insurance industry workforce will retire by 2018 (McKinsey)
  • There are 2.3 million workers in the insurance industry. More than 1 million will retire in the next 10 years, and 400,000 positions will be left open by 2020 (Deloitte and Jackson Group)
  • Workers over the age of 45 represent 48% of the insurance workforce

Are we doing enough with colleges to show the career opportunities in the insurance industry? Although more colleges and universities are offering risk management programs, the reality is that there are very few of these programs nationwide. Our industry needs to support these programs with both grants and internship opportunities.

In workers’ compensation, we need to be looking at the role of the examiner. Are there tasks that we could automate and reduce workload need? Millennials say they want to work with purpose. The role of the claims adjuster is to assist injured workers in their recovery. Could we be doing more to highlight the positive aspects of the claims adjuster role to make it more attractive to millennials?

We also need to be looking at ways to be flexible with work schedules and at whether someone is tied to the home office or able to work from a remote location. Finally, we need to continue to focus on promoting diversity and inclusion within our workforce.

In May, we will be doing an “Out Front Ideas with Kimberly and Mark” webinar devoted to this topic.

  1. Market Conditions

You cannot forecast the coming year for the workers’ compensation industry without talking about rates. Recently, for the first time in years, the Fed increased interest rates. This is good news, but the change is still insignificant and will not have a material impact on the workers’ comp industry. Because investment opportunities are limited for carriers, they continue to be very diligent with their underwriting. What does this mean for rates? Right now, the market is relatively stable. Accounts with good loss histories could see steady to slightly decreased rates, while accounts with poor loss histories will likely see slight increases. Overall, significant rate changes across the nation are not expected in the coming year.

  1. Predictive Analytics

Predictive analytics have been a buzz word in our industry for a number of years. Most data models identify at-risk claims, which may benefit from additional intervention in terms of nurse case management or a more skilled adjuster. The goal of the intervention(s) is to change the trajectory of the claim, to do something different than in similar prior claims, so the result is improved over the past experience. Although most payers reflect having predictive analytics and a variety of models available, there are limited published results on the outcome and effectiveness. Watch in 2016 to see if organizations begin sharing outcomes as a way to market their business or provide industry thought leadership on what is working and should be considered to drive success.

There is a need to evolve predictive analytics and big data models so that some human tasks are automated. Instead of just identifying cases where intervention is necessary, we should also identify claims where minimal intervention is needed. This approach frees resources and allows attention on claims, which will benefit from the touch. Future claims models will benefit from analytics using learning models similar to IBM Watson-type smart analytics.

  1. OSHA

OSHA continues to be a challenge for employers. Going into 2016, OSHA has increased reporting and recordkeeping requirements. It is also increasing its focus on certain industries, including healthcare, and employers are seeing a significant increase in fines. This is an area that is constantly evolving.

Our April 5 “Out Front Ideas with Kimberly and Mark” webinar will focus on these continuing developments and discuss the continuing issues that employers should track.

  1. Utilization Review

There is industry buzz and sidebar conversations around utilization review (UR) and the current approach deployed by employers, payers and service providers. Physicians are asking more than ever how they can help streamline treatment requests, obtain decision outcomes electronically and more quickly and provide timely, appropriate care for patients.

Utilization review should ensure that injured workers receive appropriate care within the right setting and for the correct duration. But what is the right UR model? Should all treatment be subject to UR or select treatment requests? Is UR a process strictly addressing the request for treatment and medical documentation submitted against guidelines of care or collaborative with adjusters, providers and the injured workers? Are denials of care driving up litigation unnecessarily? Do utilization review referral triggers change if the physician providing care is part of a high-performance network or known to be a top-performing physician? These are questions being raised by industry veterans and newcomers alike and are likely worthy of a review and further dialogue.

In the consumer-driven health world where we find ourselves, there is greater interest from injured workers to understand treatment options and outcomes. If not a part of UR, is your case management or claim model providing medical treatment option education, inclusive of outcomes awareness? Transparency is becoming increasingly important to consumers.

  1. Exclusive Remedy

Plaintiff attorneys are always trying to find ways around the exclusive remedy protections of workers’ compensation, and these efforts are becoming increasingly successful. In early January 2016, the District Court of Appeals in California allowed an injured worker to pursue a civil claim against a utilization review provider because the provider failed to warn him about the potential risks of medication withdrawal.

