Tag Archives: senate bill 863

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.

A Key Ruling on Workers’ Comp in California—and What It Means

The workers' compensation community watched anxiously for months as the U.S. District Court for the Central District of California considered a constitutional challenge to the lien activation fee — an important component of the 2012 reforms in Senate Bill 863. In the case (Angelotti Chiropractic, et al. v. Christine Baker, et al.), Judge George Wu ruled on Nov. 12 that the fee is indeed unconstitutional based on the Equal Protection provisions of the U.S. Constitution. His reasoning was that there was no rational basis for exempting large institutional lien holders (health care plans, union trusts, etc.) from the activation fee and that all lien claimants should either be in or out when it comes to filing fees.

The injunction against enforcing the lien activation fee took effect on Nov. 19. In anticipation, the Division of Workers’ Compensation notified the community Nov. 15 that it would no longer be requiring the fee be paid for liens filed prior to Jan. 1, 2013.

It is important to note that there are two filing fees enacted in SB 863. The one that applies to liens filed prior to Jan. 1, 2013, is the lien activation fee and is the subject of the federal lawsuit. The other is the lien filing fee, which is not affected by this litigation. In addition, statutory and regulatory changes made in SB 863 and the regulations adopted by the Division of Workers’ Compensation eliminate liens for most service providers that are subject to a fee schedule for dates of service on and after Jan. 1, 2013.

That is not to say that the injunction against enforcement of the activation fee is inconsequential, for it most certainly is not. In the last two calendar quarters of 2012 alone, more than 800,000 liens were filed. Of those, almost two-thirds are in Los Angeles County. Most of these have not moved through the system, undoubtedly because some lien claimants were waiting to see whether the activation fee was going to be upheld. It is assumed that many of these liens were never going to be filed because of the activation fee. As such, many liens would have expired by operation of law on Jan. 1, 2014. That, too, is now part of the unknown that comes from the Court’s decision.

Obviously, the Department of Industrial Relations and claims administrators are not happy with this ruling. To a certain extent, neither are the plaintiffs in the case, who saw two of their three claims summarily dismissed by the court. Whether these issue now go up to the Ninth Circuit U.S. Court of Appeals remains to be seen. Plaintiffs, and indeed all lien claimants regardless of whether they were parties, have secured the relief they sought – enjoining the activation fee—but that could be put at risk if there is an appeal. Conversely, while the Department of Industrial Relations disagrees with the finding that the activation fee is unconstitutional, the fact that Judge Wu dismissed the claim that the activation fee constituting a “taking” of private property is a big win for proponents of SB 863 – for the taking argument has much broader implications than does the Equal Protection argument that Judge Wu found persuasive.

Because the Jan. 1, 2014, dismissal by operation of law date on old liens has been enjoined, it is not automatic that there will be a flood of activity on liens filed before Jan. 1, 2013, at the Appeals Board before year end. It is a fair observation, however, that liens many in the community thought would be extinguished by operation law won’t be. Whether those liens are going to be the subject of Appeals Board hearings and ultimately paid, however, remains uncertain. And uncertainty is a chronic symptom of our oft-ill but rarely cured workers’ compensation system.

And in case no one noticed, on Nov. 14 a new federal lawsuit was filed challenging both the lien activation fee and the lien filing fee. The plaintiff, who is seeking class action certification, is also demanding disgorgement of fees paid and reinstatement of any lien dismissed for failure to pay the appropriate fee. That case is Kancilia v. Brown, et al. and was filed in a different federal district court than Angelotti.

The transition from one set of rules to another on the heels of major legislative changes is never easy, regardless of the subject matter. In time, because of the other changes wrought by SB 863, the disruption caused by these suits will work its way through the system. Relief from the costs associated with the lien process will be delayed, and the income the fees provide to the Division of Workers’ Compensation will be less than anticipated, but ultimately the lien problem will be solved – just later than most had hoped.

The Real Challenge for Reforming Workers’ Comp

Sifting through the claims and complaints of those involved in California’s complex workers’ compensation system could leave both the casual observer and the seasoned veteran wondering when, if ever, this multibillion-dollar program will ever get properly aligned. It would be fairly easy to say, “Not during our lifetime.” But that would be too cynical even when discussing a system that for the past several decades could easily invoke cynicism.