More and more, judges are allowing such litigation to survive a motion to dismiss on summary judgement because of workers’ compensation exclusive remedy protections. This creates enormous costs for employers and carriers, which then must spend hundreds of thousands of dollars or more defending such lawsuits and face the risk of a jury award that could be worth millions. In addition, an employer’s liability award based on the “intentional actions” of the employer may have issues with insurance coverage. The entire industry should be paying close attention to this area of increased litigation around exclusive remedy.

  1. ICD-10

The ICD-10 medical classification came along last year with a lot of hype and a significant amount of work effort to update systems and train teams. There was concern that the new diagnosis codes would result in slowed claims processes and treatment decisions. Thus far, workers’ compensation key stakeholders report little to no impact from the change. This may be because states did not mandate the use of ICD-10 for workers’ compensation and most organizations continue to accept ICD-9. Bill review receipt to pay timeframes have not lengthened, and e-billing rejections did not increase, which were two areas to watch after the ICD-10 go-live.

In 2019, Medicare plans to roll out an incentive-based reimbursement model tied to patient outcomes (MACRA). The American Medical Association believes this will be a significant reimbursement change for physicians. Changes to Medicare reimbursement could impact workers’ compensation because some state fee schedules are Medicare based.

History has proven Medicare does not always follow through with what it says it is going to do in terms of changing reimbursement models, but the MACRA implementation is an issue worth monitoring.

  1. Marijuana

Thus far, New Mexico has been the only state allowing medical marijuana for treatment under workers’ compensation. But as the use of medical marijuana spreads, it is inevitable that we will see other states take on this issue. The answer is simple –if states put something in their statutes barring medical marijuana under workers’ compensation, then that solves the problems. Some medical marijuana states have already indicated that insurance is not responsible covering medical marijuana. State legislators and regulators can stop this before it becomes a legitimate problem.

The bigger issue is employment practice concerns. Many expect the federal government to reclassify marijuana as a Schedule 2 drug, possibly by the end of this current administration. Once that happens, it will no longer be an “illegal” drug. Employers are going to need to adapt and drug test for impairment rather than just testing the presence of the drug. Standards are going to need to be developed on what constitutes “impairment” with marijuana. The science needs to catch up with the realities of this new normal when it comes to marijuana in the U.S.

  1. On-Demand Economy

The on demand economy is creating new concerns about what constitutes an employee/employer relationship. Is an Uber driver an employee of Uber or an independent contractor? What about a repair person you hire through Angie’s List?

While the on-demand economy is a newer dynamic, determining what constitutes independent contractor vs. an employee has been a challenge for the workers’ compensation industry for many years. In July 2015, the Department of Labor issued an interpretive memorandum indicating that the DOL feels “most workers classified as independent contractors are employees under the Fair Labor Standards Act’s broad definitions.”

So perhaps the issue to watch here is not so much the on-demand economy, but instead whether we are going to see the Department of Labor push for fewer and fewer workers to be classified as independent contractors. This could have a significant impact on many industries as well as significantly changing the business model of services like Uber and Lyft.

Southern California Is Home to Fraud

Those who are familiar with the California workers’ compensation system are aware that much of the fraud, and a very high percentage of the liens, in the state are in Southern California. These three articles (here, here and here) show why workers’ comp fraud is making a home in Southern California.

Before the passage of SB-899 in 2004, there was one back fusion surgery for every laminectomy (surgery to reduce pressure on the spinal cord or nerves) provided in workers’ compensation in California even though only 3% of laminectomies by group health providers resulted in fusions.

Prior to SB-899, it was almost impossible for the payers to say no to physicians’ requests for multiple surgeries. Back then, six and seven unnecessary back surgeries on a patient were not uncommon — and, apparently, for the benefit of the doctors, not of the injured workers.

To compound the problems for the injured worker, when the multiple back surgeries were not successful, the employee was then given opioids for the intractable pain. This resulted in a large number of injured workers who are now opioid addicts.

Opioid-addicted injured workers now account for a high percentage of the complex and advanced IMRs (independent medical reviews done by Maximus).

Pending regulations from the Division of Workers’ Compensation for a pharmacy formulary (using evidence-based medicine) will help reduce the number of inappropriate requests and questionable denials.

Already, passage of SB-863, with a focus on evidence-based medicine and medical decisions made by medical professionals, helped significantly reduce the abuses and improve the care for the injured workers of California. The IMR process outlined in SB-863 takes medical decisions away from non-medical professionals. It helps protect the injured workers from abuses like those outlined by the FBI in the articles I linked to above.

It would be interesting to see how many of the millions of the liens filed in the system are associated with the indicted doctors mentioned in the article.