Every participant in workers’ compensation has two faces. Some employers provide benefits, have a compliant return to work program and enforce a culture of safety at the workplace, while other employers view employees as a necessary evil. These latter employers view adherence with the legion of local, state, and federal laws and regulations regarding the workplace as burdens that need only be acknowledged if employers are required to do so, generally in the form of a legal proceeding against them.

We have seen the abuses in the medical system from unnecessary surgeries, overuse of Schedule II medications, and downright fraud in billing insurers and other payers, and yet if there is one indispensable party in the workers’ compensation system beyond labor and management it is medical providers. As recent events have demonstrated, we have yet to figure out how to empower the noble practitioners of the healing arts while keeping the venal away from injured workers.

Claims administrators vary in expertise, motivation, and professionalism, as do the various service providers and the tactics they employ to provide services and collect fees. “Insurers” have borne an unfair brunt of criticism largely because it is an easier talking point to cast such a broad brush than to single out any one bad actor or group of them. Without the ability to transfer risk, however, the workers’ compensation system could never be sustainable.

Each system participant has a particular grudge against the others. We allow policyholders to sue insurers for claims handling practices, and, in far narrower circumstances, an injured worker may pierce exclusive remedy and sue a claims administrator when conduct is so egregious that it goes beyond the grand bargain that is at the core of workers’ compensation.  Periodically, claims administrators and service providers resort to the civil courts with a variety of complaints over unfair business practices.  And, of course, the Workers’ Compensation Appeals Board is the forum where all participants flock with even the slightest provocation.

The appellate courts weigh in on a wide range of benefit delivery challenges, as well. Their decisions in Guzman and Ogilvie were two of the main incidents inciting changes in permanent disability benefit determinations codified in Senate Bill 863 (De León). Even today, we are litigating issues over the apportionment changes brought about in Senate Bill 899 (Poochigian) enacted almost a decade ago. Litigation in federal court is rare, although not unprecedented, as the current challenge to the lien activation fee in SB 863 demonstrates.   State-imposed fee schedules have periodically worked their way into federal court on the theory that reimbursement rates are so low that they are confiscatory – a challenge unlikely in California while the fee schedule is not mandatory, but still possible given the breadth of authority that the Division of Workers’ Compensation has been given to develop fee schedules for virtually all service providers.

“Well, that’s just California workers’ comp.”  That may be the case, but such resignation does tend to take the focus away from core problems that magnify the multiple personality disorder that plagues this system. As we work our way through the implementation of SB 863, we must also recognize that not every solution to the high cost of comp, both in dollar and human terms, can be put down on paper in Sacramento or Oakland.

While compliance is part of best practices, it does not define them exclusively. To be sure, the new costs associated with complying with SB 863 are consequential. As is inevitably the case when new comprehensive workers’ compensation laws are enacted, there will be considerable friction moving from one set of rules to another. The threat of litigation will hang over the changes made in this legislation just as it has in prior iterations of reform. It will take years to sort this all out.

In the meantime, there is much work to be done to improve the system even if it is not in  reaction to a new law or regulation or judicial decision. As has been the case all too often over the past two decades, laws are driven by anecdote. The adage “bad facts make bad law” applies equally to the legislative, regulatory, and judicial processes. Navigating California’s complex system is never easy. If claims administrators expect the process by which laws are made and interpreted to provide the necessary clarity and simplicity we crave to do our jobs, then we are all sadly mistaken.

Yet, when we commit to best practices both as employers and claims professionals, we can create better outcomes than Sacramento could ever hope to achieve. The challenge, therefore, is not what legislators or regulators or justices will do for us, but rather what will we do for ourselves?

Prescription Drug Abuse – Progress In Sacramento

On May 30, the California Senate passed Senate Bill 809 (DeSaulnier) unanimously. This bill has as its primary goal the continued funding of the Controlled Substance Utilization Review and Evaluation System (CURES) in the California Department of Justice. Over the past year, considerable attention has been brought to the issue of abuse of prescription painkillers nationwide and across all benefit systems. Well-publicized research in California by the California Workers' Compensation Institute (CWCI) and multi-state analyses by the National Council on Compensation Insurance, Inc. (NCCI) and the Workers' Compensation Research Institute (WCRI) have quantified the tragic effects of over-prescribing these medications.

SB 809 seeks to do more, however, than simply develop a stable funding source for this program. The recent Senate action, while important, demonstrates that not all issues surrounding the CURES program are likely to be resolved in 2013. As a series of investigative reports done by the Los Angeles Times pointed out, participation in the CURES program by physicians is not mandatory, and there is no adequate mechanism in place to report unusual prescribing patterns by physicians to the Medical Board of California. While the funding legislation for CURES will address the latter problem, there is still no requirement that prescribers access the database before prescribing a Schedule II – IV controlled substance. However, all prescribers and dispensers will be required to register with the CURES system, which in and of itself is an important development for the Department of Justice and the Medical Board in their efforts to identify and investigate abusive prescription patterns and to combat diversion of the medications for illicit purposes.

Also, stripped from the bill was a tax on manufacturers of controlled substances that would have been used for enhanced law enforcement capabilities throughout the state. This was a critical development that policy makers still need to address, either in this legislation or through the budget process.

Even though a targeted tax on manufacturers is not palatable to the Legislature, the need to fund better enforcement of the laws governing illicit sales of prescription drugs remains a high priority. The funding in the current bill will allow the CURES program to be maintained and improved, but law enforcement will still not have what it needs to investigate physicians and pharmacists who are violating the law and bring them to justice.

While California's workers' compensation system does not have the same level of protections against prescription drug abuse as other state workers' compensation systems, there are resources at our disposal to limit the danger of these medications.

The Medical Treatment Utilization Schedule, utilization review, and Independent Medical Review (IMR) recently added by Senate Bill 863 will assist payers in their effort to curb overutilization of these medications while still addressing the very real clinical need for relief from acute pain and management of chronic pain resulting from an occupational injury. The Division of Workers' Compensation is expected to release new guidelines on pain management later this year that should further assist in this process. And the workers' compensation system, like all other healthcare financing programs, will benefit from the enactment of SB 809. It's a good start, but we are a long way away from declaring this problem solved.

The abuse of high powered prescription pain medication is a public health crisis with workers' compensation implications. The path to a solution requires the active participation of the medical and pharmacy communities, drug manufacturers, law enforcement, medical benefit payers — whether public programs, private group health plans or workers' compensation insurers and self-insured employers — and state and federal agencies and boards overseeing the development and use of these medications.

Progress is being made, but more work needs to be done. The goal is not simply for payers to be better able to say “no”. The goal is also not simply being able to avoid the costs of these medications and the complications their abuse creates and have those costs be borne somewhere else. The goal is delivering the highest quality treatment for an injured worker. A back injury, for example, doesn't automatically require surgery in all circumstances any more than it requires an injured worker to face the prospect of drug dependency.

If we use the tools at our disposal compassionately and intelligently and if we continue to press policy makers and regulators to take all steps necessary to protect patients from the improper use of these medications, then we will be able to measure success in more than dollars saved. If Governor Brown gets SB 809 on his desk and signs it, it will become effective immediately. That's a good first step, but there will still be much work to do.

Napoleon's Corporal And The Implementation Of Senate Bill 863

SB 863 was passed on the last day of August 2012. It is the largest and most comprehensive change to the California workers compensation system since April 2004 when SB 899 passed.

To make sure that the new law is implemented properly, the California Division of Workers Compensation and the Workers Compensation Appeals Board have both promulgated extensive regulations. Some of the regulations, by their nature, were considered “emergency” and were approved by OAL on December 31.

Because of the extensive impact of the various articles in the legislation, there will be ongoing regulatory efforts at least through the first six months of this year.

I strongly encourage all claims operations to review these regulations and provide their insight, thoughts, and comments on a timely basis to the Division of Workers Compensation. You can find all of the regulations on the California Department of Industrial Relations web site or the California Division of Workers Compensation web site.

Implementing SB 863
On the front lines there are many legitimate questions, such as:

  • How much of the new law applies to my existing cases?
  • If I have started Permanent Disability (PD) advances, and if the employee has returned to his/her regular work, do I still need to advance Permanent Disability?
  • What is Independent Medical Review (IMR)?
  • How will I pay for the Independent Medical Review evaluation?
  • Under what circumstances will I have to use Independent Medical Review?
  • What happens if I have an old case and the applicant attorney claims a sleep disorder?
  • What are the new ways to rate Permanent Disability?
  • What happens if the lien holders have not paid their lien filing fee?

To assist with helping claims operations and claims departments implementing the new law, I have provided an SB 863 Implementation and Survival Guide, organized by Mark Webb. It is intended to assist claims operations in the day-to-day implementation of SB863.

The original wording of the bill can be viewed here.

Napoleon's Corporal
Napoleon Bonaparte conquered most of Europe and North Africa. Many do not know the inside story of why he was a successful a military leader. One reason was his unique and extensive use of cannon. However he also had a secret weapon … His advantage was his use of a corporal.

Napoleon realized that war was a complex endeavor. When his generals outlined the battle plan, he had a random corporal assigned to shine his boots. After the plan was explained to Napoleon, he would look down at the corporal and ask if he understood the plan. If the corporal (who had been listening to the explanation of the plan) understood, Napoleon would then authorize the attack. However if the corporal was confused or did not understand the plan, then Napoleon had his generals re-do the plan to simplify it.

Napoleon understood that it was his front line that needed to execute the battle plan. If the plan was confusing, the front line would not be successful.

I recommend that this concept be considered when implementing SB863.

Here are some additional comments and observations on developing claim procedures to implement SB 863:

  • Usually the best and the brightest are used to develop procedures in claims departments. That does not always result in simple processes. This is because the focus is usually only on compliance with the new laws (which does not include simplifying the existing processes or the new process).
  • When the claims departments are developing their policies, rules and procedures, front line claims assistants and examiners should be included in the development of the processes and should also review the proposed plans to determine if they can be understood and implemented.
  • Unfortunately many times the new procedures result in processes that reflect the axiom “we have always done it this way.” Include folks who think “out of the box” and allow their voices to be heard.
  • SB 863 will result in major changes within the claims offices procedures and claims handling. Now is the time to take advantage of the change and embrace the change rather than to resist the change.
  • The focus on implementation should be: Benefit provision, Compliance, Cost Savings, Simplification, Documentation, Training.
  • For many claims adjusters, this will be the third system that they will be working with (Pre-899, 899 and 863).
  • Segregating claims by system may help but is not a panacea (because many of the provisions of SB863 apply to all existing claims).
  • Claims systems will also have to be changed. Limitations of some of the claims systems will result in problematic work-around procedures for awhile.
  • Sometimes working out a manual process first allows one to identify efficiencies. Do not be afraid to use a manual process for awhile (as the bugs are worked out).
  • Regular reviews of the implementation team specifically focused on simplification are productive.
  • The team should have a dedicated focus on the new law's cost-saving provisions.
  • The team should keep track of its costs and also develop an analysis of costs of implementing the laws.
  • The new laws may change the claims staffing model.
  • Third Party Administrators should notify their customers of the potential increased costs (Permanent Disability, for example) and also projected savings (lien reduction and resolution).
  • Third Party Administrators should review their contracts with their customers to determine if the changes in the laws impact their current pricing models and are best for their clients and for their success.
  • Bill review vendors and Utilization Review companies both have major changes to implement.
  • Special Investigations Units and Fraud Reporting have new issues to report because of the increased conflict of interest provisions in the law. Include the Special Investigations Unit as part of the implementation team.
  • I recommend an implementation team include: A senior claims executive, a senior claims supervisor, a claims examiner, a claims assistant, a bill specialist, a hearing representative, a finance person, a claims system expert, an attorney who knows the new law, and a person who is responsible for documenting the discussions, processes and procedures.
  • Training of the entire staff will take more than just one meeting and more than one month. Assume that there will be a need for re-training on a regular basis for the first nine months.